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New PA Law (Act 87 of 2012) Clarifies Bonding Requirements for Conventional Wells

Act 13, Pennsylvania’s new Oil and Gas legislation that became law in February 2012, raised the required dollar amount for well bonds and was clearly aimed at the unconventional Marcellus well boom. However, Act 13 created confusion about the bonding requirements for shallower conventional wells. Recent legislation, passed as part of the end of the legislative year, clarified that the legislature did not intend to change the bonding requirements for conventional wells. Act 87 of 2012, which was signed by the Governor on July 2nd, provides that notwithstanding Act 13, the bond amount for conventional oil or gas wells shall be $2,500 per well or a blanket bond of $25,000 (Section 1606-E). These are the same bond amounts required for all wells prior to Act 13’s passage in February 2012. The new legislation also requires that the Environmental Quality Board review the bonding requirements for conventional oil and gas wells.