Operators who are subject to the Financial Security Requirements must secure wells in the form of an acceptable instrument (Letter of Credit, Performance Bond, or Pledge of Certificate of Deposit) or by plugging credits.
Financial Security Rules
(Title 43: NATURAL RESOURCES, Part XIX. Office of Conservation, Subpart 1. Statewide Order No. 29-B §104. Financial Security)
*Rules address financial security requirement, accepted forms, coverage minimums, and exemption criteria.
Instrument - Amounts
|Depth||Land Locations||Water - Coastal||Water - Offshore|
|≤ 3,000 ft.||$2/ft.||$8/ft.||$12/ft.|
|3,001 - 10,000 ft.||$5/ft.||$8/ft.||$12/ft.|
|≥ 10,001 ft.||$4/ft.||$8/ft.||$12/ft.|
|BLANKET ← After August 12, 2016|
|Number of wells||Land Locations||Water - Coastal||Water - Offshore|
Instrument - Accepted Forms
Downloadable PDF templates can be accessed on our Forms Page and below. Incomplete and/or incorrect financial security instruments will be returned to sender for corrections.
Letter of Credit
- Ensure that the bank provides two individual authorized signatures.
- LORA - Louisiana Oilfield Restoration Association, Inc.
- As of November 2019, Office of Conservation is accepting financial security from Louisiana Oilfield Restoration Association, Inc. Select the above link to view the executed Cooperative Agreement 20-004. To apply, visit LORA's website at www.lora-inc.com.
- A performance bond shall be secured by a Surety or Insurance Company currently on the United States Department of the Treasury Financial Management Service List of approved bonding companies.
- NOTE- the performance bond form has been updated as of October 28, 2019. All new instruments must comply with the October 28, 2019 form.
Pledge of Certificate of Deposit
- Ensure that the issuing bank has signed and dated under the heading "Receipt" on page 3.
- Witnesses must print their name next to their signature.
- Include a copy of receipt of deposit from your bank (info shown on receipt should include: Operator Name, CD No., and CD amount.)
Exhibit "A" Forms
- The Exhibit "A" is the attachment to each instrument which lists the wells associated with that coverage.
- Blanket-10 Wells Form
- Blanket-25 Wells Form
- By Footage-Form
- Max Financial Security - Blanket - All Wells
- The "Max Financial Security - Blanket - All Wells" form is for operators that have the maximum financial security tier. File the "Max Financial Security - Blanket - All Wells" form with new instruments. Modify the grey location text for the tier- ie, either land location ($500,000), land and inland water location ($2,500,000), or delete the grey land description if the financial security instrument covers land, inland water, and offshore locations ($5,000,000).
- Amendment Form
- To add or delete wells to the existing Exhibit "A," use the Exhibit "A" Amendment Form. For large well lists (adding/deleting more than 10 wells), use the Exhibit "A" Amendment Form Attachment sheet for extra spaces to list wells. Make sure you use the appropriate attachment (ADDED or DELETED).
- Max Financial Security - Blanket - All Wells - Amend
- File the "Max Financial Security - Blanket - All Wells - Amend" for existing instruments when the max-tier financial security is in place. Modify the grey location text for the tier- ie, either land location ($500,000), land and inland water location ($2,500,000), or delete the grey land description if the financial security instrument covers land, inland water, and offshore locations ($5,000,000).
Promulgated April 2019, operators can apply plugging credits to wells that require financial security in lieu of instruments. Full and half credits are issued; one full credit is required per wellbore requiring financial security.
Full Credit - Orphan Wells
- Orphan wells plugged after August 1, 2016 qualify for one credit.
- Credit will be issued to operators for orphan wells acquired and plugged after August 1, 2016.
- If orphan well plugged via a cooperative agreement, credit will be issued to entity associated with cooperative agreement.
- OSR contractor operating under OSR contract will not be entitled to a credit.
Half Credit - Inactive Wells
- Wells inactive for a minimum of five years and plugged after August 1, 2016 qualify for a half credit.
A plugging credit will be issued to qualifying well/applicant upon submission of Form APCC - Application for Plugging Credit.
- Must be applied for within three years of p&a of qualifying well.
- Shall expire five years after issued.
- Can be applied to a well that:
- Is in the same field as the plugging credit well.
- Is the same location type as the plugging credit well (land, inland water, or offshore).
- Has a total depth that does not exceed 2,000' more than the total depth or plugback depth (whichever is less) of the plugging credit well.
Plugging credits are transferable to operators of record via Form APCCO - Transfer of Plugging Credit.
Plugging Credits - Sample Scenarios
Full Credit - orphan well with a plugback depth of 8,500' and total depth of 9,500' plugged after August 1, 2016. Upon application, operator will receive one full credit. The credit can be utilized for a well in the same field with a total depth no greater than 10,500'.
Half Credit - well has been off production for more than five years and plugged after August 1, 2016. Plugback depth of 8,500' and total depth of 9,500'. Upon application, operator will receive one half credit.
Operator plugs another well after August 1, 2016 in the same field that has been off production for at least five years. Plugback depth of 7,500' and total depth of 8,000'. Upon application, operator will receive one half credit.
Once the two half credits are approved, operator can apply the two half credits to a well in the same field with a total depth no greater than 9,500'.
Please contact Carrie Wiebelt at (225) 342-9380 with questions regarding plugging credits.
Frequently Asked Questions
If I operate wells at both land and water locations, can I combine all locations under a single blanket financial security?
Yes. However, the blanket security amount shall at minimum meet the funding level for the higher cost location (i.e. water locations). Additionally, the total number of wells secured under a blanket coverage (≤10, 11-99, ≥100) remains unchanged, regardless of the fact that land locations may cost less to restore than water locations.
How long do I need to keep Financial Security in place?
New operators must post Financial Security prior to permitting their first well. Existing operators must provide Financial Security for newly permitted wells within 30 days of completing drilling operations. Financial Security must be provided for all wells included in an operator change prior to approval of the operator change. Wells that are secured with Financial Security will remain secured until the wells are either transferred to a new operator or the wells have been P&A'd and the sites have been restored.
How do I amend my Exhibit "A" to add/delete wells?
Please use the Exhibit "A" Amendment Form. Make sure proper signatures, and witness signatures are present before submitting for review. To delete a well, ensure that all necessary paperwork has been submitted to this Office to reflect the current disposition of the well and/or to verify that it has been plugged and the site has been restored.
How do I request the release of Financial Security when I plug and/or transfer Operatorship of my wells?
Write a letter referencing the Operator and Financial Security Number (Bond #, CD #,..) and request that the security be released by this Office. Prior to any release request, ensure that all necessary paperwork has been submitted to this Office to reflect the current disposition of all wells covered by the security and to verify the status of plugged wells.
My well is located within the coastal zone but it is situated on land and accessible by road, how would these wells be classified?
Within the defined coastal zone area, any well drilled at a land location that remains accessible by road can be secured as a land well. If a particular wellsite location is disputed, a final determination will be made by this Office based on a review of Coastal Use Permit documentation, and/or field inspection.
My well is going to be located on the water, how do I know if it is located "offshore" or within the "coastal zone"?
The definition of the coastal zone boundary is provided in LSA R.S. 49:214.24. An offshore location is any water location in a field designated as offshore by the Commissioner of Conservation. LDNR provides several on-line services via the SONRIS system including interactive GIS maps. Both the state coastal zone boundary and state offshore boundary can be viewed.
If I operate a dual/triple completion well and I wish to obtain blanket financial security, is each completion (i.e. well serial number) counted as a distinct well under the blanket?
No. Multiple completion wells will count as a single wellbore under the blanket. However, list all serial numbers in the Exhibit "A" and clearly indicate any multiple completions.
The state-accepted format for a letter of credit includes language referencing the Uniform Customs and Practice for Documentary Credits by the International Chamber of Commerce Brochure No. 600 (2007 revision). Will the Office of Conservation accept any other UCP brochure revisions?
We will accept letters of credit with either the UCP 600 (2007 revision) or the UCP 500 (1993 revision) reference; no others shall be accepted.
Where do I submit Financial Security documents?
Financial Security documents are maintained in the Baton Rouge Office and can be sent to:
Louisiana Office of Conservation
617 North Third Street
Baton Rouge Louisiana 70802
Attn: Financial Security, 9th Floor
Louisiana Office of Conservation
P.O. Box 94275
Baton Rouge Louisiana 70804-9275
Attn: Financial Security, 9th Floor
If you have any questions concerning financial security, contact 225-342-5540.