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DNRC Headquarters
1539 Eleventh Ave. Helena, MT 59601
Phone: (406) 444-2074 | Fax: (406) 444-2684
Questions? Email us

For Current or New Operators


For New Operators

Companies doing business in the state must register with the Montana Secretary of States' office.  Registration information is available at sosmt.gov. An organization report (Form 1) must be filed with the Board of Oil and Gas Conservation Office, 2535 St. Johns Avenue, Billings, Montana 59102.  This form is also available under the Forms section of the site.

 

A plugging and reclamation bond must be acquired before a drilling permit can be issued or wells can be acquired if the wells are located on private (fee) or state lands.

 

Additional information about bonding, permitting, or acquiring existing wells through a change of operator request can be found under the appropriate sections of this page.

 

The Montana Department of Revenue collects production taxes.  For additional information about taxation see its website at mtrevenue.gov.

 

Producing wells may require registration with the Montana Department of Environmental Quality (DEQ).  Oil & Gas Well Facilities with potential emissions greater than 25 tons per year require a Montana Air Quality Permit or Registration in lieu of a permit.  More information can be found at the following link:  http://deq.mt.gov/Air/BI/airforms.

Plugging and Reclamation Bond

Bond amounts are established under ARM 36.22.1308.  A summary of bond requirements and instructions is available here.

 

Fee or state wells must be covered by a plugging and reclamation bond before an application for permit to drill or a change of operator request can be approved.

 

Bonds are available as single or multiple well bonds.  Single well bond amounts are based upon drilled depth for new wells or plug-back depth for existing wells.  Bond amounts can be doubled or the number of wells on a multiple well bond may be limited if the Board determines that additional surety is required to assure the performance of the operator to properly plug each well when it can no longer be used for the purpose for which it was drilled.

 

Plugging and reclamation bonds must remain in effect until all wells covered by the bond have been plugged and the locations restored or the wells have been transferred to another operator.  Bonds that no longer cover wells will be released upon receipt of a written request from the bonded operator.

Application for Permit to Drill (APD)

A completed application for permit to drill form (Form 22) must be submitted before a drilling permit can be issued.  All information requested on the front and back of the form are necessary, including the identification of any additional permits that might be required by state or federal agencies.  Other permits could include those listed on the form.  If access to the proposed well site requires creek or drainage crossings, or the location is adjacent to a stream or drainage, the county conservation district should be contacted to see if a 310 Permit is required.

 

Important information reviewed during permit approval process includes compliance with notice requirements, surface casing depth and proposed well construction, reserve pit design, blow-out prevention, and proposed completion method.  The requirements may be site-specific and any questions should be directed the Billings office.  A detailed permit check list is available here.

 

An application for permit to drill may require review by the Montana Sage Grouse Habitat Conservation Program (Program) if the proposed well is located in general or core sage grouse habitat.  A utility available at sagegrouse.mt.gov can be used to determine whether a submission to the sage grouse program is required prior to the issuance of the APD.  It is the operator's responsibility to request review by the sage grouse program.

 

Oil or gas wells must be drilled at a location that complies with applicable spacing regulations.  Spacing and setbacks from spacing unit boundaries may be determined by field rules if a spacing order has been issued for the target formation at the proposed location, or by the statewide spacing rules.

 

Montana has no confidentiality period for well drilling and completion data.  For wells drilled outside of delineated field boundaries, completion reports, logs, surveys, geological or other reports, and analyses must be submitted within six months of the completion or abandonment of a well.  Data from wells drilled within delineated fields are due within 30 days of completion, reworking, or abandonment.  Directional surveys for horizontally drilled wells must be submitted with 30 days after well completion (ARM 36.22.703).  See ARM 36.22.1013 for additional information about submission requirements for data other than directional surveys.

Required Drilling Notifications

  • An application for permit to drill must include a well location plat prepared by a registered land surveyor.  A land surveyor must give 15-days’ notice to a surface owner prior to entering the property to conduct a survey (§ 70-16-111, MCA).  This notice may be waived or may be made in conjunction with a separate required notice.

  • Notice must be given to the surface owner no fewer than 20 days and no more than 180 days prior to activity that disturbs the surface (§ 82-10-503, MCA).

  • For wells drilled outside the boundary of delineated fields, notice of the proposed drilling activity must be published in a Helena newspaper and a newspaper of general circulation in the county where the well is to be located (ARM 36.22.601).  Publication must be made no fewer than ten days before an application for permit to drill can be approved.  A protest of an application can be filed, and the requirements for protest are set forth in paragraph six of the rule.  If a protest is received, the application for permit to drill will be considered at the next available Board hearing.  Suggested language for the published notice is available here.

  • Notice of an application for permit to drill must be given to all owners of record of occupied structures located within 1320 feet of a proposed well (ARM 36.22.620).  A protest of an application can be filed with the board, and the requirements for protest are set forth in paragraph five of the rule.  If a protest is received, the application for permit to drill will be considered at the next available Board hearing.

 

Hydraulic Fracturing

Hydraulic fracturing, acidizing, or other chemical stimulation done to complete a well are considered permitted activities under the drilling permit for that well if the processes, anticipated volumes, and types of materials planned for use are expressly described in the permit application for that well. For wildcat or exploratory wells when the completion method hasn't been finalized at the time the well is permitted, the operator must submit a notice of intent to stimulate or chemically treat a well on Form 2 at least 48 hours prior to commencing such activities.

 

Montana requires full chemical disclosure to be included with all hydraulic fracturing proposals. The requirements for this disclosure can be found in § 82-10-603, MCA. A request can be made for an exemption to the full disclosure for any chemical that is considered a trade secret. The process for making this request is outlined in § 82-10-604, MCA and the form/guidelines that need to be completed for the request are found here.

 

Once the hydraulic fracture treatment has been completed, the post-fracturing chemical disclosure must be uploaded to fracfocus.org.

Sundry Notice, Miscellaneous Well Work

Proposed modifications to an existing APD or well work performed after a well is completed are submitted on Form 2, the sundry notice form. In general, any work that changes wellbore configuration such as squeezes, liners, perforation, recompletion, stimulation, plug-back, or abandonment requires the filing of a notice of intent and a subsequent report filed on Form 2.  Refer to the form and rules to determine which activities require the use of the sundry notice form. 

 

Activities authorized by sundry notice may also require review by the Montana Sage Grouse Habitat Conservation Program (Program) if the proposed well is located in general or core sage grouse habitat.  A utility available at sagegrouse.mt.gov can be used to determine whether a submission to the sage grouse program is required.  It is the operator’s responsibility to request review by the sage grouse program and the activity cannot be approved until the sage grouse program’s recommendations are received by the Board.

Required Monthly Reports, Taxation

Board rules require that production reports be filed on Form 6 for all unplugged wells except injection wells, which are reported on Form 5Both Forms 5 and 6 are to be submitted monthly and are due the end of the month following the month being reported (ARM 36.22.1242, 36.22.1415).  No confidentiality period exists for these types of reports.

 

Production reports are filed by lease, which represents a grouping of common mineral and working interests.  The term “lease” as used in reporting should not be confused with a mineral lease but, instead, is a Department of Revenue property or production reporting unit identification.  The grouping may include one or more wells with common interest. Production is reported by well while inventory and disposition, including sales, are reported by reporting unit.

 

Through an agreement with the Department of Revenue, Board staff assigns reporting unit (lease) numbers.  Contact the Billings office for numbers or if you have questions about either production or injection reports.


Injection reports are primarily filed by well but wells may be grouped by field or unit if the formation being injected into is the same for all wells.

 

Production tax is collected by the Department of Revenue.  For additional information see mtrevenue.gov.

Change of Operator Requests for Existing Wells

Transfer of ownership and plugging responsibility for existing wells is done using Form 20.  The new operator must be a registered operator and have an adequate plugging and reclamation bond to cover the newly acquired wells. 

 

A change of operator request will initiate field inspections to determine if the wells to be transferred are in compliance with rules. Cases of non-compliance may have to be resolved prior to the transfer being approved.  Approval of a change of operator request may be referred to the Board if either party to the transfer is not in substantial compliance with rules or if unresolved compliance issues exist with wells included in the transfer.

Well Spacing

The authority to establish and requirements for spacing units are included in § 82-11-201, MCA.

Whether under the statewide spacing and drilling rule (
ARM 36.22.702
for vertical wells and 36.22.703 for horizontal wells) or under a specific board order, spacing determines the area included in the spacing unit and commonly establishs a minimum distance from spacing unit boundaries for well locations.  The spacing unit for a well determines who shares in production from that well; however, the actual distribution of revenue may be altered by private contracts or agreements.

 

Wells are generally drilled under drilling units established by rule or temporary spacing units established by the Board following notice and hearing.  Permanent spacing units may be established by the Board following the completion of a successful well. 

 

In the absence of a Board-issued spacing order, the following requirements apply:

  • Gas wells:  640-acre regular governmental section with a 990-foot setback from spacing unit boundaries.

  • Oil wells, less than 6,000 feet:  40-acre regular governmental quarter-quarter section or lot-equivalent, 330-foot setback from boundaries.

  • Oil well, 6,000 to 11,000 feet:  160-acre regular governmental quarter section, 660-foot setback from quarter section boundaries.

  • Oil well, over 11,000 feet:  320-acre temporary spacing or drilling unit comprised of 2 contiguous quarter sections that lie in either one or two governmental sections, 660’ setback from exterior boundaries.

  • Horizontal wells:  Two, three, or four contiguous drilling units of the size and shape authorized for a vertical well of the same projected depth with a setback distance that would apply to the base drilling unit.

Wells must comply with established spacing and setback rules to be permitted.  Exceptions to existing spacing rules may be granted by the Board after notice and hearing and may allow a well to be drilled closer to the spacing unit boundaries or within an alternate drilling or temporary spacing unit.

 

Applicants requesting the designation of a temporary or permanent spacing unit must give notice to owners of the oil and gas leasehold interests sought to be spaced.  The notice must be in writing and mailed to the most recent address shown by the record of the county clerk and recorder and must be mailed at least 20 days prior to the public hearing (§ 82-11-141(4)(b), MCA).

Pooling of Interests Within Spacing Units

Pooling and unitization requirements are established in 82-11- 2, MCA.  Actions under this statute include the forced pooling of interests within a spacing unit and the imposition of non-joinder penalties.  Requests for pooling require notice and hearing.

 

If a pooling order is issued, operators who do not participate in the costs of the drilling the well and unleased mineral interests are subject to a penalty of 200% of the costs of staking, drilling and completion, and 100% of the costs of surface equipment beyond wellhead connections (§ 82-11-202 (2)(b), MCA).  Unleased mineral interests receive a one-eighth royalty until the consenting owners recover the costs and penalties, after which time the interest owner owns its proportionate share of the well and facilities and is liable for further costs (§ 82-11-202(c), MCA).

 

Applicants requesting a pooling order must give notice to owners of the oil and gas leasehold interests being spaced or pooled.  The notice must be in writing and mailed to the most recent address shown by the record of the county clerk and recorder and must be mailed at least 20 days prior to the public hearing (§ 82-11-141(4)(b), MCA).

Unitization for Enhanced Recovery

The Board may designate units for “enhanced recovery purposes as to oil or oil and gas” or “to increase the ultimate recovery, or to prevent waste from pools or portions of pools where only gas is produced”.  The procedures for unitization are established under § 82-11-2, MCA. 

The creation of a unit requires notice and hearing and the additional requirement that the applicant notify all known persons owning an interest in the oil and gas within the proposed unit area at least 60 days prior to filing the application for hearing (§ 82-11-204, MCA).

Underground Injection Control (UIC) Program

Wells used for water disposal or enhanced recovery are regulated under the Class II Underground Injection Program.  The Board has jurisdiction for all injection wells located outside the boundaries of Indian Reservations.  Rules covering the program are in ARM 36.22.14.  The program is supported by a $200.00 injection well fee that is collected for each injection well at the beginning of each calendar year.

Injection permits are issued by order following notice and hearing.  The permit applicant is responsible for two notices.  These include (1) mailed notice of the injection permit application to interest and surface owners within the area of review under ARM 36.22.1410, and (2) published notices of the application which must be published in a Helena newspaper and a newspaper of general circulation in the county in which the well is located.  The notice must appear in the newspapers no later than 30 days prior to the hearing.

The application must be received by noon on the filing deadline.  Deadlines for hearings can be found on the Board ‘s website.  Call the Billings office at (406) 656-0040 with any questions.

Injection wells must be covered by a bond other than a producing well bond (ARM 36.22.1408).  Monthly injection volumes are reported on Form 5.

Board Hearings

Matters that require a hearing before the Board include the designation of temporary or permanent spacing units, pooling of interests in spacing units, and the delineation of enhanced recovery projects.  Hearings are held throughout the year, and the schedule is available on the hearing information section of the website.

 

Parties requesting a hearing must submit an application prior to the hearing application deadline.  Applications typically are prepared by an attorney, and applicants must be represented by an attorney at the hearing.  Each application is given a docket number, and notices of all hearings are prepared and published in the Helena newspaper.  Specific dockets are also published in a newspaper of general circulation in the county or counties involved in the request.  Those notices are the responsibility of the Board.  Dockets can be found here.

 

Evidence in support of the application is presented by the applicant at the hearing.  Interested parties may appear and present evidence either in support of or in opposition to the application.  Testimony is received under oath, expert witnesses must be qualified, and cross-examination may occur at a hearing.  Members of the Board or staff may ask questions of the applicant or other parties providing testimony.

 

At the close of the hearing, the Board can vote to continue, dismiss, deny, or approve the application.  A modified approval may be granted if the modifications are within the scope of the notice that was published for the docket.  After the hearing, the Board prepares a written order.