What is an Orphan Well?
Orphan wells are old and abandoned oil and natural gas wells where no owner or responsible party can be found. These wells may be a hazard to the environment and your health and safety and they must be plugged. The Ohio Department of Natural Resources (ODNR) is planning to plug approximately 175 wells this coming year.
“Proper plugging of orphan wells is necessary to protect public health and safety, conserve natural resources and allow the efficient development of Ohio’s oil and gas resources.”
-Ohio Department of Natural Resources
The ODNR Division of Oil and Gas Resources Management (DOGRM) gives a contract to the most qualified bidder who has experience in oil and gas well drilling and plugging. There are quite a few requirements to become an approved bidder in this process.
What is an approved bidder?
An approved bidder has fulfilled the requirements of pre-qualification criteria to get added to a list of contractors. The requirements will vary depending on the scope of work. Some factors that may be used to evaluate prospective bidders are, size of firm, experience, financial status, management, labor relations records, work and bonding capacity, product service record, facilities, professional credentials, reputations and reference checks. A very important piece that will be considered is insurance.
What insurance is required?
There are specialized insurance requirements to become an approved bidder with the key coverage being professional liability. Most general liability policies do not have this professional coverage built-in to them and you will need to purchase a separate professional policy.
What is Professional Liability?
Professional Liability insurance (also known as Errors and Omissions and/or E&O insurance) is a special coverage that protects your company against allegations of:
- Failure to perform a service
- Financial loss caused by policyholder
- Error or omission in service or sold by policyholder
This coverage will help protect and defend your company against negligence claims made by a client and pay damages that may be awarded to the client in a civil lawsuit, even if the legal action turns out to be groundless. This protection is not part of a general liability policy.
How do I get this coverage?
Mitch Pertee, a Hummel Group Business Risk Advisor, has been able to assist his clients in putting policies in place that they needed to become an approved bidder for the Orphan Well program in Ohio. If you have questions about the program or getting policies put in place, feel free to contact Mitch to discuss further.
You can also contact us by calling 800.860.1060 or by clicking the link below.
Mitch Pertee here with the Hummel Group and the Oil and Gas Insurance Agency and today's Tailgate Talk is on the Orphan Well program. The Ohio Department of Natural Resources is planning to plug, somewhere in the neighborhood of 175 wells this coming year. You will find that DNR has quite a few requirements, a few hurdles and hoops to jump through to be able to become an approved bidder. And one of those is some specialized insurance requirements that have to do with professional liability. Most of your general liability policies are not going to have this professional coverage built into them and you will need to purchase a separate professional policy. I have been able to help my clients navigate through this and get the policies in place that they needed so that they could become an approved bidder. If you have any more questions on this, you'd like to discuss this any further, I'd be happy to help you out. Thanks for listening to today's Tailgate Talk.