A. No permit for the drilling or putting down of any petroleum or natural gas well shall be issued to any person, firm or corporation, and no well for which permit has been hereto issued shall be drilled into any producing oil or gas horizon until there shall be obtained and filed with the city clerk a producing policy of liability insurance to cover injury to property or persons and that will cover any liability imposed by law for damages on account of injury to property, either private or public, or bodily injury, including death, received or suffered by any person or persons, firm or corporation, and resulting from the drilling, operation or maintenance of any well or structure, equipment, machinery, tanks, pipelines or appurtenances thereto, with the city named as an additional insured thereon, in such minimum amounts as prescribed and set forth in the Oklahoma political subdivision tort claims act, 51 Oklahoma Statutes section 151 and following, as may from time to time be amended. In case the minimum amounts prescribed and set forth in said Oklahoma political subdivision tort claims act should be amended, the holder of any outstanding permit shall have thirty (30) days thereafter to have said amended minimum rate endorsed upon the policy on file with the city clerk, or to obtain a new or further policy reflecting said amended minimum rates. In case any policy of insurance required in this section shall lapse or become void for any reason whatsoever, in addition to the general penalty provided for the violation of any ordinance, the permit or permits issued under the terms of this chapter shall immediately become inoperative and void until a new policy of insurance shall be provided and filed with the city clerk or the existing policy of insurance reinstated in full force, and all wells covered by such lapsed or voided bond shall be shut down and all operation and production thereof shall be suspended and discontinued until the filing of such new policy of insurance or reinstatement of such existing policy of insurance.
B. 1. In the event a permit is authorized by the city under the terms of this chapter for the drilling and operation of a well, no actual drilling operation shall be commenced nor operation continue, until the permittee files with the city clerk a bond in the principal amount of at least twenty five thousand dollars ($25,000.00), or such higher principal sum as has been determined by the commission, on all wells by a single operator on a single lease. Said bond shall be executed by an insurance company authorized to do business in the state of Oklahoma as a surety with the permittee as principal, said bond running in favor of the city for the benefit of the city and all persons concerned. If a bond meets all the requirements of this chapter, the city shall accept a bond which also lists the state of Oklahoma or an agency thereof as beneficiary.
2. In the alternative, permittee may file an irrevocable letter of credit in an amount equivalent to the bond which would otherwise be required, said letter of credit being issued by a bank having sufficient equity that the letter of credit represents no more than five percent (5%) of the equity of the issuing bank. The letter of credit shall be irrevocable, and shall be on terms approved by the city manager. The letter of credit must be advised through and confirmed by a bank located within the state of Oklahoma.
3. The bond or letter of credit shall expire one year after the date of the issuance of the oil and gas permit; provided, that if either drilling or production activities are to continue on the lease after the scheduled termination date of the permit and security, a new bond or letter of credit must be submitted to the city in advance of the expiration date of the old security device, and must accompany an application for renewal of the permit. Should the owner or operator fail to supply such security device and the existing securities expire by virtue of their own terms, all further drilling, production, or injection activities on the lease must immediately cease and the well must be immediately plugged.
4. All security under this section shall be conditioned on the following:
a. Permittee will promptly pay all fines, penalties, or other assessments imposed upon permittee by reason of the breach of any of the provisions dealing with the performance of oil and gas drilling or production.
b. Permittee will not destroy or will otherwise promptly restore to their former condition, the streets, sidewalks and other public property of the city which may be disturbed or damaged by the operations.
c. Permittee will, after drilling operations are complete, grade, level, and restore all property at the surface condition as nearly as possible, as existed when operations for drilling of the well were first commenced.
d. Permittee shall indemnify and hold the city harmless from any and all liability attributable to granting the permit.
5. Although not covered by the terms of the security itself, permittee will further sign a statement expressly agreeing:
a. To promptly clear the premises of all litter, trash, waste and other substances used, allowed or occurring in the drilling or production operations;
b. Acknowledging permittee's knowledge of, and willingness and ability to comply with applicable federal and state law, municipal ordinance, rules, regulations, standards and directives relating to the maintenance of the safe and beneficial physical, chemical and biological properties of any waters of the city or lands within the city;
c. That permittee will bear all the costs necessary and incidental to the correction of any pollution of the waters of the city or lands within the city caused by permittee or his agents, servants, employees, subcontractors or independent contractors; and
d. Acknowledging that violation of any of the provisions of this section subjects the permittee to loss of permit, civil action for damages, and possible criminal action in municipal court.
6. In addition to the security required above, permittee shall carry a policy or policies of standard comprehensive public liability insurance, letter of credit or equivalent security approved by the city manager, including contractual liability covering bodily injury and property damage, naming the permittee and the city as coinsureds. Such security shall, in the aggregate, provide for minimum coverage of one million dollars ($1,000,000.00) combined single limit with a maximum of twenty five thousand dollar ($25,000.00) deductible.
7. Permittee shall file, with the city clerk, certificates of insurance or other security approved by the city manager, and shall obtain the written approval thereof by the city manager or his designee, who shall act thereon within ten (10) days from the date of the filing of the documents. In the event that the protection provided by these securities is terminated for any reason, permittee's rights to operate under the oil and gas permit shall cease immediately and the permittee may take no action other than plugging of the wells until substitute securities are provided. (Ord. 1939 § 1, 2009: Ord. 1369 § 3H, 1979)