(a) At the time of applying for a license under this chapter, an applicant engaged in the business of oil or gas exploration, development, or production shall file a surety bond in the amount of $250,000 running to the state, conditioned upon the applicant's promise to pay all
(1) taxes and contributions due the state and political subdivisions; and
(2) persons furnishing labor or material or renting or supplying equipment to the applicant.
(b) In lieu of the surety bond required under this section, the applicant may file with the commissioner a cash deposit or other negotiable security acceptable to the commissioner in the amount of $250,000.
(c) The bond required by this section remains in effect until cancelled by action of the surety, the principal, or if the commissioner finds that the business is producing oil or gas in commercial quantities, by the commissioner.