Oil Theft is a Real Thing. Here’s What Texas is Doing About It

“It really is an organized criminal enterprise.”

By Alain StephensDecember 3, 2015 10:13 am| ,

As the energy downturn leaves oil rigs throughout the state empty and roughnecks out of a job, thieves have now stepped in to turn the state’s oil woes into a lucrative criminal opportunity.

The state has been attempting to combat oil theft by crafting legislation that will provide tougher prosecution. In the meantime, however, law enforcement and industry officials are attempting to clamp down on rig security.

Mike Peters, Global Security Manager for Lewis Energy in San Antonio, talks to the Standard about the black market surrounding black gold.

“It really is an organized criminal enterprise that does the stealing,” he says. “You’ve got the truck driver, which is the main component. Without a truck and a tanker, there’s no way you can steal oil to begin with.”

According to Peters, the oil then has to be laundered into the system for reporting to the Texas Railroad Commission, and “legitimately” go to a gathering system. He says that oil thieves average about $10 a barrel, or 25 percent of how much crude oil costs in the open market.

“Depending on the size of the tanker, the driver of one of these vehicles can profit anywhere from around $1,100 to $1,800 a load,” Peters says.

The 24-hour cycle of oil processing makes it possible for oil thieves to steal in broad daylight.

“There are literally thousands of tractor trailers out in the field that are hauling oil legitimately day in, day out,” Peters says. “So if you put one illegitimate tanker trailer out there, they just blend in with everybody else.”

Although the FBI has an oil theft taskforce in the Permian Basin, Peters, who works with another taskforce in South Texas, says “they’re overwhelmed.” House Bill 3291, which would have toughened prosecution of oil thieves, was vetoed by Gov. Greg Abbott in June.

“The governor has some questions on the language in the bill,” Peters says. “It’s my understanding that he is very much in favor of cracking down … and I think it’s just a question of getting the House, the Senate, and the Governor together to agree to the language.”

According to Peters, the oil industry could be losing between 1 and 3 percent of profits from theft, but when put into the perspective of barrels of oil produced in a year, the consequences are much more costly.