Crude Oil Theft Becoming Rampant As Oil Industry Faces Downturn

Crude Oil Theft Becoming Rampant As Oil Industry Faces Downturn

Theft of crude oil has skyrocketed since dropping oil prices and demand for oil have dropped, resulting in the oil industry’s biggest slow down in generations.

Energy Security Council executive director John Chamberlain says that official estimates show losses by theft has reached $1 billion. He cautions that this may be a conservative figure, as all oil thefts are not reported or may not have even yet been discovered. The situation is fueled by the loss of thousands of oil jobs, abandoned drilling sites, and idle trucks.

“You’ve got unemployed oilfield workers that unfortunately are resorting to stealing,” he says.

The global security manager of San Antonio-based Lewis Energy Group Mike Peters, says, “This is like a drug organization. You’ve got your mules that go out to steal the oil in trucks, you’ve got the next level of organization that’s actually taking the oil in, and you’ve got a gathering site — it’s always a criminal organization that’s involved with this.”

Stolen crude oil is selling for $10 a barrel in Texas, a third of the price fetched legally.

In Texas, unemployment insurance claims from energy workers have doubled in 2015 to 110,000. In North Dakota, average weekly wages in the Bakken oil patch have dropped 10 percent in the first quarter of 2015, compared with the previous quarter.

Even security guards who had been hired during better times are being laid off, leaving oil sites unprotected.

John Esquivel, an analyst at security consulting firm Butchko Inc. and former chief executive of the U.S. Border Patrol in Laredo, says, “There are a lot less eyes out there for security. The drilling activity may be quieter, but I don’t think criminal activity is.”
In addition to stealing oil, drilling machinery is being taken as well. These include drill bits that fetch thousands of dollars on the resale market and copper wiring.
Texas lawmakers are drafting a bill that will increase penalties related to the crime.

In Oklahoma, law-enforcement officers have teamed up with the FBI, which has also opened an office in the heart of North Dakota oil country.

In January, a Texas man was found guilty of stealing three truckloads of oil worth $60,000 . In April, the Sheriff’s office in Weld County, Colorado recovered $300,000 worth of stolen drill bits.

Robert Butler, from the Texas Attorney General’s Office, investigates oil thefts full time. He says one case involved the theft of 470,000 barrels of oil, worth $40 million, over the past three years.

Many of the crimes are inside jobs, with gate guards doubling as thieves and tank drivers as the “mules”.

“Your average person wouldn’t know the value of a drill bit or a piece of tubing or a gas meter,” say Chamberlain. “It’d be like breaking into a jewelry store; unless you know what’s valuable, you wouldn’t know what to steal.”

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