Fraud in the Oil Fields: A Boom in Theft Costs Texas Industry Millions

Dave Fehling / StateImpact

Convoy of Halliburton trucks on Interstate 10

If you drive west from Houston out Interstate 10, about the time you’ve gone 100 miles and reached the edge of the Eagle Ford Shale, you’ll begin noticing them: Big rigs and other assorted trucks. They’re heading to the oil and gas fields of South and West Texas. Some are loaded with tons of steel pipe, others with tanks and contraptions for mixing the concoctions used to drill and “frack” wells. Still others are full of high tech seismic devices.

The equipment is unique and expensive. And the crooks have noticed.

Dave Fehling / StateImpact

County police in Midland County estimated oil field theft totaled at least $20 million annually

“There’s thieves out there who know what they’re looking for and trust me, if they get the opportunity they will take it,”said a technician who asked that his name not be used. He’s with one of the big oil field service companies. “They tell us to always be careful, always watch our surroundings ’cause you never know who might be out there watching you, especially when we carry that type of expensive equipment.”

In West Texas, county police estimated that reported theft of oil field equipment was costing drillers there at least $20 million a year. In 2008, police teamed with the FBI to form the Permian Basin Oilfield Task Force. Figures released by the FBI last year showed the task force had won 39 convictions and recovered about $18 million. In some of the cases, prosecutors used a statue that makes it a Federal crime to damage an “energy facility”. Maximum prison term: 20 years.

But the crime continues.

“We have thieves that are coming in here from all over the country,” said Gary Painter, the Midland County Sheriff. “We have material that’s going into Mexico from here. We have oil theft. We have oil tool theft. We have white collar crime.”

Dave Fehling / StateImpact

Steel pipe westbound in Colorado County

With so much drilling underway, there’s a big demand for equipment and apparently little reluctance for some operators to buy replacement parts from dubious sellers. Some operators might even resort to ripping off their competitors says John Chamberlain, executive director of the Energy Security Council, a Houston-based industry group.

“If you’re operating a rig or a production facility in the the boondocks and all of a sudden a critical piece of equipment breaks down and you know there’s a drilling rig 20 miles down the road, instead of waiting to fix your equipment you may send someone down to steal something, Now, reputable people don’t (do that) but if you’re a non-reputable operator you might,” Chamberlain told StateImpact.