The decline in the price of crude oil is translating into job losses in the oilfields of Texas and New Mexico.
And that means there’s renewed focus on an ongoing problem in the oilfields, and that’s the theft of oil, tools, piping and copper wire by laid off or disgruntled workers.
The FBI has a team working full-time to identify stolen oilfield equipment which in at least one case was smuggled to borderland Mexico.
“They live paycheck to paycheck,” said Midland County, Texas Sheriff Gary Painter driving past an oil well.
“And they don’t have means to get enough money to get out of here, to move out whenever they get laid off. So they go to stealing. And that’s what we’re looking at right now,” he said.
Painter’s office is part of the FBI-led Oilfield Theft Task Force in Midland, Texas, the historical epicentre of boom and bust in what is still the nation’s highest producing oilfield, the Permian Basin of Texas and New Mexico.
“We’re averaging between 400 and 800 thousand dollars a month in theft,” he said.
And that’s just in a three county area in west Texas. But the tentacles of oilfield theft here reach borderland Mexico.
Until crude oil’s price decline, international investors—and it turns out, Mexican organized crime—were getting ready to extract oil in the largely untouched shale fields of northern Mexico. That requires equipment such as pipes, batteries and pumps.
“We have a large amount of equipment that’s stolen in the Permian Basin area that’s stolen, that’s going south across there border. We’ve caught a lot of stuff going across.”“We’ve had contact with people out of Mexico right across the border in Chihuahua State,” explained Painter.
We met with oilfield worker Mark Johnson as he unloaded oil from his truck into a matrix of pipelines that carries crude from Texas to other states. He says theft is part of the landscape. And he says it takes place whatever the price of oil.
“People have got to eat. I’m not saying it’s right. It’s definitely not right. It’s wrong.”
“When you lose your job you’ve got to find some way to make money. And it’s hard to make money around here without being in the oilfield,” said another worker, John Meyers.
Several years ago in Washington, D.C., an FBI agent presented statistics about theft in the oil patch to his superiors. The result was the creation of a task force in 2008, headquartered in Midland, dedicated solely to oilfield theft. It’s the only such unit in the country.
The team leader is FBI Supervisory Senior Resident Agent Troy Murdock.
“I can tell you that I’m not slowing down any,” he said when asked if the fall in the price of crude was affecting his work.
In January, his team helped win a conviction that brought the weight of federal law onto a defendant who otherwise might’ve only charged with a state crime.
The defendant pleaded guilty to stealing oil multiple times. When someone crosses from one state to another with stolen oil, that’s a violation of the laws governing interstate commerce.
That’s a federal crime.
In this case, the FBI convinced the court that the act of stealing oil itself implied that the oil would be placed in a pipeline that sends oil to other states.
“We didn’t have to prove that the guy actually went and hooked up the line to the drop area where it actually went into interstate commerce,” said Murdock. The drop area is a depot where crude haulers bring oil in trucks to a central depot connected to an interstate pipeline.
“With this precedent that’s been set, it will make it easier for my investigators, and eventually once the word gets out, squash some of the activity that’s going on,” he said.
Oilfield theft isn’t confined to crude oil and tools. Murdock says white collar crime is also a persistent problem. Some people have been caught embezzling money by issuing checks for non-existent employees. Others bill the company for hours they did not work.
By the time the discrepancies are discovered, the suspects may be long gone.