Texas Lawmakers Seek Abbott's Blessing on Oil Theft Crackdown

Oil rustlers of Texas beware: State lawmakers want to crack down on the those who swipe hundreds of barrels of black gold to sell on the black market — whether the crime happens during the dead of a South Texas night or under the Permian Basin sun.

But first, they need the governor’s blessing.

Even as a flooded oil market has slowed the Texas boom to a crawl, the multi-billion-dollar threat of oil theft remains large — if not growing — across the state’s secluded drilling country. Some out-of-work roughnecks are resorting to crime just to pay rent. Experts say catching the thieves and keeping them behind bars for very long can prove maddeningly difficult under the state’s current criminal laws.

So in its 2015 session, the Texas Legislature sought to give law enforcement officials more tools to address that problem. House Bill 3291, proposed by Laredo Democrats Rep. Richard Peña Raymond and Sen. Judith Zaffirini, would have toughened prosecutions of oil theft. It drew no public opposition and sailed through both chambers.

But Gov. Greg Abbott vetoed the legislation in June, calling its language overly broad, with the potential to lock away people for decades for innocent mistakes.

“This particular veto shocked us because the [governor’s] staff had worked with us on it,” said Zaffirini.

Abbott’s office would not comment for this story, saying his veto spoke for itself.

Lawmakers have revived their anti-theft push. In what some are pegging as one of the top energy issues for the next legislative session in 2017, they're aiming to send Abbott an anti-theft bill he can stomach. Lt. Gov. Dan Patrick and House Speaker Joe Straus both directed lawmakers to study the issue in the coming months, and the Senate Committee on Natural Resources and Development has already discussed it in a hearing this month.

“My concern is that the thieves will get smarter with time,” Sen. Troy Fraser, R-Horseshoe Bay, said at the hearing. “We’ve got to get the governor comfortable with prosecution.” 

Oil and gas companies and law enforcement officials nationwide have grappled with oilfield theft, and the problem looms particularly large in Texas, the U.S. energy king.

Thieves are eying most anything they can get their hands on; batteries, metal valves, piping and other equipment frequently vanish from oilfields, running up production costs. And of course, there’s the petroleum, which criminals haul away and sell cheaply.

The problem, as old as the oilfields themselves, expanded during the last Texas boom, experts say, as surging production created more to steal. Now authorities are seeing even more cases amid a downturn as laid-off workers get desperate and penny-pinching companies are more likely to audit their supplies.

“Anywhere you got oil, and you got oil companies, you’re going to have theft. That’s just the nature of the beast,” said Midland County Sheriff Gary Painter, who often handles two or three oil thefts each month. “Now that the drilling’s stopped, or slowed down drastically, we’re having people that have been accustomed to bringing in $6,000 to $10,000 a month. Now they’ve bought all their toys — their boats and their trucks — but have no way to pay for them, so they’ve resorted to stealing.”

His office is part of the FBI-led Oil Field Theft Task Force, established in 2008 to fight such Permian Basin crime at the federal level.

Plenty of oil pilfering goes unreported, so quantifying the problem is tricky. But the Energy Security Council, a Houston-based security group, estimates thieves took 1-3 percent of the roughly 700 million barrels Texas produced in 2013. If accurate, theft would have bled up to $2.1 billion from producers that year. 

Theft schemes range in complexity. Bolder thieves might directly tap storage tanks in dark of night, hoping no one is watching. A more common scenario involves waste haulers or vacuum trucks, which are hired to remove water collecting on the bottom of oil storage tanks. Criminals — whether employed in the industry or not — suck up some oil during that process to sell later, a crime that can go unnoticed even at a bustling work site.

“Oil theft is one of the hardest to prove because they could do it in broad daylight,” said Midland County Sgt. John Henry. “You almost have to know what’s happening and be right there when it does.”

In South Texas’ Eagle Ford Shale, Lewis Energy did just that — twice this year, teaming up with local authorities to nab two groups of alleged criminals in the act on sites near Cotulla. But such instances are incredibly rare, said Mike Peters, the company’s global security manager.

One set of arrests came on an early morning in May, as a tanker that looked like a wastewater tanker was pulling out of well site. A crew had first used a scout vehicle to check the location and then act as surveillance as the tanker — which had no water-hauling permit — guzzled some 150 barrels of oil, Peters said. Theives had taken a total of 700 barrels over the course of a month.

The feds took up the case, which resulted in four arrests. Those charged could each be facing a 10-year prison sentence.

In a September case, a man driving a legitimate oil tanker for a gathering company was arrested after allegedly taking 185 barrels of Lewis Energy oil and selling it for a fraction of its market price, Peters said. But because the federal task force — with its huge workload — did not take up that case, authorities could only charge the man with a state jail felony, which carries a sentence of just six months to two years in a state jail.

Stealing oil and sneaking it safely into pipelines often involves sprawling networks of criminals.  The teams of mules, lookouts and launderers are not all that different from drug traders, experts say. Sometimes, investigators may perform something of a DNA test to match stolen oil from the well that produced it. But oil from multiple wells often gets mixed together, making forensic tests near impossible and stalling investigations. 

Law enforcement officials say strengthening criminal penalties would give officials more tools to attack the networks from all angles.

House Bill 3291 would have created a second-degree felony for anyone caught “recklessly” possessing, purchasing, moving or selling oil or gas without proper Texas permits. Such felonies carry up to 20 years in prison.

But Abbott nixed the legislation, calling it unnecessarily harsh. 

“Theft of oil and gas is a serious problem facing one of our state's most vital industries. Those responsible should be prosecuted to the fullest extent of the law,” he wrote in his veto message. But the bill’s “overly broad language,” he added, created “severe criminal penalties for conduct that may have nothing to do with theft of oil and gas” — like mere faulty paperwork.

“Apparently, it was the governor himself who did not like it. The staff itself signed off on it," said Zaffirini, who was disappointed with the veto but called Abbott's careful reading of the bill "refreshing." 

Advocates hope simply swapping the word “recklessly” in the bill for “intentionally or knowingly” participating in theft will alleviate the governor's concerns.

They may not know for sure, however, until the next bill lands on his desk in 2017. At the hearing this month, Fraser asked Texas Attorney General Ken Paxton's office to help lawmakers make the bill airtight and veto-proof. 

“Otherwise this committee will be doing this again two years from now," he said.