As unfortunate as it is, theft is an inevitable part of business. For as long as there have been businesses, there have been people who sought to steal, whether it is physical goods or labor. Retail theft runs a cost of around $42 billion annually while labor theft (a failure to pay workers for their wage) is estimated to cost workers upwards of $50 billion a year. While these figures paint a very unfortunate picture of theft in America, these are only two big, broad categories of theft. We’re here to tell you about a kind of theft that is fairly new, oilfield theft.
To those outside the industry, theft in the oilfield might seem like a rather obscure target. In many cases the sites are very remote and hard to find, plus the majority of the equipment is very large and difficult to move. Despite all this, from large-scale equipment theft to smaller-scale convenience theft (the theft of small tools, like drills and hammers) it is estimated that oilfield theft reaches around $1 billion a year. This is a staggering number for such a niche field. While it may be nowhere near the massive $42 billion of culmulative theft in the retail industry,this $1 billion in stolen assets from the oilfields is growing on a regular basis. Also, considering how few oilfields there are in comparison to retail outlets, it’s becoming a major problem in the United States.
Why do Criminals Target Oilfields?
If you thought that oilfields seemed like an unlikely target for theft, you’d have thought the same as most people. It’s exactly this thinking that inspires criminals to steal from oilfields. Energy services have very important, very expensive equipment, so if you combine that with a relative lack of oilfield security, it’s easy to figure out that criminals are going to exploit the system. The first and biggest part of the problem is simply that it seems so unexpected.
You would also probably think that selling the goods would be difficult. It’s not as simple as say, pawning a gold watch. But there is definitely a market for stolen oilfield goods which continues to grow as more and more oil and gas sites fall victim to oilfield theft. Everything from the oil itself to to wiring, tubing, and piping are common items being stolen. Some of the larger and more obscure stolen equipment that can’t be sold inside the borders of the US for fear of being caught is now being purchased outside our borders. There is a growing market for fenced oil goods in Mexico, where companies either use it themselves or ship it even further south. As of March 2015, oilfields in West Texas are reporting a $400K-$800K loss by theft, per month!
How Does Oilfield Theft Occur?
Aside from the generally unexpected nature of oilfield theft, part of the issue is that managers may not know what measures they can take to protect themselves. Quite often employees haven’t been well-informed about the severity or commonality of the problem. With the remote locations of oil and gas sites many people working in the oilfield don’t treat security with the same regard as they would say an office in the city. Educating oil and gas teams to be aware of oilfield theft is the first step towards a more secure oilfield.
While some instances of oilfield theft are executed by professional, sophisticated criminal organizations, a lot of the time it’s a lot more simple than that. Things that seem second nature like locking up temporary field offices or monitoring exactly who goes in and out of an oil and gas site are often overlooked due to the locations being ‘in the middle of nowhere.’ Beyond equipment, oilfield criminals are beginning to go as far as targeting private digital information from oil and gas companies which are usually accessible from on-site computers. Sometimes this data is taken with the intention of being sold to competitors and this sensitive information often trumps the value of tangible assets being stolen.
In addition to a lack of knowledge on the frequency that oilfield theft actually happens, many oil fields also lack basic security measures. Equipment may be left in areas that are accessible to everybody (instead of only to those authorized) and there may be little or no record keeping on the equipment itself. With the vast range of tools used in oilfield operations it’s often hard to keep track of every little piece of equipment. Also due to the tedious nature of keeping records, some oil and gas companies experience oilfield theft for some time without even noticing things have gone missing!
What is the Forecast for the Future?
Until the oil and gas industry begins to take more serious methods to increase security, the problem will likely continue to get more serious. Another issue is that the decline in oil prices threatens oilfield jobs causing people to feel more desperation. As some oilfield theft is committed by actual employees of an oil and gas company, this trend could contribute to even more stolen goods. As long as oilfields remain relatively easy targets for theft the future of oilfield theft doesn’t look good.
However there is also hope for the industry. Advances in technology and more affordable security equipment have opened a new sector of business for companies like PetroCloud, offering oilfield surveillance and monitoring systems. By increasing oilfield security through automation these systems have been proven to both eliminate oilfield theft while saving oil and gas companies money.
The biggest way to fight oilfield theft is simply to get the word out. Most people simply don’t realize the severity of this issue in the US, so awareness is the first step. If you or anyone you know is involved with oilfield operations, speak up about this very real risk that American oilfields face and fight the problem, one person at a time.
For more information on the subject please read this blog post about Oilfield Security and Protecting the US Energy Infrastructure.