How the US oil industry tries to bring petrocrime under control

A truck carrying crude oil from Bakersfield, Calif., wheels into the Port of Los Angeles and pulls up to a petroleum storage terminal. The trucker gets out to pump the cargo into a tank.

Moments later, he pulls up to another terminal to empty more crude. At both terminals, the siphon was hooked up and the valves turned. But the cargo never made it into the first tank, which belonged to a buyer of crude oil. It did, however, make it into the second, which belonged to a buyer of stolen crude oil.

The hand can be quicker than the eye in California and other oil-producing states. In the midst of the lucrative oil business are a number of crooked operations that pad the cost of exploration, steal prospecting equipment, and often make off with what's been discovered.

Oil crime is so widespread and has been going on for so long that law enforcers and the oil industry say no estimate of loss is reliable. But within the past few years, they have done some organizing of their own and, at least occasionally, the eye has caught the hand in mid-motion.

A recent Oklahoma law requires most oil-field equipment to have identification markings. If it's stolen, the lawful owner is traceable. An Oklahoma inventor devised a means of distinguishing one load of crude oil from another by dumping millions of pieces of film with the owner's name inscribed on them into tanks of crude. These microdots turn up when just a small quantity is siphoned off.

On the premise that an investigator is more effective if he goes into a case knowing the difference between hydraulic tubing tongs and spider slips, petrocrime specialists are turning up on the rosters of law-enforcement agencies in oil-producing states.

In April 1982 several industry groups set up the Petroleum Industry Security Council in Austin, Texas, complete with a hotline, to track oil crime. Dialing 800-OIL-COPS gives victims a central reporting point and even lets thieves who are cut out of their share of the plunder get revenge.

The impulse to organize has led not only to cracking more cases but to some discoveries about the reach of ''crooked oil.'' The Interior Department estimates it loses $1 million a day through underpaid royalties and theft of crude from federal land. Other discoveries have implicated oil companies themselves. A district attorney in the Austin Chalk field of central Texas has charged that oil companies have stymied his investigations of corrupt employees.

An FBI agent in Oklahoma criticized oil companies for being the most vocal opponents of that state's equipmentmaking law. An FBI deputy inspector said two years ago that the bureau was looking into more than 200 oil-crime cases, at least some of which involved the victims collaborating with their predators.

Oklahoma private investigator Joe Dickerson tells of a thief who tried to peddle $100,000 worth of valves stolen from a refinery undergoing expansion. His customer was an informant. The thief was arrested, the valves recovered.

But when the company's security director took a look at the valves, he told Dickerson, ''Well, we don't have a report of having a loss, and we can't say they're ours.'' The suspect had confessed. The valves still had tags hanging from them with job numbers corresponding to those on refinery blueprints. But they were not reclaimed, Dickerson says, because ''it's more acceptable to have a cost overrun than a major theft under the noses of security and management.''

Uncovering a kickback scheme means finding a criminal. Therein can lie a significant complication, says Michael F. O'Donnell, audit partner and director of the oil and gas industry practice for Arthur Andersen & Co.'s Dallas-Fort Worth office. At a seminar the ''big eight'' accounting firm held for the energy industry recently, he said, ''One of the points that was brought up is tolerance from the standpoint that the good-old-boy syndrome runs through the industry. What happens is you're out in some small town in Texas or Oklahoma and the individual perpetrating the fraud is the pillar of the community, so let's don't prosecute him, he only took a little bit and he's trying to put his kids through school.''

Law enforcers indicate that big and little oil companies alike appear to tolerate carelessness with equipment.

''I've got equipment stored in my office that I don't know who it belongs to and I'll probably never find out,'' says Lt. Don Moreau, in charge of a district office of the Louisiana State Police. ''I've got pipe elevators here that cost $ 3,000 to $5,000. They're very common. I see them lying around on the ground everywhere at drilling sites. Two men can grab that, throw it in the back of a pickup truck, and sell it for $500.''

While some investigators see the industry's attitude toward security improving somewhat, others say its apathy mirrors the attitude of some law officers. Sgt. Larry Congdon heads the oil-field theft detail of the Kern County Sheriff's Department in Bakersfield, Calif, which trapped the truckers and their wayward oil in 1982.

Oil companies, he says, ''in some areas may not feel law enforcement is going to do anything. When officers go out to take these (theft) reports, they're out of their environment, and they don't understand the lingo of the oil patch.''

Petrocrime cases often receive low priority in court, says Boyd Burdett, executive director of the Petroleum Industry Security Council. ''There's a lot of misconception on the part of the public that oil companies have a lot of money and don't care whether they get stolen from,'' Burdett contends. Jurors, he adds, ''are often more sympathetic with the thief than they are the victim.''

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