What if there was a way to reduce the losses associated with oilfield thefts?
Oil companies may have their doubts, but there’s no disputing the problem of theft at drilling sites. It’s an incident management situation that too often gets overlooked until it’s too late. This post will address the problem of theft and the solutions an online incident management system provides.
Despite their best efforts, law enforcement is not always successful at recovering the property.
The problem of costly and unreported oilfield thefts
Five years ago, the Texas Tribune published an article on the number of thefts Texas oil and gas drillers were enduring, specifically those involving the batteries that power pipeline monitors. Thefts like these lead to large replacement expenditures and production downtime. The article reports on a 2008 study in which, “West Texas counties estimated that oilfield thefts cost drillers $78 million during the previous three years. The actual costs could be twice that, because many thefts go unreported, said John Chamberlain, head of the Houston-based Energy Security Council, a nonprofit adviser to the industry on security issues.” Chamberlain goes on to say that the thefts are difficult to track and that some companies “just write off thefts as the cost of doing business…”
“Many thefts go unreported.” Why? Often it’s because the missing items aren’t discovered to be missing for days or even weeks. What a sad state of affairs when companies feel the need to account for losses not caused by the economy or poor production, but caused by the dishonest gain of criminals. There’s got to be a better way.
The challenges of oilfield thefts for law enforcement
Where’s law enforcement? According to one victim, “Doing the best it can with the resources it has.” The following stories exemplify the measures law enforcement sometimes has to take.
Near Hobbs, New Mexico, a deputy followed two and a half miles of tire tracks from a drilling site to find a 55-gallon barrel of paraffin, a 55-gallon barrel of compressor oil, and a $27,000 trailer, all of which had been stolen from oilfields in the area.
Four-thousand dollars worth of oilfield equipment was recovered In Freestone County, Texas after the subject was identified by security cameras on the property.
In Crane County, Texas, thieves stole an 11,000-pound power swivel valued at $115,000 and filled up a pickup with other tools. The power swivel and $10,000 worth of the tools were recovered, but other tools had already been sold.
Despite their best efforts, law enforcement is not always successful at recovering the property. The remote nature of oilfield crimes along with the time delay between when they occur and when law enforcement is notified puts crime fighters at a disadvantage. Often, by the time they are notified, a company has already experienced revenue loss, worker stalls, customer delays, and replacement costs.
One of the key problems is lag time between the theft and when law enforcement learns about it.
“They went to check on it and it was gone.”
Damaged equipment due to oilfield thefts
Near Oklahoma City earlier this year, thieves stole enough copper wiring from New Dominion oil field sites to cash in on approximately $30,000 at metal recycling facilities. Oil companies have to do more than replace the wiring, though. Police estimate that the damage it causes to equipment could total as much as 12 and a half million dollars. The thieves were arrested, but not before significant damage had been done.
How might that story have been different if the damage had been noticed sooner and law enforcement brought in immediately? It could have been a difference of millions of dollars.
Poor asset management leads to undiscovered thefts at drilling sites
In August of this year at an oilfield near Carlsbad, New Mexico, a $35,000 equipment trailer with power washers was stolen. Workers didn’t report it to detectives until it had been missing for 20 days. According to an article in the Carlsbad Current-Argus, “They went to check on it and it was gone.”
It was 20 days before anyone noticed the trailer gone simply because everyone made assumptions about where the trailer might be instead of having a system in place to track where it should be.
The high cost of equipment theft in oilfields
Also this year, an air conditioning unit was stolen from a storage building on an oil lease in Taft, California. A Texas mom and her two sons stole trailers, gates, and a 500-gallon water tank from an oilfield in DeWitt County, Texas. And near San Antonio, thieves masterminded multiple heists to steal $1.7 million worth of oil from the tank batteries of at least three different oil companies.
The problem of theft is rampant wherever oilfields exist. Thieves take advantage of remote locations to pilfer both crude and equipment. In Texas, the Energy Security Council estimates the oil and gas industry is losing revenue in the range of $450 million to nearly $1.5 billion on 10 to 30 million barrels of crude oil each year. The Oilfield Theft Task Force estimates that Permian Basin equipment thefts total between $200,000 and $300,000 a month.¹ That’s between $2.4 million and $3.6 million dollars of equipment theft each year. No CFO should have to account for that when planning an annual budget.
Incident management aids in resolving all of these problems, provided you choose the right incident management system. Verity Incident Management System addresses each of these problems in one online web application.
How to prevent oilfield theft
Incident management aids in resolving all of these problems, provided you choose the right incident management system. Verity Incident Management System addresses each of these problems in one online web application.
Connect directly to law enforcement for incidents of theft
For starters, Verity Incident Management System reduces the number of unreported thefts by allowing third-party integration. That includes law enforcement. This means you can share the information with local law enforcement as soon as you notice an item is missing using the web application. Law enforcement has a better chance of catching the crooks when the lead is still hot.
Report damage incidents immediately
Secondly, an online incident command software like Verity makes it easier for remote locations to report equipment damage caused by theft. Shutting down equipment sooner rather than later prevents additional costly damage. Because Verity allows users to tag certain individuals in incident reports, the right people find out about the damage sooner, leading to quicker repairs or, in some cases, replacement.
Manage assets from multiple sites in one place
Managing assets properly, regardless of the remote locations of said assets, makes it more likely for a company to discover damage and missing items in a timely manner. As a result, it reduces the cost of losses associated with both. Verity’s map-based asset tracking, incident and damage reporting capabilities, as well as the third party integration makes it easier for a company to manage assets across the board. Online incident management enables workers to notify law enforcement, repair damage to equipment, and create reports company-wide.
Managing assets properly, regardless of the remote locations of said assets, makes it more likely for a company to discover damage and missing items in a timely manner. As a result, it reduces the cost of losses associated with both.
Summary
Here’s how Verity Incident Management System works with law enforcement to reduce theft and loss:
- It aids law enforcement by significantly reducing lag time and providing specifics about the missing items (model numbers, identifying marks, etc.).
- Because one of the functions of an incident management system is to help track assets, it’s more likely that thefts will be discovered sooner and, as a result, reported sooner.
- Quicker response time from law enforcement means less downtime on the site.
- The faster thieves are apprehended, the less likely they will be to strike again, especially if your oilfields build a reputation for good security and a relationship with local law enforcement.