The Texas Senate Committee on Natural Resources met this week to discuss legislative solutions to oilfield theft in the state.

According to data provided by the Texas Alliance of Energy Producers during the hearing on Monday, oilfield theft in Texas could have a $4.3 billion annual economic impact.

Several cases of oilfield theft have made headlines recently, including a recent case involving Texas and Oklahoma that resulted in a series of search and arrest warrants across several counties in both states.

Oilfield theft is not limited just to crude oil; it also includes equipment and vehicle theft.

Oilfield theft crimes, and specifically crude oil theft, tend to be committed as part of complex organized criminal networks due to the level of sophistication required to steal the oil.

Senate Bill (SB) 494, passed in the 89th Legislature, created the State Taskforce on Petroleum Theft under the Texas Railroad Commission. Other significant legislation passed last session includes SB 1806, which increased criminal punishment related to oilfield theft, and House Bill 48, which created a theft prevention unit within the Department of Public Safety (DPS).

Prosecutions of oilfield theft cases were highlighted during hearing testimonies, as the topic has proved particularly problematic for lawmakers and law enforcement. State Sen. Pete Flores (R-Pleasanton) said during the hearing that the current apprehension rate for oilfield thefts is 2 percent, and the prosecution rate is 1 percent.

During the hearing’s second panel, Loving County Constable Brandon Jones stated about prosecuting such crimes, “From my perspective, I’ve seen as many unicorns as I’ve seen cases prosecuted in Loving County — we haven’t had any prosecution.

“The avenues are not there,” he affirmed.

Michael Lozano, Vice President of Government Affairs of the Permian Basin Petroleum Association, said during the hearing’s first panel that prosecution was “the next needle to move” in the state’s push to address the problem.

The Texan spoke with Lozano more extensively about the topic.

“It’s a resource-intensive process,” he said about prosecution. “There have been some real severe deficiencies in investigating and prosecuting these crimes — and again, not to beleaguer the issue from law enforcement’s side or the investigator’s side, but that is happening because it is an area the size of Minnesota.”

Challenges like funding, recruitment, training, and multi-department cooperation all contribute to prosecutorial stagnation.

“There is just not the bandwidth,” Lozano affirmed.

On the other hand, Lozano stated that the DPS’ theft unit has seen success in its recent dealings.

“Effectively, it was an unenforced crime that is now being enforced, and that attention has been helpful,” Lozano said.

He called SB 1806 a “game-changer” because it “gave statewide jurisdiction to the [DPS] to investigate,” and added that the bill better streamlined the prosecution process.

Panelists conceded that in addition to prosecution, the reporting of theft remains one of the main challenges being tackled currently. Lack of reporting by operators largely stems from tax laws the state requirements of operators, who must pay severance taxes on any oil that has been produced and measured.

Committee Chairman Kevin Sparks (R-Midland) questioned panelists about the loss of tax revenue to the state in the context of theft.

Karr Ingham, president of the Texas Alliance of Energy Producers, responded that “unfortunately for the operator,” the state does not lose as much revenue, because the operator is still required to pay severance tax on the stolen oil.

“That’s a double hit that that guy is taking,” Ingham said about the hypothetical operator. “His incentive is high not to report.”

Ingham continued, “There’s not a great solution to that, but [we want to make] sure that we don’t penalize an operator for reporting that information — because he is penalized right now.”

However, he affirmed to Sparks that the state does lose revenue from sales taxes, motor vehicle taxes, hotel taxes, and royalty payments when oilfield theft occurs.

State Sen. Tan Parker (R-Flower Mound) asked panelists whether they felt the topic had “adequate awareness,” to which DPS Captain Tim Murphy stated, “I think we’ve put a pretty big scare into a lot of people.”

Murphy continued, “We’ve heard rumors that it’s been difficult for [thieves] to sell the oil that they’ve stolen, and that they’re looking for different people to shovel it off to.”

Panelists generally conceded that the steps being taken in the Legislature were having a positive impact on the issue, even though solutions take time to implement.

Murphy detailed that in the DPS’ first year of operating their Organized Oilfield Theft Prevention Unit, the unit arrested 289 people, as well as seized $11.4 million in currency, over 98,000 barrels of crude oil, 107 stolen vehicles and trailers, and $16 million of other equipment.