Gov. Abbott signs bills targeting oil theft in Texas

MIDLAND, Texas — Gov. Greg Abbott signed several bills into law on Thursday that aim to crack down on the theft of petroleum products and oil and gas equipment.

Texas is the top state for oil and gas production, accounting for 43% of the nation’s crude oil production and 27% of its natural gas, and petroleum theft has been a persistent problem.

On Thursday, Abbott traveled to the epicenter of the industry, the Permian Basin in West Texas. The bill signing took place in the auditorium of the Permian Basin Petroleum Museum in Midland. That area alone accounts for 40% of the nation’s oil production and 15% of its natural gas.

“The Permian Basin is the lifeblood of Texas. The lifeblood that quite literally powers our engines but equally literally that powers our economy,” Abbott said. “Because of that pinnacle role, it’s very important that the state responds to the challenges that you deal with and to issues that are important to you.”

Abbott spoke alongside Former U.S. Secretary of Commerce Don Evans and several state lawmakers who filed bills this legislative session to crack down on thefts of petroleum products and oil and gas equipment. The lawmakers who filed those bills were State Sen. Kevin Sparks (R-Midland), Former House Speaker and current State Rep. Tom Craddick (R-Midland) and State Rep. Brooks Landgraf (R-Odessa).

“We’re very proud of the role that we play as the energy-producing epicenter of the free world, and we know that that allows the state of Texas to derive so many benefits,” Landgraf said. “These bills are very critical to make sure that we have a sustained industry and that we crack down on oil field theft.”

The most recent data highlighting the prevalence and severity of the issue dates back to 2016, when an Oilfield Theft Task Force involving several agencies, including the FBI, estimated that the Permian Basin region averaged between $200,000 and $300,000 in monthly thefts of tools, pipes, and valves. All of those are things that can easily be resold.

The Energy Security Council estimates between 1 and 3% of oil and gas products are stolen in the state. Based on the production of more than one billion barrels of oil and condensate in Texas in 2016, the ESC estimated that the industry loses 10 to 30 million barrels annually, equivalent to a revenue loss of $450 million to almost $1.5 billion at today’s prices.

Since then, losses have escalated as Mexican cartels have been increasingly stealing oil and equipment as one of their sources of income in Texas. Abbott said by targeting oil pipelines and storage tanks, organized criminals and cartels have stolen millions of dollars from communities in the Permian Basin. 

“Many of you all have complained about oil field theft, and for a good reason. It is on the rise and is very costly,” Abbott said.

The three pieces of legislation that state lawmakers passed and Gov. Abbott signed into law on Thursday aim to give law enforcement the tools it needs to deter and prosecute oilfield theft. These measures include stricter penalties for oil and gas crimes and the creation of new criminal offenses involving petroleum products and oil and gas waste.

“It was a full effort in figuring out what are the things that we need to give our law enforcement and our railroad commission the tools that they need to help improve oilfield theft,” Sparks said.

House Bill 48, authored by State Rep. Drew Darby (R-San Angelo), which Gov. Abbott signed into law on May 29, establishes an Organized Oilfield Theft Prevention Unit within the Texas Department of Public Safety to combat oil and gas equipment theft.

The unit will be based out of DPS Region 4 in the Permian Basin, which includes 36 counties in west Texas. The new unit will be tasked to investigate offenses related to the theft of drilling equipment, pipelines, petroleum products, and vehicles used in oil and gas operations. 

In addition to coordinating with local, state, and federal agencies, the Organized Oilfield Theft Prevention Unit will be tasked with educating the public and industry leaders on how to prevent oilfield theft, as well as maintaining a central oilfield theft database. The unit will then submit biennial reports on its effectiveness to state leaders, including statistics on arrests, prosecutions and asset recovery.

Senate Bill 494, authored by Sparks, requires the Railroad Commission of Texas to create a task force to study the issue of organized oilfield theft and make recommendations to prevent the theft of petroleum products. Sparks is also an executive of an oil and gas company in Midland.

The task force, which would be comprised of both law enforcement and industry stakeholders, would submit a biennial report with findings and recommendations to state leaders on ways to “increase transparency, improve security, enhance consumer protections, prevent the theft of petroleum products, and address the long-term economic impact of the theft of petroleum products.”

The Railroad Commission of Texas would be responsible for appointing members to the task force until it expires on Dec. 31, 2030.

In 2017, state lawmakers passed a bill by State Sen. Judith Zaffirini (D-Laredo) to create criminal offenses and penalties for the theft of oil and gas equipment. However, state lawmakers say it is not doing enough to deter theft.

So, they passed, and Gov. Abbott signed Senate Bill 1806 on Thursday, which increases penalties and enforcement measures to crack down on petroleum theft. The bill makes it a felony, ranging from third-degree to first-degree, with the severity of the offense escalating based on the value of the theft.

It establishes strict inspection rules for cargo tanks transporting petroleum and grants specially trained officers the authority to inspect these tanks and collect samples for forensic analysis.

“It authorizes local law enforcement to confiscate petroleum products that are alleged to have been stolen,” Abbott said.

It also criminalizes the unauthorized disposal of oil and gas waste and makes it a similar felony.

“Bottom line, we’re bringing the full weight of the law to crack down on oil theft in the Permian Basin,” Abbott said

The governor also signed Senate Bill 529, which allows the City of Midland to divert certain collected tax revenue for economic development projects such as hotels and convention centers in the Midland area. He compared that city’s situation to Austin’s a few years ago.

“Austin has been a magnet for both economic development and also for tourism, but they were hindered for many years because they were limited in the size of their convention center,” Abbott said. “As a result, they lost convention after convention after convention after convention to other cities across the United States because the convention center was not accommodative of what was needed.”

Austin is just starting on a years-long, $1.6 billion dollar project to double the size of the downtown convention center.