Midnight Oil

At 3 o'clock one morning last April, the five-man crew of an isolated oil-drilling rig near Chickasha, Okla., was suddenly surrounded by three bandits wearing ski masks and brandishing shotguns. Without uttering a word, the gunmen removed twelve tungsten carbide drill bits worth about $27,000 from the rig's storage shed and then fled with their booty in the crew's pickup truck.

Thievery in various forms has become all too frequent over the past three years in the production fields and exploration areas of the South and Southwest that are the heart of what petroleum people call the U.S. Oil Patch. Spurred by the rise in oil prices, drilling activity has reached its highest level since the '50s, resulting in an acute shortage of pipe, drill bits and other oil-exploring and -producing equipment. Orders for derricks can take as much as 18 months to fill. Buyer impatience has spawned a burgeoning subindustry: a booming black market for stolen oil equipment, the value of which may run as high as $50 million a year.

Neither the size nor the complexity of the equipment deters the thieves. Alcorn Well Service Inc. of Victoria, Texas, reports $15,000 worth of gear stolen this year; latest loss: a $1,200 pair of 60-lb. elevators used to pull pipe. Says Alcorn Vice President Jimmy Hendrix: "Just about dang near every weekend somebody gets hit. They come in after dark, strip your rig, and we never recover anything."

Police estimate that 70% of the thefts are inside jobs. Says Houston Police Lieut. J.B. ("Bill") Bradley: "It goes right down to the roustabout in the field." Identification procedures are so lax that some firms wind up buying or renting back their own equipment through various "midnight" dealers. When it is sold, the stolen gear usually goes for bargain prices --$500, say, for a high-pressure valve that costs $5,000. But some thieves with business savvy have been known to make really big money. In July, Houston's special "fence detail" arrested a middle-aged veteran salesman with a major drilling-equipment manufacturer and confiscated $580,000 worth of stolen hardware. Police say the man apparently purloined the equipment from his employer and then, through a dummy rental outfit that he set up, leased it to a legitimate rental company. His take, according to police: about $150,000 every three months.

Trying to curb the flow of stolen gear, drillers in Oklahoma and Louisiana have set up rewards earmarked to pay informants. Throughout the South and South west, law-enforcement officials and oil-company security people are holding seminars on antitheft measures. Says William J. Sallans, executive vice president of a Houston-based association of 210 petroleum-equipment manufacturers and suppliers: "We've bought more' cyclone fence since 1973 than at any other time in the history of the oil industry."

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