Chemical Fuel Markers Can Thwart Theft in the Oil & Gas Industry
Oil and gas infrastructure is a prime target for vandalism, thievery, and even sabotage. For years, countries, oil companies and fuel distributors have faced profit losses and property damage from individuals illegally tapping pipelines and selling the recovered oil or fuel in the black market. In some cases, criminal organizations have installed connections into the pipelines to divert oil and gas. In the US for example, the record prices seen earlier this year led to an increase in fuel theft from local gas stations. Across the border, Mexico continues to fight “huachicoleo”, the name popularly used in the region for fuel theft. In Africa, Nigeria is well known for “bunkering”, where criminals target the production of crude oil rather than fuels and the profits are used to fund criminal organizations and militant groups. Aside from theft, the oil & gas industry is also vulnerable to sabotage by environmental groups looking to raise awareness of the industry’s carbon footprint, groups pursuing political motives, and even governments seeking to leverage the geopolitics of oil and gas. Sabotage, the illegal tapping of pipelines, and theft of fuel could have catastrophic effects on the environment, the global economy, human lives and welfare, as well as adding further volatility to an already strained market.
The UN estimates that fuel theft costs the oil & gas industry up to $133 billion per year. In addition to affecting corporation profits, the consequences of pipeline leakage caused by illicit tapping leads to human casualties and significant detrimental damage to the environment. What’s more, sabotage of the oil & gas infrastructure escalates political tensions and further contaminates and harms the environment while indirectly fueling calls to reduce fossil fuel dependence. Other threats to the environment and human health stem from idled or abandoned oil facilities that have not been fully sealed or mitigated. Whether it’s testing for fuel markers or testing contaminated water and the affected surroundings, chromatography, molecular spectroscopy and other general analytical techniques are essential in conducting tests to hold individuals and corporations accountable and to monitor product quality and environmental impacts. In November, SDi published an in-depth review of the analytical instrumentation used by the oil and gas industry, providing information on the market size, vendor share, and forecasts by product type, region, end market and application. The report also includes a general review of the oil & gas industry supply and demand over the last two years, and how industrial and regional trends are affecting the marketplace. One such trend is how the aforementioned criminal activity and environmental dangers are being addressed; the oil & gas industry is pursuing a variety of avenues, and chemical markers combined with laboratory analysis forms one of them. While the threats outlined by the UN are global in scale, there are a number of particular regions where the situation is particularly severe.
Since 2010, organized crime groups in Mexico have incorporated fuel theft into their revenue stream and it has rapidly turned into a lucrative business. The stolen gasoline was sold in public at a discounted price, heavily supported by impoverished communities unable to keep up with the record prices. However, fuel theft has also caused horrific incidents resulting in hundreds of lives lost. In 2019, a pipeline in Hidalgo, Mexico burst open, reportedly caused by an illicit pipeline tap. As the fuel sprayed into the air, local residents rushed to the area and collected buckets and barrels of fuel. Unfortunately, two hours later, the pipeline exploded leaving over 100 people dead and dozens more injured. The illicit pipeline tapping in the region has caused Pemex, Mexico’s state-owned petroleum company, an estimated $123.6 million between 2019 and 2021. Prior to Mexico’s crackdown on fuel theft, Pemex had lost an estimated $7.4 billion between 2016 and 2018. With fuel prices increasing in 2022, illegal taps are again on the rise and a recent study warns that sanctions against Russia will make fuel theft increasingly profitable.
Like Mexico, Nigeria faces similar challenges with oil theft and illegal refineries. In October of 2022, at least 58 connection illegal points were discovered in Dela and Bayelsa States in Nigeria. An illegal connection point on the Trans Escravos pipeline had been operating for 9 years, meaning thieves had been stealing crude oil for that entire timespan at that location. This year, Nigeria is reported to have lost 95% of its crude oil to looters and the rate at which it has increased in recent times is unprecedented. A more disastrous scenario occurred in South Africa; the Meul River in the Free State was contaminated after thieves stole fuel from the Transnet pipeline and left the valve open. The contamination of the river had the potential to impact water resources, downstream water users and aquatic life in the area.
In the Middle East, fuel smuggling in Iraq caused shortages and spiking prices earlier this year. The smugglers redirect tanker trucks headed to fuel stations, illegally tap on pipelines and subsidize the fuel for resale at market rates. Oil smuggling in the region is enabled by sky-high global energy prices, and although smuggling in the region is not new, the current oil market has incentivized smugglers even more.
In the US and Europe, soaring oil & gas prices earlier in 2022 led to an increase in fuel theft via “drive-offs”. In the UK alone, petrol retailers reported a 215% increase in “drive-off” thefts since December 2021. In the US, where customers typically provide payment information prior to gas delivery, some individuals are using highly modified vehicles to steal tens of thousands of gallons of fuel from gas stations. The modified vehicles look like a normal truck, but intricate pipping is installed inside of them. A makeshift gas tanker that was caught outside of Las Vegas on its way to California, where gas is more expensive, was towing a horse trailer filled with tanks of stolen fuel. Others with deeper system knowledge will open the gas pump themselves and manipulate the gears to unload the fuel with no payment. The sky-high prices are not the only incentive for stealing fuel; low prices can also spur oil theft as plummeting oil prices result in layoffs in the energy sector and drive individuals to resort to other means of revenue.
In addition to record oil & gas prices fueling theft, governments are resorting to pipeline sabotage to exploit the power dynamics brought on by the oil & gas industry’s importance in the energy sector. Most recently, the Nord Stream pipeline leaks reported in the Baltic Sea have led to accusations of sabotage. Unknown undersea blasts damaged the Nord Stream 1 and 2 pipelines causing huge methane leaks. The Nord Stream pipelines leaks are suspicious, given that they transport natural gas from Russia to Europe and the explosions were located near a new gas transmission line expected to deliver Norwegian gas to Poland and neighboring countries. The methane escape from the two pipelines is likely to be the largest known gas leak to occur over a short period of time. and researchers warn the potent greenhouse gas poses immediate harm to marine life and fisheries in the Baltic Sea and to human life as benzene and other trace chemicals are present in natural gas. Following the Nord Stream pipeline explosions, natural gas prices soared in Europe and stocks fell.
Although sabotage is much more difficult to control, some preventative measures have been used to discourage fuel theft and smuggling of oil through use of fuel markers. The markers are unique identifiers introduced in trace quantities into petroleum products at depots before distribution in the market. GC/MS is the standard analytical technique used to identify the presence of the fuel marker and also aids in determining fuel type, grade or brand in the downstream petroleum industry. The presence of fuel markers deters illegal trade of fuel, adulteration, and can produce actionable evidence resulting in arrests of individuals and groups involved.