On September 30, 2007, approximately 0830 mountain daylight time, a Piper PA-28R-201T, N38765, piloted by a private pilot, caught fire during departure from the Taos Regional Airport (SKX), Taos, New Mexico. While attempting to return to the airport, the airplane's engine lost power and the pilot subsequently performed a wheels up landing one mile south of the airport. The personal flight was being conducted under the provisions of Title 14 Code of Federal Regulations Part 91 without a flight plan. Visual meteorological conditions prevailed at the time of the accident. The private pilot was not injured. The flight departed Taos at 0815 and was en route to Nogales, Arizona. The pilot reported that he had taken off from SKX and was in a climb heading southbound when he noticed a slight fuel smell followed by white smoke coming out of the right side of the dash. The pilot said he turned back for the airport. Flames began coming from the right side of the cowling and then the engine lost power. The pilot performed a wheels up landing in rough terrain. The fire persisted as he evacuated the airplane. The airplane continued to burn until fire had consumed all but the airplane's engine, wing tips and empennage. An examination of the airplane showed a b-nut on the fuel return line was unscrewed. No other anomalies with the airplane were found.