API to target more independents as members

API Pres.
Red Cavaney
"We want to represent the broader oil and gas industry. We feel it's very important that, with more players in the industry, and with the industry segmenting more and more, that smaller companies should be made welcome at API."

The American Petroleum Institute plans a major restructuring to attract new members and make itself more useful to existing ones.

Red Cavaney, the new API president and CEO, said the group's management and public policy committees have directed him to draft recommendations by late April.

"It's our goal to get this done this year. We're not talking about a long-term thing."

Changing industry

Cavaney said the oil industry is changing, and API needs to become "maximally aligned with where the industry is today."

He said that although API has more than 400 members, it is structured to primarily serve large, integrated companies. But industry is shifting to smaller operating units and joint ventures.

"Member companies are having much more difficulty in aligning with us and getting all the answers they need from us. Our committees might have to hold three different meetings to make sure they touch all the elements."

He said the API dues structure is designed to provide maximum value for firms active in all sectors of the industry, but API needs to make it "just as attractive for somebody who's in one segment of the industry.

"We are going to look at how we serve business units within the larger companies; how we serve the smaller, nonintegrated companies; and how we deal with the big issues. I think what will come from that is some new ways of doing things."

Possible changes

Cavaney said API's downstream committee may serve as a model as it considers shifting to a business-unit approach.

For that panel, "We went to all the members with downstream operations and said, 'Give us your most senior person, and we'll give this group significant authority over all downstream issues.' This group has done a very good job for us. We want to know if that same model makes sense for the E&P side, for pipelines, and so forth."

Cavaney said, "The oil industry also is facing more 'global' issues that affect every single part of a business, like global warming.

"On these big issues, we're not currently configured to put together large-issue teams on a permanent basis."

He said API needs to be able to anticipate problems better, set policies faster, and act more quickly.

"There's a view around here that you can't reach a public policy decision until you have unanimity. But when you look at public policy issues, there are always key times (for action) and if you wait to get absolute consensus, sometimes the moment passes."

He predicted API would be less reluctant to take positions even though a few member companies might strongly disagree.

"The sense is we want to have more people involved, and get more things done, and, by definition, when you do that, you can't always wait for 100% (of the members) to agree on every issue."

Cavaney said, "Downsized companies need associations more than ever, but the flip side of that is they don't have enough people to participate extensively in an association to get all they can from it. We need to figure out how to meet them half way.

"There are certain things we think we should to be able to do for companies that they can't get done elsewhere. If we don't do that, we don't deserve their business."

Broader membership

Cavaney said API will actively recruit nonintegrated companies.

"We want to represent the broader oil and gas industry. We feel it's very important that, with more players in the industry, and with the industry segmenting more and more, that smaller companies should be made welcome at API."

He said API would look at how dues and services should be structured for the smaller firms. API has an $89 million budget, two thirds of which comes from dues and the rest from service fees.

"When you look at the mega-issues that affect all of us, increasingly we need to speak with at least a common message, if not with one voice. The only way we can really get a common message is to get a great deal of interchange and cohesiveness within the industry so that everybody gets an understanding of the complexity of the issues, what are the best solutions, and what we are going to do."

He said API wants to complement, not compete with, other industry associations.

"We'll be talking with the staff and leaders of the other associations to see how we can increase our value to them and their value to us so we can work more cohesively as an oil and gas industry.

"One of our messages will be that we do not intend to look at merging any other organization into API. This is not an effort to seize their constituents or their role. We want to partner with them."

Public image

Cavaney said the API committees also directed him to seek ways to improve the oil industry's public image. "A number of industry leaders are concerned that, although the industry has done a great deal to improve its safety and environmental record over the last 20 years, for some reason, we haven't done nearly as good a job explaining to the public what we have achieved. It still looks at us as if it were 20 years ago. "We're going to take a much more proactive part in trying to get out and talk to the public about the oil industry and the benefits it provides." Cavaney said API does not plan an advertising or public relations campaign. Instead, it will work with member companies both on maintaining safety and environmental standards and effectively communicating their successes. "This is in more in the nature of basic blocking and tackling," Cavaney said. "Image improvement, to be lasting, is 'walking the talk.'"