API prepares for reorganization in 1999

American Petroleum Institute Pres. Red Cavaney says his association is preparing for a "year of transition" as it restructures from a function-based to a program-based orientation. API staff have spent a year exploring the concept and drafting an operational plan. It will report to the board at API's annual meeting this week in San Francisco, and the board is expected to change the bylaws to facilitate the reorganization.

Nov. 9, 1998

4 min read

API Pres. Red Cavaney
A new cooperative spirit between API and other U.S. petroleum industry associations is helping industry speak with a more consistent voice on most of the issues.

American Petroleum Institute Pres. Red Cavaney says his association is preparing for a "year of transition" as it restructures from a function-based to a program-based orientation.

API staff have spent a year exploring the concept and drafting an operational plan. It will report to the board at API's annual meeting this week in San Francisco, and the board is expected to change the bylaws to facilitate the reorganization.

Restructuring strategy

Cavaney, who has been API president for 13 months, said, "A conscious decision was made that, rather than spending a whole lot of time to get everything just right, it was better to get 80% together and just work out the other 20% as we go along."

The reorganization will make API more team-oriented and goal-based, "very much like you would run a company," Cavaney said.

"We see this kind of approach as significantly increasing our efficiency and cost-effectiveness at a time when both of those are very important to our members. We hope we will be more flexible."

Cavaney said API will operate on a dual track, using functional and program-based approaches, through 1999. But, beginning in June, budget decisions will be made that will guide strictly program-based operations in 2000.

He said API's staff will remain at 450 or so, including the state petroleum councils. API has added about a dozen members in the past year and now has just over 400.

Cavaney said API has failed to attract as many large independents as it had hoped, but he contends that is largely due to low oil prices.

He said, "The feedback I'm getting from people in the industry is that they expect market conditions to be this way for a while."

Image, cooperation

API has been increasingly concerned about the industry's public image.

It has retained a research group to develop a database on that subject and has been sharing the information with other oil and gas associations.

Cavaney said API will continue to work to develop a methodology to improve industry's communications with the public.

API also is improving its partnership with other industry associations. A goal of the reorganization is to improve cooperation and coordination with other groups, with certain associations taking the lead on particular issues.

API has met with upstream groups such as the Independent Petroleum Association of America, the Domestic Petroleum Council, and the National Ocean Industries Association "to discuss priorities, who was prepared to do what, and who had unique skill sets or brought things to the table that made sense for them to take the lead.

"In other words, we have been cooperating in advance, so that each organization could put its own budget or business plan together, and we could start to minimize duplication and overlap and get rid of some of the confusion about that."

Cavaney said a process for that cooperation has been agreed upon. A conference of association leaders, called the Houma Summit, will meet in January at Houma, La. It will draft an agenda for a February meeting of a group called the Spirit of Eagles, which was created many years ago to improve understanding between small and large oil firms.

"Here we are seeing, in less than a year after we started to talk about the concept, a good deal of interest on the part of all the associations in the upstream sector to improve their cooperation."

Achievements

Cavaney said he is impressed with the intra-industry cooperation he has seen this year.

And he said industry executives are pleased with the new cooperative spirit between API and other industry associations.

"That's a breath of fresh air that's very much appreciated by the leaders of the industry, big and small companies alike, and it has helped us speak with a more consistent voice on most of the issues."

For instance, he said that, in September, API and National Petrochemical & Refining Association officials agreed to join forces to comply with the U.S. Environmental Protection Agency's initiative on high production of chemical wastes.

He said that, in the past Congress, five associations joined forces to fight the Minerals Management Service's royalty oil valuation rule, winning a delay until June 1. "It was a textbook case of what we ought to do."

Cavaney said the route to success in politics is coalition-building, but noted, "That's not necessarily the route the oil industry has taken in the past."