The Independent Petroleum Association of America's push to establish a nationwide program to improve the U.S. oil industry's image has suffered a critical setback.
Directors of the American Petroleum Institute recently dealt the program a major blow when they decided not to participate in it.
The program would have been modeled after Oklahoma's check-off program, which uses a volumetric assessment on production both to promote the oil industry and clean abandoned well sites.
IPAA had proposed that majors and independents equally split the cost of the 5-year, $25 million/year program.
After a feasibility study was completed last year, API had agreed with IPAA that a long-term advertising and public relations program would be worthwhile but withheld final approval until it could determine whether its members were willing to help fund it (OGJ, Nov. 25, 1996, p. 29).
Legislation needed
IPAA proposed that a bill be introduced in Congress to collect as much as 0.1% on the first sale of oil and gas by independent producers and royalty owners. Those not wishing to participate could apply for refunds.
Majors would have decided separately how to raise their half of the program.
All the funds would have gone to a Domestic Oil and Gas Council, composed of members of participating oil associations, which would have determined how to spend the money.
An API official explained, "API decided not to proceed with it primarily because there was not a consensus among our members to do so. Many of our companies strongly opposed a check-off program. They thought it was inappropriate for the federal government to get involved."
IPAA Chairman Lew Ward, president of Ward Petroleum Co., Enid, Okla., has been the major promoter behind the drive for a nationwide program (OGJ, July 29, 1996, p. 48).
IPAA reacts
Ward said, "IPAA is disappointed by the API member companies' decision not to move forward with the development of a national program to enhance the public's awareness of the oil and gas industry.
"As independents, we feel the Oklahoma industry's highly successful environmental and education campaign serves as an excellent model for a national program.
"We remain committed to the creation of a national program that allows the industry to tell its collective story through the combination of grassroots programs, including school curriculum and the awareness of advertising, which is critically important to our future."
Some independents had objected to the check-off program too. The IPAA leadership thought its members supported the program, but when the issue came before IPAA's governors in February, objections were raised.
So the IPAA governors created a task force to work with IPAA regional groups to ensure the proposal had grassroots support. The task force was due to report by May 10, in advance of the association's midyear meeting May 14-17 in Washington, D.C.
IPAA now will reconsider the program in light of API's rejection. Ward already has said one option might be to establish separate programs in each producing state.
