The Current Level Of World Oil Pricing: Implications For The Independent Sector Of The Oil And Gas Industry In Western Canada
Authors: Andrews R.R. 
Published: March 2010

The Independent Petroleum Association of Canada

The Independent Petroleum Association of Canada (lPAC) is a trade association representing the Canadian independent oil and gas companies operating in Canada. The association was formed in 1960 and this year celebrates its 25th anniversary. From an original founding group of 18 companies, IPAC has grown to a current size of some 200 oil and gas exploration and production companies and 150 associate members who provide equipment and services to the oil and gas industry. The principal objective of lPAC is to develop among the independent sector of the petroleum industry in Canada, all levels of government and the general public, a better and more complete understanding, cooperation and awareness of the role which the independent sector plays in Canada's economy.

IPAC member companies principally explore in the western Canadian sedimentary basin, although a number of members are also involved in exploration and drilling activities in the frontier areas.

Some facts regarding the independent sector of the oil and gas industry are:IPAC members companies have total assets in excess of$24 billion, representing about 25% of the oil and gas industry.IPAC members paid over $200 million in land bonuses in Alberta in 1984 almost 37% of the total.IPAC members drilled over 3 000 wells in Alberta in 1985-some 44% of the total.IPAC members employ almost 15 000 people.IPAC members paid over $1–5 billion in crown royalties in 1985–20"70 of the total.IPAC members spent in excess of $2 billion on exploration and development in 1985-some 35% of the total.IPAC members operate 550/0 of the wells in Alberta.

Major Decisions of 1985

A brief historical review of the last year or so leading up to today's current situation in the oil and gas industry will be given. During 1985 Canada went through a major restructuring of the relationship between federal government and industry in the oil and gas sector.

Oil and Gas Agreements

The Atlantic Accord was signed defining the federal/provincial relationship in the eastern frontier areas, the Western Accord was signed by the federal government and the three western producing provinces; crude oil deregulation became a fact and a commitment was entered into by industry and government to phase into natural gas deregulation by November of 1986; and lastly, a new frontier oil and gas policy was defined in Canada.

The Western Accord in particular signalled a new era of cooperative policy development in the oil and gas industry in Canada. Negotiations were undertaken in a spirit of consultation and cooperation, recognizing the view and position of both parties, and making a substantive effort to reach an acceptable accommodation. The main accomplishment of the Western Accord was the resolution of the role of the federal government in the Canadian oil and gas industry. The outcome of that agreement was the removal of the Special Petroleum and Gas Revenue Tax and a commitment to move to deregulated oil prices in June of 1985.