Creation of the PRF Trust
The ACS Petroleum Research Fund can trace its origins to the early part of the 20th century and the pioneering oil processing research of Jesse A. Dubbs. What is now known as the Dubbs process was the first thermal/pressure cracking process. Universal Oil Products Company (UOP) held the exclusive patent rights to the Dubbs process and benefited by licensing it to the major oil companies. In 1931, a consortium of major oil companies (all of them UOP licensees) purchased UOP. Subsequently, in 1944 to avoid possible antitrust litigation because of cross-licensing patents, six of the owners of UOP donated their UOP securities to establish a Trust Fund, The Petroleum Research Fund, under the laws of the State of New York. The American Chemical Society was named as income recipient of the Trust. Soon thereafter, The Guaranty Trust Company was chosen as the Trustee.
Stipulations of the Trust Agreement
The Trust Agreement creating The Petroleum Research Fund stipulated that, as income recipient, ACS must use all funds “for advanced scientific education and fundamental research in the ‘petroleum field’, which may include any field of pure science which in the judgment of the recipient may afford a basis for subsequent research directly connected with the petroleum field." “The term ‘petroleum field’ as used herein embraces (1) exploration for, and the production, transportation and refining of, petroleum, petroleum products and natural gas, and (2) the production and refining of substitutes for petroleum and petroleum products from natural gas, coal, shale, tar sands and like materials.” Download the Trust Agreement.
7th Oil Company Donates to the PRF Trust
A seventh oil company and holder of UOP securities was not a party of the original agreement establishing The Petroleum Research Fund. However, because of pending litigation and the poor financial condition of UOP, it too divested all of their holdings in UOP to ACS. In accordance with the terms establishing the Trust, ACS transferred all of the seventh oil company’s UOP holdings to the Trustee.
First Grants Awarded
Initially, there were insufficient funds to develop grant programs and award grants. However, within ten years, UOP’s financial position improved to such an extent that in 1954 the first Petroleum Research Fund grants were awarded by ACS. Yet, the ACS Board of Directors wanted more secure financial assets for PRF than having to rely on the fortunes of a single company, UOP.
PRF Trust Diversified
In 1956, ACS encouraged the Trustee to initiate an action that would diversify the portfolio to provide a more constant income and hopefully a greater income. In 1960, the Supreme Court of the State of New York authorized the Trustee’s action to sell all of the UOP securities and to invest the proceeds in a diversified financial portfolio. The net sale of the UOP securities was in excess of $70,000,000. Guaranty Trust Company later merged with J.P. Morgan & Company with the merged firm named the Morgan Guaranty Trust Company. Over the next four decades, the interest and dividends of the Trust’s investment portfolio were used by ACS to support various PRF grant programs, as the corpus of the investment portfolio of the Trust continued to grow.
PRF Trust Transferred to ACS
By 1999, the corpus of the Trust was sufficiently large that the ACS Board of Directors and the Trustee explored changing the terms of the Trust to allow ACS to receive a fixed percentage of the Trust’s corpus to support the proposals submitted to PRF at a value that keeps pace with inflation. On October 25, 2000 a Transfer of Trust Agreement was signed by Morgan Guaranty Trust Company (Trustee-Transferor), ACS (Transferee) and the Attorney General for the State of New York that dissolved the PRF Trust. Accordingly, ACS became both the Trustee and the income recipient. Download the Transfer of Trust Agreement.
ACS PRF Established
The former PRF trust was immediately re-established in Washington, DC as The American Chemical Society Petroleum Research Fund. ACS can use up to 5% of the Fund’s rolling three-year average of the Fund’s year-end market value. The additional funds allowed ACS to increase the value of each research grant program and explore developing new grant programs. For example, ACS PRF funding commitments in 2007 exceed $25.2 million.