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Gas, Oil Industries Will be Y2K Ready by September, Survey Says

Gas, Oil Industries Will be Y2K Ready by September, Survey Says

Most of the companies in the oil and gas industry - 94% - report they will have addressed fully by September any computer-related challenges posed by the arrival of the new millennium, according to a survey tracking the industry's Y2K progress that was released last week.

The survey completed in January found that there has been substantial progress made by oil and gas companies into the later phases of remediation (fixing) and validation (testing) of their computers systems to avoid potential problems or "bugs" when the clock strikes 12:01 a.m. Jan. 1, 2000. The results were gleaned from the responses of 1,000 companies representing 88% of the oil and gas demand in the nation, including most gas pipeline/distribution capacity and, to a lesser extent, production. The industrywide survey was a follow-up to one done last September, and was released last Thursday during the second technical conference of the oil and gas sector working group of the President's Council on Year 2000 Conversion, which was held at FERC.

It found that 86% of the oil/gas companies, up from 55% since last September, were into the later stages of fixing and testing of their business computer systems, which mostly includes traditional information technology systems related to customer service, office support and billing. About 78% reported they were in the later phases of Y2K readiness with their embedded hardware systems, which are used primarily to control the flow of oil/gas and monitor pressures. This compared to just 46% last September. Lastly, only 67% said they were in the later phases of Y2K preparedness with systems involving their supply chain.

As for contingency strategies to deal with unexpected system responses, more than 80% of the surveyed companies that don't have such plans at the present reported they will have them in place by June, and the majority of oil and gas companies - 97% - indicated they will have tested their contingency plans by September.

FERC Chairman James Hoecker, who is chairing the working group, said the industry survey revealed "the potential problems with [the chips in] embedded systems appear to be more limited" than originally had been expected.

He applauded the progress the industry has made so far on the Y2K front but cited several areas requiring attention. For instance, although the working group has been "very effective" in reaching the major entities in the oil and gas industries, more needs to be done to reach the smaller companies at the retail end of the market. With this aim, the group has begun to work cooperatively with a number of associations, including the National Association of Regulatory Utility Commissioners, to "better coordinate efforts to reach local gas utilities and retail outlets for petroleum products."

Likewise, Ron Quiggins, vice president of Shell Services International and chairman of the American Petroleum Institute's (API) Year 2000 Task Force, expressed concern the survey results reflected only 79% of the domestic producing capability. "We would like that [number] to be higher," he said, adding that most of the producers that hadn't participated in the survey were the smaller independents. Participation numbers that are in the 85%-90% range "we feel extremely good about...The numbers that are below that will require some more effort."

One of the biggest concerns of surveyed companies was a lack of information on the Y2K preparedness of the telecommunications and electric industries, both of which will be critical to oil/gas if it is to make a smooth transition to the year 2000. Oliver G. "Rick" Richard III, chairman of Columbia Energy and the oil/gas representative on the senior advisory group of the President's Council, noted the group already has begun to work closely with the telecommunications and electric industries to identify common Y2K concerns.

"So despite the progress that has been made, much work awaits us all," Hoecker said, singling out contingency planning as one of the areas. "I am committed to having a smooth transition into the orderly oil and gas business of the next century...I would like to see the coming of the year 2000 turn out as the biggest non-event in the history of computer technology."

The survey was presented by the Natural Gas Council and API, which are coordinating the oil and gas industry's Y2K effort. In addition to their members, the survey results were culled from the members of the Association of Oil Pipe Lines, the Gas Processors Association, the National Petrochemical and Refiners Association, the Petroleum Marketers Association of America and the American Public Gas Association.

Susan Parker

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