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
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
"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.