NGI The Weekly Gas Market Report / NGI All News Access

Gas, Oil Interests Say Senate Y2K Report Faulty

Gas, Oil Interests Say Senate Y2K Report Faulty

A Senate report's conclusion that the natural gas and oil industries aren't likely to be ready for the computer-related system challenges of the Year 2000 is based on "out-of-date" information that "misses [the] significant progress the industries have made" during the past six months, said major industry trade groups.

The report, which was released by the Senate Special Committee on the Year 2000 Technology Problem last week, said industry Y2K remediation efforts began "too late" and were progressing "too slowly," causing the panel to conclude it would be "overly optimistic" to expect gas and oil to finish system repairs in time for Jan. 1, 2000. This "means that...disruptions in the production, transportation and distribution of gas and oil are possible."

The Interstate Natural Gas Association of America (INGAA), the American Gas Association (AGA) and the American Petroleum Institute (API) were highly critical of the Senate report, noting that its findings for gas and oil were based on an industry-wide survey of Y2K readiness efforts that was released back in September 1998. Since then, the industry has completed another survey (the results of which were issued late last month), which found that about 94% of the oil and gas companies expect to be prepared by September for the arrival of the new millennium [See NGI, 2/22/99].

The results of the September 1998 survey revealed that much of the gas/oil industry still was in the early stage of identifying potential Y2K problems. But the more recent survey, which was overseen by the API and the Natural Gas Council, demonstrated that substantial progress has been made by oil and gas companies into the later phases of remediation (fixing) and validation (testing) of their computer systems to avoid potential problems or "bugs" when the clock strikes 12:01 a.m. next Jan. 1st.

Specifically, the results showed that 86% of the 1,000 company survey respondents were at the fixing-and-testing stage with their business computer systems, which mostly include 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; and 67% said they were in the later phases of Y2K preparedness with systems involving their supply chain.

Significantly, some concerns cited by the Senate committee with respect to the industry's Y2K readiness were identical to ones raised at a recent technical conference of the oil and gas sector working group of the President's Council on Year 2000 Conversion, which was held at FERC. The concerns included the role of small- to medium-sized energy companies in the Y2K effort and a lack of information about the preparedness efforts of the telecommunications and electric industries - both of which are critical for oil/gas to have an orderly transition to the year 2000.

"While the large gas and oil companies are spending large amounts of money on Y2K remediation, the Committee is concerned about some of the smaller and medium-sized companies in this industry, including those up and down the supply chain. These small companies could be the linchpins for the overall success of this industry," the report concluded. Moreover, it called for "better coordination" of the Y2K efforts of oil/gas, telecommunications and electricity companies. The Senate panel also emphasized the need for oil and gas companies to do more contingency planning.

Susan Parker

©Copyright 1999 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

Copyright ©2018 Natural Gas Intelligence - All Rights Reserved.
ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus