Most of the companies in the oil and gas industry – 94% -report they will have addressed fully by September anycomputer-related challenges posed by the arrival of the newmillennium, according to a survey tracking the industry’s Y2Kprogress that was released last week.
The survey completed in January found that there has beensubstantial progress made by oil and gas companies into the laterphases of remediation (fixing) and validation (testing) of theircomputers systems to avoid potential problems or “bugs” when theclock strikes 12:01 a.m. Jan. 1, 2000. The results were gleanedfrom the responses of 1,000 companies representing 88% of the oiland gas demand in the nation, including most gaspipeline/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 technicalconference of the oil and gas sector working group of thePresident’s Council on Year 2000 Conversion, which was held atFERC.
It found that 86% of the oil/gas companies, up from 55% sincelast September, were into the later stages of fixing and testing oftheir business computer systems, which mostly includestraditionalinformation technology systems related to customer service, officesupport and billing. About 78% reported they were in the laterphases of Y2K readiness with their embedded hardware systems, whichare used primarily to control the flow of oil/gas and monitorpressures. This compared to just 46% last September. Lastly, only67% said they were in the later phases of Y2K preparedness withsystems involving their supply chain.
As for contingency strategies to deal with unexpected systemresponses, more than 80% of the surveyed companies that don’t havesuch plans at the present reported they will have them in place byJune, and the majority of oil and gas companies – 97% – indicatedthey 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 [thechips in] embedded systems appear to be more limited” thanoriginally had been expected.
He applauded the progress the industry has made so far on theY2K front but cited several areas requiring attention. Forinstance, although the working group has been “very effective” inreaching the major entities in the oil and gas industries, moreneeds to be done to reach the smaller companies at the retail endof the market. With this aim, the group has begun to workcooperatively with a number of associations, including the NationalAssociation of Regulatory Utility Commissioners, to “bettercoordinate efforts to reach local gas utilities and retail outletsfor petroleum products.”
Likewise, Ron Quiggins, vice president of Shell ServicesInternational and chairman of the American Petroleum Institute’s(API) Year 2000 Task Force, expressed concern the survey resultsreflected only 79% of the domestic producing capability. “We wouldlike that [number] to be higher,” he said, adding that most of theproducers that hadn’t participated in the survey were the smallerindependents. Participation numbers that are in the 85%-90% range”we feel extremely good about…The numbers that are below thatwill require some more effort.”
One of the biggest concerns of surveyed companies was a lack ofinformation on the Y2K preparedness of the telecommunications andelectric industries, both of which will be critical to oil/gas ifit is to make a smooth transition to the year 2000. Oliver G.”Rick” Richard III, chairman of Columbia Energy and the oil/gasrepresentative on the senior advisory group of the President’sCouncil, noted the group already has begun to work closely with thetelecommunications and electric industries to identify common Y2Kconcerns.
“So despite the progress that has been made, much work awaits usall,” Hoecker said, singling out contingency planning as one of theareas. “I am committed to having a smooth transition into theorderly oil and gas business of the next century…I would like tosee the coming of the year 2000 turn out as the biggest non-eventin 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. Inaddition to their members, the survey results were culled from themembers of the Association of Oil Pipe Lines, the Gas ProcessorsAssociation, the National Petrochemical and Refiners Association,the Petroleum Marketers Association of America and the AmericanPublic Gas Association.
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