A Senate report’s conclusion that the natural gas and oilindustries aren’t likely to be ready for the computer-relatedsystem challenges of the Year 2000 is based on “out-of-date”information that “misses [the] significant progress the industrieshave made” during the past six months, said major industry tradegroups.

The report, which was released by the Senate Special Committeeon the Year 2000 Technology Problem last week, said industry Y2Kremediation efforts began “too late” and were progressing “tooslowly,” causing the panel to conclude it would be “overlyoptimistic” to expect gas and oil to finish system repairs in timefor 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), theAmerican Gas Association (AGA) and the American Petroleum Institute(API) were highly critical of the Senate report, noting that itsfindings for gas and oil were based on an industry-wide survey ofY2K readiness efforts that was released back in September 1998.Since then, the industry has completed another survey (the resultsof which were issued late last month), which found that about 94%of the oil and gas companies expect to be prepared by September forthe arrival of the new millennium [See NGI, 2/22/99].

The results of the September 1998 survey revealed that much ofthe gas/oil industry still was in the early stage of identifyingpotential Y2K problems. But the more recent survey, which wasoverseen by the API and the Natural Gas Council, demonstrated thatsubstantial progress has been made by oil and gas companies intothe 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 companysurvey respondents were at the fixing-and-testing stage with theirbusiness computer systems, which mostly include traditionalinformation 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; and 67% said they were in the later phases of Y2Kpreparedness with systems involving their supply chain.

Significantly, some concerns cited by the Senate committee withrespect to the industry’s Y2K readiness were identical to onesraised at a recent technical conference of the oil and gas sectorworking group of the President’s Council on Year 2000 Conversion,which was held at FERC. The concerns included the role of small- tomedium-sized energy companies in the Y2K effort and a lack ofinformation about the preparedness efforts of thetelecommunications and electric industries – both of which arecritical for oil/gas to have an orderly transition to the year2000.

“While the large gas and oil companies are spending largeamounts of money on Y2K remediation, the Committee is concernedabout some of the smaller and medium-sized companies in thisindustry, including those up and down the supply chain. These smallcompanies could be the linchpins for the overall success of thisindustry,” the report concluded. Moreover, it called for “bettercoordination” of the Y2K efforts of oil/gas, telecommunications andelectricity companies. The Senate panel also emphasized the needfor oil and gas companies to do more contingency planning.

Susan Parker

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