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gas and oilindustries aren’t likely to be ready for the computer-relatedsystem challenges of the Year 2000 is based on “out-of-date”information that “misses [the] significant progress the industrieshave made” during the past six months, said major industry tradegroups.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 yesterday, said industry Y2Kremediation efforts began “too late” and were progressing “tooslowly,” causing it to conclude that it would be “overlyoptimistic” to believe gas and oil would finish their systemrepairs in time for Jan. 1, 2000. This “means that…disruptions inthe production, transportation and distribution of gas and oil arepossible.”
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 about two weeks ago), which found that about94% of the oil and gas companies expect to be prepared by Septemberfor the arrival of the new millennium.
The results of the September 1998 survey found that much of thegas/oil industry still was in the early stage of identifyingpotential Y2K problems. But the more recent survey, which wasoverseen by API and the Natural Gas Council, revealed there hasbeen substantial progress made by oil and gas companies into thelater phases of remediation (fixing) and validation (testing) oftheir computer systems to avoid potential problems or “bugs” whenthe clock strikes 12:01 a.m. next Jan. 1st.
Specifically, the results showed that 86% of the 1,000 companysurvey respondents were into the later stages of fixing and testingof their business computer systems, which mostly includetraditional information technology systems related to customerservice, office support and billing; about 78% reported they werein the later phases of Y2K readiness with their embedded hardwaresystems, which are used primarily to control the flow of oil/gasand monitor pressures; and 67% said they were in the later phasesof Y2K preparedness 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. These 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 oil/gas, telecommunications and electricity on theY2K front. The Senate panel also emphasized the need for oil andgas to do more contingency planning.
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