NGI The Weekly Gas Market Report
One of the “biggest issues” facing the natural gas industry inthe upcoming year with respect to Y2K will be the readiness of “keyproviders and dependent players,” namely the electricity andtelecommunications industries, said pipeline and LDC officials lastweek.
The majority of gas companies, including pipelines, LDCs andproducers, report they expect to be Y2K ready by June 1999, andelectric utilities are said to be following a similarly aggressivepath. “I think that for electric and gas we’re on very similartracks as far as being ready. The electric side is going to bedoing some full industry-type testing in April that the gascomponents hope to get involved with,” noted Gary Gardner, chiefinformation officer for the American Gas Association (AGA).
As for telecommunications companies, “I think the big playersare probably going to be there. And the concern is [over] thoselocal carriers out there because there’s thousands of them. Wehaven’t seen any warning signals or big problems so far,” he toldNGI following a press briefing in Washington D.C. on the challengesthat the oil and gas industries face with computer and electronicsoftware and hardware when the clock strikes Jan. 1, 2000.
“We’re pretty much all in the same stage of readiness, which iswhere we want to be – about half way at this point” through testingand correcting the problems, said Skip Horvath, executive vicepresident for the Interstate Natural Gas Association of America(INGAA), a major pipeline group. “The reason for all of us to betogether is if any one sector or any one industry is behind, thenall the others are behind because they rely on that one. So we’reall pretty much making sure we go lockstep together…”
In 1999, “we’re going to be contacting and working with theelectric and telecommunications industries to make sure our…plansmake sense with where they are in their plans,” Horvath said.Toward that aim, the Natural Gas Council is scheduled to host ameeting in Houston on Jan. 27 for gas, electricity andtelecommunications to provide updates on their Y2K preparedness.
The entire gas industry presently is surveying companies abouttheir Y2K readiness. The results of an LDC survey will be presentedat a FERC technical conference scheduled for Feb. 18th, AGA’sGardner said. “So far, from the initial responses that we’ve gottenprogress is still being shown. The majority of people are movinginto what we call the later stages of remediation and validation,”and they see “no major challenges” ahead. “That’s a good sign,” hesaid.
The news also is encouraging from the quarterly statements onY2K readiness that publicly traded investor-owned utilities (IOUs)have filed with the Securities and Exchange Commission. BothMerrill Lynch and Moody’s Investor Service have reviewed thesestatements and “feel pretty confident that based on what they’veseen that the energy industry, and specifically the LDCs, shouldnot be at risk,” Gardner noted.
“I think the general feeling we’re getting is there could besome little nuisances here and there” come Jan. 1, 2000. “But fromthose working close to the issue, we don’t see a big problem” onthe horizon, he said. Gardner noted that Montgomery County inMaryland conducted a “dry run” of emergency-response capabilitieslast week by “pushing the clock forward” on its systems, and”apparently everything ran smoothly.”
Pipelines and LDCs have similar Y2K “vulnerable” areas. Thefirst is the SCADA (Supervisory Control and Data Acquisition)system, which “basically is our communications system,” saidINGAA’s Horvath. “It’s a bunch of pieces of equipment scatteredaround – some at the control area and some at the customer sites.”The other area of vulnerability is the control panel of compressorstations, he added.
The vulnerability stems from the fact that some systems orelectronic devices contain embedded chips or processors that may bedate-sensitive, Gardner said. The chip “may have some kind of clockto it,” which could cause it to reach the “wrong assumption” thatit’s 1900 rather than 2000 when Jan. 1 dawns. So far, LDCs arefinding that chips used in their operations basically “don’t havethat date type of sensitivity.”
The Y2K issue has gone from being “a software traditionalinformation systems type of problem” to more of a hardware concern,where “anything that has a chip in it may have a vulnerability,”Gardner noted. He conceded it’s been a “laborious process” tolocate these chips and test them. But “right now I think theconsensus is that they’re feeling pretty good across the board atwhat they’re finding. They’re not finding that much of a problem.”He said the chips in some cases can be replaced, but he cautionedthat companies that wait too long could be “shut out.”
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