SURVEY SHOWS OIL AND GAS INDUSTRIES PREPARED FOR Y2K (Embedded chips do not pose significant problem) (620) By Anita Santos USIA Staff Writer

Washington -- A survey reports that most oil and natural gas industries have made substantial progress in preparing for the Year 2000 computer problem and that potentially vulnerable chips are less of an operational risk than originally perceived.

A survey released February 18 by the Natural Gas Council (NGC) and the American Petroleum Institute (API) compiled data from 1,000 companies from all sectors of the natural gas and oil industries on their Year 2000 (Y2K) readiness plans. Those companies provide for 88 percent of the fuel consumed in the United States.

One key discovery in the survey was that computer embedded chips do not pose a significant problem for industries, said Ron Quiggins of Shell Services Corporation and chairman of the API Year 2000 Task Force. "We are not finding the embedded chip failures that we thought we had," he said.

More than 86 percent of companies surveyed are in the final stages of fixing and testing their computer systems. In September 1998, only 55 percent of the companies were at the same stage. Ninety seven percent of the industries expect to have contingency plans in place and tested by September 1999.

The oil and natural gas industries are working to ensure that the flow of energy to markets and consumers around the country will be maintained. Computer systems and electronic chips are essential to the processes and equipment that natural gas and oil companies rely on to operate wells, pipelines and local delivery systems for millions of homes and businesses.

One of the most common complaints presented by industries in the survey is the lack of information on Y2K readiness by key utility providers, including telecommunications, electricity and water. All those industries depend on one another and will be unable to function properly if one of them has major problems with the coming date change. The API said they had already begun to work closely with those companies to develop integrated contingency plans.

The NGC and API survey results were presented to the Federal Energy Regulatory Commission, which is working with other federal agencies as a member of the President's Council on the Year 2000 Conversion.

Commission Chairman James Hoecker said that while he feels "confident and optimistic" about the data from the survey, there is still "some serious work awaiting many small and independent entities in the natural gas and petroleum industries at the production and retail distribution ends of the system."

Because many oil and natural gas industries are multinational corporations, the Y2K readiness of their international partners is also important. API is paying special attention to their counterpart industries in Mexico, Canada, Venezuela and Saudi Arabia. Progress in Y2K preparedness in those countries is fundamental to normal distribution of energy in the United States, researchers said.

Fortunately, January 1, 1999, is a Saturday and energy demand is typically lower on the weekend. This should be helpful in allowing time to fix any problems that may show up, API said. In many cases, natural gas companies also have manual controls as backups for computerized systems, so the problem for industries in this field might be smaller than previously thought.

The Year 2000 or Y2K problem refers to computer's inability to read the date "00" as 2000. When the first computer programs were designed 20 years ago, many represented years with only the last two digits. So instead of reading "00" as 2000, the computers will read 1900 and this could present problems for equipment that rely on sequential date information.

-- (Busy@the.top), February 19, 1999

Answers

What no link?

-- (Looking@links.com), February 19, 1999.

Link please.

-- Vic (Roadrunner@compliant.com), February 19, 1999.

After reading this a second time I have some questions as to its autheticity because of style. As has happened in the past, posters have identified stories as legitimate when they are not, and the best clue is sloppy writing, ignorance of the AP style book and poor syntax. A mainstream journalist would not begin a paragraph in a news story with the word "fortunately." As well, it would be Jan. 1, 1999, not January 1. Again, style book. Maybe it is legitimate and just poor journalism.

-- Vic (Roadrunner@compliant.com), February 19, 1999.

Survey

AG

-- (AG@BFI.com), February 19, 1999.

Another problem with this article is that Chevron has already said it isn't practical for them to have all their mission-critical systems ready by the end of this year.

It takes as little as one weak link in a system to cause major problems. That's why there was the Northeast power blackout in the U.S. in 1965--one switch caused the problem.

-- Kevin (mixesmusic@worldnet.att.net), February 19, 1999.

Good news, particularly about the embedded chips, if true - but they are still "predicting" compliance and discussing contingecy planning "to be completed" in September.

Be patient, don't criticize such news unduly nor reject it out of hand. However, one report - particularly from such a spokeman - about one industry entirely reliant on international exchage - if the rest fails economincally, can the US end of the business pay its clients, employees, and taxes? is not the end of the problem.

It does imply that the problem may be reduced.

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), February 19, 1999.

Now I see. This report was released by the American Petroleum Institute. It is in their interests to release good news, the same way it's in the interests of the North American Electric Reliability Council to release good news.

The percentage of date-sensitive embedded microprocessors has always been small. Just one malfunctioning chip can cause major damage to equipment, though.

And let's hope we can still get a regular supply of oil from the Middle East and South America...

-- Kevin (mixesmusic@worldnet.att.net), February 19, 1999.

It sounds like great news. But when Richards says that "we believe that we are well on our way..." , I am not so sure.

-- dave (wootendave@hotmail.com), February 19, 1999.

Because many oil and natural gas industries are multinational corporations, the Y2K readiness of their international partners is also important. API is paying special attention to their counterpart industries in Mexico, Canada, Venezuela and Saudi Arabia. Progress in Y2K preparedness in those countries is fundamental to normal distribution of energy in the United States, researchers said.

'nough said, TAZ

-- TAZ (taz@no.yr), February 19, 1999.

This is remarkable. Be sure to click through to the link so kindly provided by AG, and go to the bottom of the page. There are three PowerPoint presentations that are very interesting. (hint: when viewing a PowerPoint presentation, always go to the View menu, and select 'Notes". Often the speaker's notes are included in the presentation.

I would be happier if this report was based on the findings of outside auditors, but still I find it very encouraging. Kevin's point about vulnerabilities in the infrastructure of foreign energy sources is well taken.

-- Lewis (aslanshow@yahoo.com), February 19, 1999.

I hope the above IS good news. We've been given so much good news in the past, such as that the federal government would be compliant by September 30, 1998...

http://www.fcw.com/pubs/fcw/1998/1005/fcw-newsy2kshort-10-5-98.html

-- Kevin (mixesmusic@worldnet.att.net), February 19, 1999.

You ever notice how these stories have future tense info in the body of the article (eg. "We are on track and expect to be ready"), but the headlines are always written in the present tense (eg. "XYZ industry prepared for y2k")?

Weird, huh? That technique isn't in the AP style book, is it?

-- rick blaine (y2kazoo@hotmail.com), February 19, 1999.

Seems to have been taken from this press release.

http://www.api.org/ecit/pressreleases/pressrelease6.html

Course you can find them all just up the file chain a bit.

-- Paul Davis (davisp1953@yahoo.com), February 19, 1999.

Some of it has to be future tense though Blaine. Y2K is not the only concern of these companies. Again, if they are talking future tense in November, then the concern level goes up drastically.

Likewise, I wish to announce that I am on track to have completed 100% of my Christmas shopping by December 22, 1999. Presently, I am not compliant. My assessment will be finished by December 1st, 1999, leaving three full weeks for purchasing and wrapping.

The point is, just because I'm not finished my Christmas shopping yet, doesn't mean I won't be finished on time. It doesn't need to be finished yet.

-- Craig (craig@ccinet.ab.ca), February 19, 1999.

ya know Kevin, you mentioned Chevron earlier. I've been thinking about Yardeni's premise that you can judge a corporation's readiness by how much of their Y2K budget they have spent so far. It dawned on me that none of these guys had any idea how big a job remediation would be when they wrote their budgets. (or SEC disclosures?). No one had ever done this before.

I bet many corps made a wild-ass guess, doubled it, and hoped for the best. If budgeted compliance costs end up being alot different than the final numbers, I don't think we should be too surprised.

And now the thread about AT&T. This has been an interesting afternoon...

-- Lewis (aslanshow@yahoo.com), February 19, 1999.

Christmas shopping??

Gee, Craig, you've shown a lot more gray matter than that in the past. Is that your best analogy? Comparing a silly two-day annual ritual to a once-in-a-lifetime complex project?

-- rick blaine (y2kazoo@hotmail.com), February 19, 1999.

This went up yesterday at the Y2K.gov site Be sure to read to the end...:

For Immediate Release Contact: Jack Gribben February 18, 1999 (202) 456-7010

STATEMENT OF JOHN A. KOSKINEN

Assistant to the President and

Chair, Presidents Council on Year 2000 Conversion

I applaud the Natural Gas Council, the American Petroleum Institute, and the other trade organizations who have worked under the leadership of the Federal Energy Regulatory Commission (FERC) to compile this most recent assessment of Y2K readiness within the oil and gas industries. These organizations are performing a valuable public service by providing important information about the status of the industries work on the Y2K problem as well as the challenges individual oil and gas companies still must face to be ready for the Year 2000.

The oil and gas industries are making good progress in tackling the Y2K problem, and companies need to continue their aggressive efforts to prepare systems for the Year 2000. It is particularly encouraging to see the substantial increase for participation in this most recent assessment, which now includes information from companies whose customers represent close to 90 percent of the total consumption of oil and gas in the United States.

This most recent assessment does, however, reinforce an ongoing concern about the difficulties some companies have reported in obtaining information on Y2K readiness across industry lines. "The Year 2000 Information and Readiness Disclosure Act" makes it possible for companies to share in good faith information about their Y2K efforts with their suppliers, customers, and other organizations with whom they interact. I encourage all companies to engage in such information sharing.

Periodic assessments of Y2K progress such as that provided today by the oil and gas industries are crucial to the countrys efforts to prepare for the century date change. Assessments help to promote action on the problem by providing industry members with benchmarks for progress and enable those who rely on industries to engage in more realistic contingency planning efforts, which will become increasingly important as we approach January 1, 2000.

The Council looks forward to receiving additional information from FERC and its partner organizations on the readiness of the oil and gas industries.

# # #

There is no evidence at this time that the Y2K problem will create national failures in electric power service. Indeed, the industry is making significant progress in preparing critical systems for the Year 2000, and is taking an aggressive approach to contingency planning. But much work remains. It is vital that each of the more than 3,000 power companies in the United States be prepared to meet their obligations to customers throughout the Year 2000.

-- Lewis (aslanshow@yahoo.com), February 19, 1999.

It's all very encouraging. Well, except for one TINY thing.

[BEGIN CUT AND PASTE]

Commission Chairman James Hoecker said that while he feels "confident and optimistic" about the data from the survey, there is still "some serious work awaiting many small and independent entities in the natural gas and petroleum industries at the production and retail distribution ends of the system."

[END CUT AND PASTE]

If there's "serious work awaiting" the production and retail distribution ends of natural gas and petroleum, e.g., LP gas, heatign oil, kerosene, gasoline, and propane production and distribution people, you know, all those small local companies, and gas stations, then I suspect we still have problems.

-- Old Git (anon@spamproblems.com), February 19, 1999.

Oh now I get it: Re-read the original words: This report says nothing about how many are finshed, nor anything else except that more are working on it (makes sense) and more are further along in remediation (makes sense too.) There is nothing here that rates optimism - of and by itself.

<>

Last Sept, only half the oil and gas companies were in the "remediation and test phase." Now, 86% of those responding (...which represent some 88% of the oil and gas being produced...) report they are in the "remediation and test phase.

So, this report now says 75% of all of the oil and gas producers are in the "remediation and testing" phase. This is more than 55% reported earlier. But remediation and testing takes up 50% of the time of the total project. And he (the spokesman) is very careful NOT to say what percent complete (as a total) the industry actually stands at.

Hmmmmmm.

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), February 19, 1999.

I hope they are right, but just to put things in perspective, lets remember there are three levels of compliance:

- Y2K COMPLIANT

- Y2K READY (Oil & Gas industry level)

- BANKRUPT

Not much room for error IMHO.

-- a (a@a.a), February 19, 1999.

All I can add to this is that by December '98, with the intense research I did and which was further analysed here, I was convinced that this industry, along with the electric, would not be able ever to make it on time. And by December we knew that the government as they stated themselves would be on a full scale campaign to put a positive spin on the major industries's Y2K readiness.

I was expecting the spin to come then, and it has been coming. I knew then that it was too late no matter what they would say. They should have told us this good news by at least September, before we heard of the spin campaign, and when there was still, at least more realisticly, some time left for contengencies and testings.

Throw the spin at me, I'm still going to prepare.

-- Chris (catsy@pond.com), February 19, 1999.

what I still don't understand is why otherwise intelligent people seem to accept selfreporting surveys issued by PR Flaks as the undiluted truth.

ah well, more pollyanna-ish grasping at straws, eh?

Arlin

-- Arlin H. Adams (ahadams@ix.netcom.com), February 20, 1999.

What's far more troubling is that the truth is there - in between their words and glib phrases - in the basic numbers they report. But the reporting, the headlines, and the resulting propaganda is most often far from the real truth. The headlines indicates they are done, the raw numbers indicate that 88% are complete, but when you analyze what is said: only 75% are in the remediation and testing phase - up from 55% in September - but that leaves 25% NOT EVEN IN REMEDIATION YET.

The 75% now in remediation could finish in time, most probably will. But doesn't this indicate that 25% of the entire petroleum industry could fail to deliver products early next year? Or should we assume that this 25% knows something the rest don't, or that 25% will do some quick and easy trick the others are wasting their time and money by not doing?

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.R@csaatl.com), February 20, 1999.

I think the key point of the article is that they're not finding significant embedded chip problems. Whatever the state of their accounting systems, that's extremely good news if accurate. The huge Y2K nightmare for me (well, one of them) would be pipeline pump stations, refineries, and offshore wells all breaking down. Unfortunately, it's all self-reporting, with no information on how thorough their testing is, and we do have actual examples of embedded failures in these sorts of systems. So this report makes me a little more cheerful, but won't affect my preparations.

-- Shimrod (shimrod@lycosmail.com), February 20, 1999.