The American Petroleum Institute is challenging a U.S. General Accounting Office study that alleged the oil and gas industries are lagging in their Year 2000 computer problem readiness.
GAO, a congressional watchdog agency, said one fourth of oil and gas companies reported earlier this year that they did not expect to be Y2K-ready until the second half of 1999, "leaving little time for resolving unexpected problems."
It was equally concerned about U.S. vulnerability to Y2K production and transportation failures in foreign exporting countries. It said the U.S. needs a national contingency plan to deal with potential oil import interruptions on Jan. 1.
Sen. Robert Bennett (R-Utah), chairman of the Senate Special Committee on the Year 2000 Technology Problem, said his panel reported in March that the oil industry might be unable to implement Y2K solutions and test all of its systems in time.
Bennett said, "(The) GAO report confirms this concern. The oil and gas industry is highly automated, and the task to remediate all critical systems is enormous. It appears they started too late."
API response
Red Cavaney, American Petroleum Institute president, said the GAO report relied on outdated surveys, although API had made more recent data available.
Cavaney said a secondary problem is that the GAO authors "didn`t understand how our industry operates. We are not a national network. We are a collection of many localized operations."
He said API surveys have found that 97% of the companies are working on their Y2K problems.
"If you look at the numbers, everything is going to be fine," said Cavaney. "Oil firms are in the final stages of their Y2K repair programs, and 94% expect to be Y2K-ready by Sept. 30."
Cavaney said that, if foreign producers experience Y2K problems, major U.S. importers "would know it instantly" and would have several weeks to arrange for other supplies. He said, if necessary, the U.S. Strategic Petroleum Reserve could be drawn down.
According to the most recent survey of the U.S. oil and gas industry, conducted by API and the Natural Gas Council, companies supplying 93% of U.S. demand expect to be Y2K ready by Sept. 30. All respondents reported they will have checked, tested, and upgraded their computer systems by the end of the year to prevent shutdowns on Jan. 1, 2000.
Ron Quiggins, chairman of API`s Year 2000 task force and director of Shell Services International`s Year 2000 program, said companies now are focusing on their suppliers` Y2K readiness: "It is taking more effort to assess other companies` readiness than we had envisoned."
Readiness testing
The International Energy Agency, Paris, will perform a simulation exercise to test its ability to respond to oil market disruptions. The exercise, planned for late September, will involve major oil companies and energy security experts from IEA`s 24 members and will include an examination of disruptions due to Y2K problems.
During the past few months, IEA has held Y2K seminars in Caracas, Singapore, and Abu Dhabi, where oil producers, energy industry representatives, and computer experts shared information and discussed preparations for the millennium rollover. A fourth seminar will be held in Moscow this month.
The Y2K portion of September`s exercise will reflect lessons learned in these seminars, says IEA.
