The May Oil and Gas Survey results are posted at the FERC site:

http://www.ferc.fed.us/y2k/apr99results.html

The aggregate results:

Readiness Status - May 1999

Y2k Readiness Stage	Plan	Inventory	Assessment	Remediation	Validation
Business Systems	3%	2%	4%	34%	57%
Embedded Systems	2%	2%	6%	33%	57%
Supply Chain	3%	3%	25%	N/A	69%

Estimated Dates of Completion	1st Q	2nd Q	3rd Q	4th Q
Business Systems	23%	61%	93%	100%
Embedded Systems	25%	64%	94%	100%
Supply Chain	10%	47%	86%	100%
Contingency Plans Tested	20%	37%	92%	100%

-- Hoffmeister (hoff_meister@my-deja.com), July 01, 1999

Answers

And the bottom line is: "We are still working on it. Real hard, too." Please! If this were 1998 this would be pathetic. The fact that 2000 is only 6 months away is actually insulting in addition to being pathetic.

Y2K CANNOT BE FIXED!

-- Jack (jsprat@eld.net), July 01, 1999.

A project is on schedule until it isn't.

-- Lane Core Jr. (elcore@sgi.net), July 01, 1999.

4th quarter of what year?

-- Mike Lang (webflier@erols.com), July 01, 1999.

A couple of months ago the International Energy Agency (I believe a UN organization) had posted articles revealing a very gloomy picture of the energy industries. Now those sites related to Y2K have been yanked off their web pages. For example http://www.iea.org/ieay2k/html/annexa.htm had many examples of Y2K failures in the oil idustry including show-stopper problems. I have found some iea Y2K-related web pages but they mostly consist of links to weakling web pages outside of IEA. The tone of the few IEA articles on Y2K today is radically different from the articles I saw a few months ago (Check out http://www.iea.org/ieay2k/homepage.htm if you have the time).

I am posting below some of the (pessimistic) articles from a few months ago that have been yanked.

The energy industries sure have made a lot of progress in two months.

You don't think the UN would be influenced by politics do ya?

*******************************************************************

Preliminary Findings One of the difficulties encountered in the preparation of this report was the lack of publicly available information on the level of Y2K compliance in the oil industry. In some cases it is possible that information may have been "contaminated at source". IT consultancies may have an interest in exaggerating the effects of the Y2K problem on the oil industry. On the other hand, most oil companies have released very little detailed information on the problems with which they are having to deal. This is despite the fact that some of the larger companies are spending millions of dollars testing and correcting Y2K problems. (If there is no problem then where is the money being spent?) Commercial confidentiality is obviously a factor in the oil companies reluctance to release specific details of the systems they are correcting.

Understandably, no company wants to admit to having potential Y2K problems. Consequently much of the material in the public domain is very bland and refers to what a company is doing in very general terms (e.g. inventory, testing, correcting and re-testing), without giving much information on the potential effect on individual business units. Oil companies have little incentive to hang out their dirty laundry. In addition large shares of global oil production and refining are controlled by national oil companies who may feel under little pressure to make any findings public.

A particularly worrying finding of the October 1998 Gartner Group survey is its assertion that US companies have not been providing accurate disclosures related to Y2K risks and contingencies. They find considerable divergence between the actual status of Y2K compliance and critical risks within a company and that companys disclosure to the SEC. Given that a large proportion of the worlds large and medium sized oil companies are either US based or have operations in the US, this finding, if correct, could have serious implications for the state of Y2K readiness in the oil industry generally.

Given this uncertain background regarding the effect of the Y2K problem on the industry, any conclusions on this subject must inevitably be treated with caution. With this caveat some preliminary findings are laid out below.

Findings.

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From the same site, the following info on refining:

Assuming that oil production facilities and tankers do not suffer any significant Y2K induced problems, it is still conceivable that other elements of oils critical path could be broken at the refinery level resulting in interruptions to supplies of petroleum products. Refineries are by design highly complex relying heavily on computers for smooth operation. An extensive survey of a refinery in the UK identified 94 systems requiring investigation for Y2K compliance. Of the systems assessed it was found that three would fail and that two of these three failures would cause a shutdown. Attempting to trace even a small number of potential Y2K problems at a refinery is undeniably a major undertaking.

Refining is but a part of the general problem facing oil companies trying to address Y2K issues. It is a technologically intensive industry and companies are likely to operate myriad date sensitive integrated systems. Embedded processors are the main source of this sensitivity and are found in devices such as flow meters, transmitters and smart valves. They are found throughout the oil industry and in all sectors, including drilling platforms, production platforms, pipelines and process plants. In the case of process plants, the devices containing embedded chips are interconnected, making the problem even more complex and increasing the possibility of Y2K failure.

A pilot inventory and assessment of a catalytic cracker and co- generation plant in the US revealed 1,035 systems of which 21% were not Y2K compliant and 6% that would lead to serious plant shutdowns or reduced production capabilities. The catalytic cracker would fail, rendering the refinery incapable of making gasoline. Given the widespread use of catalytic crackers in modern refineries, questions must inevitably be raised about their reliability in other refineries. For the co-generation plant 19% of the hardware, 36% of the software and 24% of the custom code was found to be non- compliant.

In late 1997 one oil companys engineers testing valve control equipment in their refineries discovered thousands of terminals controlling the dispensation of oil to have microchips with Y2K problems. All of the chips required replacement, however it was discovered that the replacement chips would not fit on the existing motherboards. It was therefore necessary to order both new chips and motherboards. Worse still, the replacement motherboards were found not to fit the old valves so the valves themselves had to be replaced. This example demonstrates how a Y2K problem can escalate beyond the original fault to include systems that may actually be compliant. An items Y2K compliancy is therefore no guarantee that its replacement will not be necessitated by problems arising in other equipment.

Link.

====================================================================

"The catalytic cracker would fail, rendering the refinery incapable of making gasoline." Pollys?

-- regular (zzz@z.z), May 19, 1999

Answers Executive Summary, from the same site: This paper reports on the current state of Year 2000 (Y2K) readiness in the oil industry. Detailing numerous examples encountered during testing, it demonstrates that the industry is not immune to the Y2K phenomenon.

The declared state of readiness of major oil companies is reviewed. Most started their Y2K programs during 1997 and expect to continue throughout 1999, implying a project timeframe of three years. With much of their internal remedial work now complete, they are increasingly turning their attention towards risk minimisation. Third parties, utilities and partners are considered the next most significant source of risk to an oil companys operations. The primary finding of this study is that, regardless of their state of readiness, every oil company should now be preparing contingency plans. These will vary at both company and country levels, depending on the level of acceptable risk and possible legal consequence of failures.

The preparation and ongoing development of contingency plans capable of dealing with these risks must therefore become the focus of action. Plans must be dynamic and capable of responding to an evolving situation. Suggestions for the scope of these contingency plans are listed.

The risk of Y2K failure appears to be influenced by company size and geographic location.

In general, large companies appear to be devoting proportionately more resources to solving Y2K problems than their smaller rivals. Assuming this is true of the oil industry, and there is no evidence to the contrary, then the large multinationals are likely to be better prepared. A high proportion of these companies have headquarters in the US, where the SECs Y2K filing requirements may have encouraged a higher level of awareness.

There is considerable regional variation in the state of Y2K preparedness generally and this is likely to be reflected in the oil industry. The poor economic climate of some regions, such as Asia, may lead to corner cutting and fewer resources being devoted to Y2K remediation. The complexities of the oil supply chain, and its resultant interdependencies may cause a ripple effect with the potential to harm even those companies and nations that consider themselves fully compliant.

This paper should help policy makers appreciate the scope and depth of the Y2K problem as they consider whether additional measures are warranted at the government or international level. In particular, policy makers are invited to consider whether there is a risk that business specific events might collectively take on systematic importance and whether collective contingency plans should be put in place to mitigate such risk. The IEA, as an energy security agent of its 24 member countries is prepared to address any such risk.

-- regular (zzz@z.z), May 19, 1999.

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This site is loaded with valuable info. From Annex A: Examples of Y2K Problems in the Oil Industry (bulleted lists won't format): The scale of the Y2K problem is highlighted by Shell Expros finding that it alone has at least 50,000 microchips in devices operating in the North Sea.

Tests by Shell in Scotland, uncovered a problem in an oil rig pump. In a simulation, one hour after pumping started at 23:00 (high tide) on 31.12.1999 the system rolled over to 01.01.100. As a result of this anomalous date the pump discharged continuously, instead of for the programmed two hour period, causing the oil rig to float as the tide receded.

Shell Services identified a problem with a fiscal metering system monitoring a gas pipeline which will fail in the millennium if left uncorrected. Fiscal metering of oil and gas production is widely used by host countries in support of taxation accounting. The impact of such a failure is unknown. It remains to be seen whether production would automatically be terminated, or could simply continue without being recorded.

Ascent Logic Corporation, a risk management technology firm in San Jose California, has inspected Y2K projects at several oil companies with embedded chips on the sea floor that control wellheads. "Most of those chips will shut down on January 1st 2000" says Ascent President and CEO Larry McArthur. "The question now is, is there enough diving capacity and time remaining to get a significant portion of these replaced?"

The oil industry is also affected by the Y2K readiness of its customers. Shell Expro notes that it is not enough for it to be Y2K compliant; if its main gas customer (British Gas for example) is not also compliant, a bottleneck might arise in the physical supply chain.

Despite the detailed examples of Y2K problems encountered in the oil industry, the Oil and Gas Journal (February 15th 1999) has drawn attention to the fact that embedded computer chips are proving to be less of a Year 2000 threat to the oil and gas industry than was previously thought. A director of a major oil company is quoted as saying "companies have not found nearly as many of these systems to be non-compliant as was anticipated when we started." However, looking for a few non-compliant systems represents basically the same managerial challenge as looking for a large number, with similar resource implications.

Shipping and Ports

The UK International Group of Protection & Indemnity Club (UK P&I Club), a non-profit protection and indemnity mutual insurance organisation, conducted a survey of its members and found their awareness of Y2K problems to be generally low. It also found that there was little co-operation within the shipping industry in dealing with the issue. A director at P&I has stated that "There is a great deal of interdependence on Year 2000 issues throughout the shipping and transportation industry." He continues "It is not enough for systems to work within a ship. They have to be integrated with other vessels, port installations and far-flung supply chains."

Shell has devoted considerable resources to ensuring that its tanker fleet is compliant. Their findings indicate that their largest and most automated ships contain dozens of embedded processors. Worryingly, the original suppliers of the processors informed Shell that less than 10 per cent were likely to be non-Y2K compliant. However, detailed tests conducted by an outside contractor found that over 20 per cent of the shipboard systems were non-compliant and in addition approximately a further 10 per cent were suspect as regards date-related failure or malfunction. Thus the 10 % level of non- compliance quoted by the original suppliers was very optimistic by comparison to the 20 to 30 % failure rate found by the detailed independent survey. This example clearly illustrates the implications of relying upon manufacturers guarantees alone.

By mid-1998 Shell had located around 3,000 embedded chips on its 50 vessels, equating to some 60 chips per ship on average. Tests on one of their Very Large Crude Carriers (VLCC) built in 1996 resulted in the discovery of failures in seven areas, including radar system mapping, ballast monitoring and ships performance monitoring. According to Shell, "Not one of these failures would stop the ship, but they might if they all happened together." Similar tests on a Shell gas carrier built in the early 1970s resulted in systems failures governing equipment for unloading the cargo and navigation. Shell estimated that it would be spending up to $20,000 per ship to ensure that its tankers were Y2K compliant by its self-imposed December 31st 1998 deadline.

Separate estimates prepared by marine insurers appear to support Shells findings on the number of faulty embedded chips. The insurers estimates suggest that there may be more than 50 embedded chips in an average modern ship and that between 20% and 30% may not be millennium compliant. A survey of marine manufacturers conducted by the US Coastguard found 20% of the embedded chips tested were non- Y2K compliant. Whilst a recent report by Londons Entropy Management Limited suggests that in big tankers and carriers, there may be more than 100 embedded chips per vessel. Uses for these chips reportedly range from controlling the operation of engine rooms to navigation, communications and cargo management systems. Entropy estimates that up to 20% of these chips could fail because of millennium problems.

Evidence prepared by The International Association of Independent Tanker Owners ("Intertanko") responsible for approximately 70 per cent of all the petroleum and petroleum products imported by the US highlights several additional problems to those identified by Shells contractor (see above). Intertanko reports problems in alarm systems and strength and stability monitors. Noting that "Within our industry, there have already been reports of documented Y2K failures of ship main control, radar mapping, ballast monitoring, cargo loading, engine room vibration and ship performance monitoring systems." The radar mapping problem results from the fact that charts are dated and the radar system is unlikely to opt for an incorrectly dated map.

Currently the worlds third largest charterer of tankers, BP, commands considerable influence in the industry. It is adopting a tough attitude with regard to the Y2K readiness of its charters. As from the 1st January 1999 it is refusing to employ vessels managed by companies that have not met BPs requirements on the Y2K issue. In May 1998 BP wrote to the 650 companies that it had chartered tankers from during the preceding two years requesting information about their state of Y2K readiness. It was made clear to the companies that failure to respond to the questionnaire would result in termination of charter dealings with BP. Although the questionnaire was very simple, comprising only 12 questions, half of which required the response yes or no, only 25% were initially returned. This 25% did however represent 50% - 60% of BPs charter requirements. Subsequent warning letters raised the response rate to around 50%, or 75% of BPs usage. The interesting point to note from this example is that half of all the companies that BP had used in the previous two years were unable or unwilling to satisfy them that their tankers were Y2K compliant. As a consequence these companies have lost tanker chartering business equivalent to a quarter of BPs annual requirements. The Y2K effect therefore has had a direct impact on the finances of many tanker chartering companies by early 1999.

The US Senates survey of major transportation agencies and companies in September 1998 obtained a similar response rate to BPs. Of the 32 maritime shippers, major airlines, airports, railroads, trucking companies and city transit agencies surveyed, only 16 responded, despite over 100 telephone calls offering assistance. BP is clearly therefore not alone in being unable to receive guarantees of Y2K compliance from the transport industry.

AEA technologies, formerly part of the UK Atomic Energy Authority, has more than 100 consultants working on Y2K projects around the world. Clients include owners of tankers and passenger liners. AEA Technologies has observed real failures  with verified evidence  of embedded processor systems in ships, including:

Radar mapping

Ballast monitoring

Cargo loading

Ship performance monitoring

Engine room vibration monitor

Service aid for ship control systems

Ship main control systems.

In addition to the Y2K problem, the tanker fleet may also face date- related difficulties associated with the Global Positioning System (GPS). This network of satellites allows planes, trains and ships to identify their precise location. Systems manufactured before 1994 will reach the end of their built-in calendars at midnight, Greenwich Mean Time, on August 22nd 1999. At this point they will rollover and the calendar will restart, operating for approximately 20 years (1024 weeks to be exact). Some people expect logistical errors on this date.

A GPS receiver determines its position by triangulating the difference in the time it takes for signals from two GPS satellites to reach it, a matter of milliseconds. The only time the week would enter into the calculation is as the system rolls over from Week 1023 to Week 0. A GPS receiver that is not prepared for the date rollover would think that the one or both of the satellites had taken 18 years to send a signal that should have taken less than a second. The US Federal Aviation Administration, a major user of GPS data, has upgraded its systems to handle the system rollover, as have airlines.

Refining

A recent report by Dow Jones Newswires (also carried by the Associated Press in Singapore) indicates that Chinas refineries may be at risk from the Y2K problem. A senior official of the China National Petroleum Corporation (CNPC), speaking on condition of anonymity, stated in a telephone interview that the Y2K problem "will lead to unimaginable results for CNPC." CNPC operates 46% of Chinas total crude oil refining capacity and was one of 18 state-owned enterprises recently told by Chinas State Council to address the Y2K problem with immediate effect. The anonymous CNPC official believes that the operation of 48 of the CNPCs 50 kinds of computer-based refining facilities and equipment will be affected in some way. He added that "once affected, the refining units will be out of control". China Petroleum News reported that the Y2K problem will affect about 30% of CNPCs 24,188 computer-based geological sensors and other equipment used in crude oil production and refining.

The scale of the problem facing refineries is illustrated by the following quote from Shells website: "Major facilities like refineries and chemical plants are operated using highly sophisticated control technology. There may be thousands of embedded computer chips in the plant run with several layers of networks. In an extreme case, if safety-critical criteria at a plant cannot be met, then the plant can be shut down. But what happens, for example, to the continuous gas supply from North Sea fields into Britain  a stream heavily controlled by IT (information technology) systems? Will it just be switched off if the safety-critical issues are not resolved?" This quotation emphasises both the scale of the problem at a refinery level and the interdependence of offshore production in the North Sea.

Power Generation

In Sweden a number of problems have already been found in nuclear power stations. At the three-reactor Forsmark station maintenance personnel found that the plants data system was unable to recognise the first two digits of the year 2000 and that this would have resulted in an automatic shutdown. Vattenfall, the owner of the Forsmark station, has been working on the Y2K problem since 1996.

In the US a Midwestern electricity utility ran a test for Y2K compliance. When the clock turned over to the year 2000, a safety system mistakenly detected dangerous operating conditions and the power generators shut down. It took programmers three days to fix the problem. When they re-ran the test a different sector failed, again shutting down the system.

A technical advisor to Pacific Northwest has noted that as of November 23rd 1998 some 65 nuclear reactors in the former Soviet Union were not Y2K ready. Lack of time and money mean that Russia is facing particular difficulties in preparing for the problems associated with the new millennium.

-- regular (zzz@z.z), May 19, 1999.

-- Rick (rick7@postmark.net), July 01, 1999.

Thanks go to regular for recording the above articles in a previous post.

-- Rick (rick7@postmark.net), July 01, 1999.