Re: Petroleum and Y2K

Rohit Khare (
Fri, 8 Oct 1999 07:24:07 -0700

>I would honestly love to feel better about this. Problem is,
>right now i don't have anything to go on.

I dunno, but I trut that more of my y2k-remediation programming
buddies would have run for the hills if it were at all bad. Here's,
say, Texaco & Exxon's 10-Q filing:s Aug 12/13 99:

YEAR 2000

On pages 39 and 40 of our 1998 Annual Report, we discussed
our state of
readiness and our costs, risks and contingency plans for dealing
with potential
Year 2000 (Y2K) date change problems. We reported that approximately
95% of the
computers and computer software involved in corporate financial
and about 5% of our industrial automation systems used in refineries,
and gas plants and oil well operations needed modification or
upgrade. Since
that time, we have not identified any additional material Y2K risks.
We continue
to believe that the worst case scenario we described in our 1998
Annual Report
is not likely to occur. However, if it occurs, Y2K failures, if not
corrected on
a timely basis or otherwise mitigated by our contingency plans,
could have a
material adverse effect on our results of operations, liquidity
and overall
financial condition.

As of the end of the second quarter of 1999, we completed modifying
or upgrading
99% of the corporate financial applications and 99% of the industrial
systems that required such work. We are not able to complete a small
of upgrades until our vendors provide the required equipment.
We expect to
complete the last of these upgrades by September 1, 1999. If these
upgrades are
delayed beyond that date, we will use contingency plans to work
around any
noncompliant systems or seek alternative vendors, as
appropriate. We are
approximately 99% through our review of our critical suppliers and
and the development of contingency plans, as required. If we
cannot satisfy
ourselves that these critical suppliers and customers will be able to
operate in
2000, we will seek alternatives and/or utilize contingency plans.

We have identified over 45,000 systems for assessment of potential
Y2K issues.
These were categorized as: Applications, Telecommunications, Computer
Systems or
Embedded Systems (Industrial Automation). We assessed each
system and
prioritized them as Critical, Essential or Important. Critical
systems are those
related to Safety, Health and Environment, including monitoring and
reporting systems. Essential systems are those required to
accomplish business
objectives. Important systems are those used in a support role
and are not
required for day-to-day operations. As of July 1, 1999, we have 129
Critical and
Essential systems pending upgrades, which are all scheduled for
during the third quarter.

We are also evaluating the business resumption plans of all our
business units
for any Year 2000 issues, and we have begun implementing
end-of-year rollover
plans. This effort is part of our Contingency Planning project,
and is 99%

- 16 -

During the second quarter of 1999, we spent $5 million in readying
our systems
for Y2K, bringing our total spent through June 30, 1999 to $49
million. We
estimate that we will spend about $11 million during the second
half of 1999,
most in December as we implement our Early Alert System.


The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define a specific year. Absent
corrective actions, a computer program that has date-sensitive
software may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in system failures or
miscalculations causing disruptions to various activities and
The corporation initiated assessments in prior years to identify the
work efforts required to assure that systems supporting the business
successfully operate beyond the turn of the century. The scope of
this work effort encompasses business information systems,
infrastructure, and technical and field systems, including systems
utilizing embedded technology, such as microcontrollers. The program
places particular emphasis on mission critical systems, defined as
those which could have a significant safety, environmental or
financial impact, should Year 2000 issues arise.
Plans for achieving Year 2000 compliance were finalized during 1997,
and implementation work has been underway since then. The initial
phases of this work, an inventory and assessment of potential problem
areas, have been essentially completed. Modification and testing
phases continue, with more than 95 percent of required system
modifications to mission critical systems completed. Some work is
continuing into 1999, including final testing of some systems and
scheduled implementation of new systems with Year 2000 impacts.
Attention has also been focused on compliance attainment efforts of
vendors and others, including key system interfaces with customers
and suppliers. Most key suppliers and business partners have been
contacted for clarification of their Year 2000 plans and over
three-fourths have confirmed that compliance plans are in place.
Follow-up discussions are being held with key suppliers when
necessary to gain satisfaction on their state of readiness. These
reviews will continue through 1999. Testing of critical third party
products and services is underway, including such areas as process
control systems, credit card processing, banking transactions and
Notwithstanding the substantive work efforts described above, the
corporation could potentially experience disruptions to some mission
critical operations or deliveries to customers as a result of Year
2000 issues, particularly in the first few weeks of the year 2000.
Such disruptions could include impacts from potentially non-compliant
systems utilized by suppliers, customers, government entities or
others. Given the diverse nature of Exxon's operations, the varying
state of readiness of different countries and suppliers, and the
interdependence of Year 2000 impacts, the potential financial impact
or liability associated with such disruptions cannot be reasonably
Exxon operating sites around the world, including those in developing
countries, are working with key suppliers in their respective
countries to address Year 2000 issues. In addition, Year 2000
Business Contingency Guidelines are being used by all operating
organizations and affiliates, and include specific reference to areas
such as transportation, telecommunications and utility services.
Existing site contingency plans are being updated in order to attempt
to mitigate the extent of potential disruption to business
operations. This work is essentially complete with refinement of
contingency plans continuing through 1999.



Through June 30, 1999, about $210 million of costs had been incurred
in the corporation's efforts to achieve Year 2000 compliant systems.
The total cost to the corporation of achieving Year 2000 compliant
systems is currently estimated to be $225 to $250 million, primarily
over the 1997-1999 timeframe, and is not expected to be a material
incremental cost impacting Exxon's operations, financial condition or