Here are some comments from guy in the biz re: some trends he's seeing in relation to y2k.
>>>While RC his boys and the polly techies battle it out on whats gonna happen to the oil industry on rollover, let me interject some stats, trends and concerns on an inevitable problem that's gonna ensue in Dec. The hand writing is on the monitor. You aren't gonna like it. Its time to sell that SUV and get the ol bike out.
First, oil industry stockpiling already started showing up in October- normally a slow oil consumption month. The US consumed nearly 20 million barrlels a day in crude and products. This is the highest level since the Iranian induced oil shortage in Feb of '79. Worldwide oil stocks have been drawn down at the rate of 1.8 million barrels a day in Sept and 2.5 million in Oct. Quoting Cent. for Glob Energy Studies, "...hardly any spare [crude] stocks at sea, in temp. storage or in non-ODEC (3rd world) countries." Based on expectations crude stocks would get damn tight even without this y2k thing. We are gonna see RECORD WORLDWIDE CRUDE OIL STOCK DRAWS BY YEAREND.
Here in the US the stats are even more disconcerting. Crude stocks are down to 309 million barrels, 30 mil below last year and close to 45 mil below a 5 year average for this time of year. The transAtlantic Brent arb is dictating that imports are gonna diminish at the same time refiners increase their purchasing due to post-Fall refinery turnaround demand.
US gasoline stocks and demand trends are really depicting upcoming probs. The minimum operating rate is considered to be 200 million barrels. With this weeks 5 mil draw, we're down to 189 mil barrels. Its like we're seeing summer type demand levels on gasoline concurrent with winter type demand levels on distillate (heating oil & diesel) in the 'shoulder season'. Distillate stocks are also low- 14 mil barrels below last year. What's gonna happen when it really gets cold?
So are refiners gonna crank it up into these improving economics? On gasoline production, they can't. Conversion (gasoline producing), as opposed to basic distillation, capacity is running flat out and has for years. This is what happens when you don't allow new refineries to be built and environmental mandates dictate specs beyond the capacity of refineries (ie Calif).
So dovetail this upcoming pre-rollover hoarding with the scant stock levels already in place and whatever senario you see unfolding after year end. Gasoline prices have to skyrocket. And with the US, with 4% of the world's population, consuming 26.7% of the world's total (based on Oct stats) don't bag on the oil companies. You've been warned.....
-- Downstreamer (downstream@bigfoot.com), November 18, 1999<<<
And at least one country has admitted to significant problems in two refineries.
Iran says two refineries vulnerable to Y2K problem
By Jonathan Lyons
TEHRAN, Nov 18 (Reuters) - Iran's two newest refineries face possible disruption from the millennium computer bug, largely for lack of key information from U.S. and other vendors, the head of the country's Y2K compliance programme said.
Mohammad Sepehri-Rad, secretary of the High Council of Informatics, said Iran's new units, at Bandar Abbas and Arak, faced complications preparing for the changeover to 2000, when computer systems might have trouble processing the new date.
"None of our refineries, except two, has any problem (because) they have no date-related embedded systems," Sepehri-Rad told Reuters in an interview on Wednesday.
"There are only two such refineries, one in Arak and one in Bandar Abbas."
He said the Bandar Abbas unit, on the Strait of Hormuz, was still under the supervision of the original contractor.
The refinery was built by Snamprogetti -- a unit of Italian energy group ENI -- and Chiyoda Corp <6366.T> of Japan and reached full production capacity of 232,000 barrels per day (bpd) in March 1998.
The 150,000 bpd Arak refinery, 260 km (160 miles) southwest of Tehran, which became fully operational in 1994, was recently handed over to Iranian control.
OTHERS REFINERIES TOO OLD FOR Y2K PROBLEM
Iran's other refineries were too old to face much of a Y2K problem, Sepehri-Rad said.
"In Bandar Abbas they have set back the calendar to 1997, and it has been working. They are not sure whether some problem will occur or not when the day comes. They are hoping that with the false date everything will go well.
"In Arak, they are doing their best to solve the problem before the end of 1999."
Sepehri-Rad said the Arak refinery included a significant amount of U.S. technology and equipment.
So far, the vendors had not provided sufficient information on Y2K compliance, as requested by the Iranian government and its agencies.
"I have a long list of letters from the Arak refinery to different vendors, but without any response," he said, without identifying the companies involved.
The Arak refinery was built under a contract won by a consortium comprising JGC Corp of Japan <1963.T> and Tecnologie Progetti Lavori SpA (TPL), an Italian subsidiary of France's Technip SA .
The U.S. broke off diplomatic relations with Iran in the wake of the 1979 seizure of the U.S. embassy in Tehran by militant students.
Cooperation on Y2K is also hampered by a U.S. embargo that blocks direct sales of technology and many other goods and services to the Islamic Republic.
The aftermath of the Islamic revolution, in particular the embassy takeover, ruptured a close political and trade relationship, which saw U.S. technology widely deployed throughout Iran.
The result is a large installed base of U.S. technology that is difficult to service and upgrade.
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