Dear Sole Judge, I hope this makes the cut. I read a statement supposed to have come from Senator Strom Thurmond, Chairman of the Armed Services Committee. The statement was that he is concerned that the oil refining industry estimates the US could lose 70% of their oil refining capacity in 2000. Does anyone have any information about this statement? If we lose that much fuel capacity how does any fuel get to electric plants? Trains and trucks would stop (not to mention us.) No fuel to electric companies. This happening would effectively shut down everything. Surely this statement is not true.

-- Anonymous, December 03, 1998

Answers

Marcella, sorry to answer your question with another question but.... If, in fact, this statement was made by the senator, was there any indication as to where the 70% number came from? I'm seeing more and more of these numbers with absolutely no attribution of their origination. My concern is if they are "real" numbers they need to be addressed. On the other hand, it's easy to pick numbers from the air and add to the scare factor - diverting energy from fixing what needs to be fixed to worrying about what to do about a hypothetical situation.

John

-- Anonymous, December 03, 1998

Marcella,

What you might be referring to is contained in Slide #43 of a Department of Defense Y2K briefing. This slide can be found at http://www.dtic.mil/c3i/y2k/slides_1998/sld043.htm. Unfortunately these appear to be notes the presenter is using and the answers to the questions are not contained in the sides  at least not that I could find. There is no reference to where the Senator got the 70% number. It is intreaguing that this presentation specifically addresses this question  a question that the Senator appears to have previously posed in another setting. This could suggest that the Department of Defense regards this as a serious area of inquiry. It would be nice to know.

Slide 43 follows:

Supplier Capability Working Group Specific Task

Answer Senator Thurmonds Y2K Related Questions to Dr. Hamre:

Comment: I understand that the commercial fuel industry is facing a Y2K challenge in their refinery operations. Some reports state that only 30% of their refineries will be renovated by January 1, 2000.

Question: Has the Department looked at the potential impact on its operations if 70% of the U. S. refinery operations are shut down?

Question: How long will the Departments supply of fuel last if deliveries are suspended?

Comment: Over the past several years the DoD has expanded its reliance upon direct vendor delivery and just in time Logistics. This has allowed the Department to save money by reducing the inventory levels that must be stored and maintained. However, this has made the Department more susceptible to disruptions in commercial deliveries.

Question: Has the DoD fully explored the impact on our military capability if the private sector contractors are not able to supply the Department because of a Y2K related failure in their production and transportation systems?

Question: How long could the DoD operate if there is a halt to the supply of consumables and spare parts?

Question: Has the DoD performed any analysis to determine if its suppliers of consumables and spare parts will be able to meet the Departments needs?

-- Anonymous, December 03, 1998

The 70% came from the previous comment, that only 30% of oil refineries would be fixed by jan. 1 2000. That figure apparently came from the private sector. Oh my-this is worse than power troubles. No refineries means no gas or electricity!

-- Anonymous, December 04, 1998

For those who might be interested, I just finished researching "Hydrocarbon Processing Magazine's Construction Boxscore Update". As of October this year, construction on 34 new refineries, producing all kinds of products from crude oil, was completed in the United States alone, with an additional 26 slated to be finished by the end of the year. Another 14 are scheduled to be completed in 1999.

Overseas, just in Saudi Arabia, 18 new refineries are either complete or nearly complete, with the last few coming online in 1999.

According to the magazine's upcoming January issue, worldwide HPI maintence and retrofitting spending is projected at nearly $39 billion in 1999. It adds that more companies are focusing on improving reliability as a way to boost profits.

While not mentioning Y2k, it's a fairly clear indication that refineries are taking a proactive approach in updating to new and emerging technologies. One would hope these upgrades are Year 2000 compliant and keep them running through the date change.

I haven't determined how many refineries are currently in operation, and as I find that information, I'll pass it along. http://www.hydroprocessing.com

-- Anonymous, December 05, 1998

Charlie, if it helps any, according to EDF there were almost 200 U.S. oil refineries in 1994. How many have come into production since then, I don't know. Up to date numbers ARE difficult to come by. I've discovered there seems to be a lot more public information available on electric utilities than on oil refinery statistics.

-- Anonymous, December 05, 1998

Bonnie:

Your statements regarding the availability of the Y2k status, or information is general, on refineries are most likely true. I have had to check with industry observers, who have given me optimistic assurances that I do not doubt, at this point. However, this once again illustrates the interdependency issue of Y2k.

Many organizations like the oil industry are divided in such a way that a company's survivial is dependent on it's weakest link. The FERC survey of oil companies may be very right in saying that most gas and oil companies will be Y2k-Ready by June 1999, but because of the division of processes, we do not know if that includes oil refineries.

There are organizations representing hydrocarbon processing that could easily weigh in on this matter. What we do not need at this point is conjecture based on unsubstantied claims. As you have already stated, information is not readily available on refineries, thus the statements made regarding only a 30% readiness within the industry are questionable.

We all may need to get on the horn and start asking questions because, again, the lack of information fuels our deepest fears.

-- Anonymous, December 05, 1998