An Interview with Mobil Corporation's Year 2000 Project Director on the Oil, Gas and Chemical Company's Y2K Preparations.

FAIRFAX, Va.--(BUSINESS WIRE)--Sept. 15, 1999--

Mobil prepares to make millennium uneventful

In contrast to people who may still be hoping to find space on a cruise ship, Dan Zivney knows exactly where he'll be on New Year's Eve. He'll be watching for "Y2K bugs." As project director for Mobil's Year 2000 project, Zivney will be in one of seven regional Mobil incident response centers that will follow the new millennium as it makes its entrance around the world.

"Quite frankly, I'm optimistic that our preparedness will reduce or eliminate the work for the response centers," he says. "I want our program to be so successful that the end of 1999 and the beginning of the year 2000 will be remembered as nothing more than a big yawn. However, the residual risks from potential Y2K failures by external parties require us to take precautions."

For over three years, representatives from Mobil's business units worldwide and Zivney's Y2K team have been busy testing, fixing and replacing Mobil equipment impacted by the problem, often called the Y2K bug. Zivney acknowledges the Y2K bug could have caused some operational problems for Mobil if it had been ignored.

"By making Y2K the highest priority, and receiving total cooperation throughout the world, our employees have positioned Mobil to be ready for the new millennium," he says. "Over the past three-plus years we've had more than 250 people working full time on the project and probably another 1,500 who have made significant contributions.

"Their bottom line goal has been to ensure that the Year 2000 arrives safely for our employees and neighbors, problem free for our customers, and without an environmental incident."

Looking at everything

While he recognizes that it is almost impossible to find every potential Y2K problem in a company with systems as large, widespread and diverse as Mobil, Zivney believes all the bugs that had the potential to cause major disruptions have been detected and appropriately addressed.

But to ensure the company is adequately prepared, Mobil units around the world developed business continuity and contingency plans based on various Y2K scenarios. More than 230 Mobil employees trained in this process are involved in this effort. The process highlights business risks associated with the year 2000 and results in strategies to mitigate the risk, wherever feasible, develop contingency plans to maintain operations and minimize customer impacts should an unforeseen upset occur.

These plans involve decisions around inventory levels of raw materials - such as crude oil, and finished products - like gasoline, changes in plant operating schedules, discretionary shutdowns, extra equipment or adjustments to marine vessel operations, to name just a few possibilities. These plans were completed in the first half of the year and are being tested during the second half.

So by planning, preparing and double-checking, Zivney and his team are working towards a January 1, 2000, on which oil and gas wells should pump, refineries should run and customers should be able to buy Mobil gasoline using cash, credit card or their Mobil Speedpass; and other customers can be billed, suppliers can be paid and paychecks can be distributed as usual.

A Four Year Project

Mobil's Y2K efforts started in 1996, when a small team of technical professionals began to evaluate the company's Y2K exposure. Their findings led to the formation in early 1997 of the Millennium Project team, which immediately launched a worldwide, intensive campaign to identify, evaluate, test and fix potential glitches in Mobil systems.

Adopting a centralized approach to overall project coordination, Mobil's experts ensured the problem was approached consistently throughout the company, regardless of the level of resources and technological support available locally. This centralized strategy was essential for success when business unit process control coordinators at almost 150 sites and technical personnel set out to collect a worldwide inventory and consistently apply the appropriate corrective fix.

The work has been painstaking, thorough and nonstop. "Most of us who use computer applications don't look beneath the surface at the programming code and logic," Zivney notes. "In many cases program date codes haven't been checked in years because it hasn't been necessary. So we had to go through the process of testing all our major applications and assessing date elements that could cause a problem."

But all the work has produced other benefits. As a result of the Y2K review, Mobil business units now have more reliable, more cost-effective and safer systems to carry them into the new millennium. "For example, we have replaced more than 350 individual applications with the SAP integrated system in North America and in our worldwide chemical company, which will provide business and financial efficiencies beyond eliminating the Y2K bug," says Zivney. SAP, which stands for Systems, Applications and Products, is a software system that integrates business processes from sales and distribution through finance to optimize supply chains, improve customer and supplier relationships, allowing for better management decisions.

"Internationally, we have simplified our computing and telecommunications infrastructures and introduced greater standardization around core business applications. Globally, these Year 2000 programs will deliver millions of dollars per year in operational savings and business efficiencies in such areas as cash management, terminal and retail automation and inventory optimization. More importantly, they provide greater flexibility for future business improvements."

Test and test again

Testing has been a key component of the Y2K program. In addition to running trials on internal Mobil computer applications, the team is testing integrated systems such as those that do electronic fund transfers with banks or that send information to government agencies.

"We can't just assume something's compliant," notes Zivney "We've defined tests around various scenarios based on what that particular application or process control device does. It's not easy, and we won't catch every single potential error because of how the programs have been developed over the years. But we've given the most critical applications and control systems a very, very high level of attention."

To minimize exposure to such problems, Mobil has worked to identify and prioritize key suppliers. "We have contacted more than 5,000 of our most critical suppliers, and as the Mobil business units prepare their contingency plans they continue to follow up to confirm those suppliers' "Y2K readiness," says Zivney.

Industrywide cooperation

Every company in the energy industry faces the same challenges, Zivney says, so avoiding these problems is a common goal. To that end, oil and natural gas companies have shared best practices and solutions through industry trade organizations such as the American Petroleum Institute, the American Gas Association, the Australian Institute of Petroleum and the United Kingdom's Offshore Oil Association, and others. In addition, many companies like Mobil support Y2K programs with key business partners in the countries in which they operate.

"For example, in Japan, Indonesia, Nigeria and Qatar, we're sharing solutions with the government-owned oil companies and joint venture business partners," Zivney says. "We are building on Mobil's efforts by helping the international operations with which we're involved."

Oil-producing countries are highly motivated to keep their income streams moving, he notes, and many are allocating extra resources to their Year 2000 preparedness plans, regardless of how much they rely on technology.

In addition, many governments and regulatory agencies are requiring compliance reporting and completion dates well ahead of January 1, not only in the oil and gas industry but also in banking, utilities and other industries that are critical to keep Mobil products moving.

Oil shortages unlikely

Those efforts, coupled with standard operational practices, mean shortages and supply disruptions are unlikely.

"Our industry supply chain is a very efficient one," Zivney says. "We've proven ourselves able to manage many disruptions, including natural disasters and global disturbances. In addition, many governments have strategic stockpiles of petroleum reserves that provide cushions. So without a prolonged outage - and we really don't see a prolonged outage - we feel it's highly unlikely that you'll see any shortages of gasoline or natural gas as a result of the year 2000."

Zivney notes that it takes several weeks to ship crude oil from major producing area like the Middle East to say the U.S., so any impact on local problems will take some time to appear which can be used to find other supply sources.

Panic buying and stockpiling could change that. "The greatest catalyst for shortages would be if consumers resorted to last-minute panic buying and hoarding," he says. "That would create a self-fulfilling prophecy that wasn't due to an actual shortage or Y2K problem."

At the same time, Mobil's strategists are continuing to work toward a very quiet New Year. "Our worst-case scenario is difficult to define because we feel confident we've taken care of the biggest risks," says Zivney. "The worst-case scenario is likely to be a cascading effect from third-party issues on top of any minor problems we have in house.

"For example, the loss of electricity because a utility had a Y2K failure would in all likelihood disrupt our operations until they restored the power." However, he adds, governments around the world are conducting tests on their electrical utility grids and other essential public service equipment to be sure interruptions, if they occur, are localized and easily fixed.

There already have been reassuring signs, he adds, as other dates regarded as potential problems have passed without incident: January 1, 1999 (1/1/1999) brought very minimal problems, while April 9, 1999 (99th day of the 99th year) passed with no documented failures. Even without major upheavals in computer systems, this New Year's Eve is likely to be the longest Zivney and the other experts staffing regional centers in Fairfax, Virginia; Singapore; Tokyo, Japan; London, England; Jakarta, Indonesia; Melbourne, Australia; and Boca Raton, Florida, ever experience.

"We'll be ready to respond wherever and whenever problems arise," says Zivney, "but realistically, our response procedure for Y2K is no different from the way Mobil handles any problem that comes up, with one exception: In this case, we know the year 2000 will occur."

Y2K Sidebar 1:

Y2K no cause for panic, experts advise

Based on what nations around the world are doing to protect key public services from the Year 2000 computer bug, it is unlikely that widespread and prolonged utility, banking or infrastructure failures will dog the heels of the new millennium.

What is of more concern to Mobil Y2K Project Director Dan Zivney and his team is that consumer worries will create problems that would not otherwise exist.

"Our biggest fear is that consumers will take steps that are unsafe and imprudent," says Zivney. "Stockpiling petroleum products, panic buying of food and household emergency supplies, storehousing of prescription medicines or sudden mass banking activities all will most surely cause shortages and supply problems that Y2K won't. And most of that is not necessary, based on what we're seeing in Y2K compliance efforts around the world."

Consumers should prepare for the turn of the century as they would for any other long weekend, without stocking gasoline or other petroleum products, he advises.

"We're very concerned about people improperly storing such products and creating significant safety hazards to their homes and communities," Zivney says. "If people feel the need to take extra precautions to prepare for the year 2000, they should do so as they would for any other holiday weekend or for adverse weather conditions. Keeping more petroleum products on hand than the family needs for normal usage at that time of year is imprudent and unsafe." People who still want to buy additional food and household supplies, just in case, should do so gradually, he adds.

"In colder climates, road maintenance crews don't build their inventories of road salt and sand the day before the snow storm arrives. They acquire materials gradually in the milder months. The same approach should be used by consumers for Y2K decisions. The canned goods you buy in September will still be good in January, and the batteries you buy in October will also be fine," he says.

Consumers also should remember that in many countries the new millennium will fall during a public holiday period when stores may be closed. That means preparing for the event as they would for any holiday - by shopping a little ahead and making sure to have the few extra supplies needed for a long weekend. To hedge against localized computer glitches, many Y2K experts recommend people keep copies of electronic banking records and financial statements, but add that those are the personal records that are routinely filed for end-of-year and tax planning purposes, anyway.

Consumers should also record the make and model numbers from appliances such as videocassette recorders, personal computers and security systems - all of which could have date-sensitive operations. To determine whether a particular appliance may be affected, consumers should contact the vendor, Zivney says, adding that many vendors have Web sites that show Y2K compliance for their products.

Y2K Sidebar 2:

Why all the fuss?

The Year 2000, or Y2K, bug that threatens the world's computers when the clock strikes midnight on December 31, 1999, was the product of good intentions. Thirty years ago, computer memory space was extremely expensive and programmers needed to reduce the amount required for their applications. They didn't realize they were creating the Y2K problem at the same time.

"In the early years of computer programming, saving even two digits in the year segment of a program was valuable," says Dan Zivney, Mobil's Year 2000 project director. "So programmers created applications that assume 1 and 9 are the first two digits of any year. When the program sees '99,' for example, it assumes the year is 1999."

That space-saving notation is a convention that far outlasted the high-cost memory circuits that prompted it. Next year, when the last two digits of the year are '00,' some computers may assume the year is 1900 rather than 2000. It's a mistake experts worldwide are working to correct because many of the world's computer systems depend on date-and time-sensitive programs to function properly. "If the problem isn't corrected, the discrepancy could cause computers to fail, or to react in a manner that could cause problems with process control systems or applications," Zivney says. "That's why we're responding to the Y2K problem as forcefully as we are."

Mobil, like many companies worldwide, upgraded programs and equipment during the past 25 years in response to new technology and business demands. Until the last few years, those upgrades did not necessarily include changes in how the date was represented.

"Obviously, when these programs were developed, nobody expected any of them to last until the year 2000," says Zivney. "But we have very capable and creative people who continued to improve on these applications and allowed them to survive well beyond their initial life expectancy."