From the Dow Jones Newswires. Robert Folsom ================ October 22, 1999 Dow Jones Newswires US Oil Transporters Plan Y2K Temporary Shutdowns NEW YORK -- Much of the oil-transport sector of the U.S. energy industry has taken the most conservative approach in its preparation for possible Year 2000, or Y2K, computer problems: temporary shutdowns. The industry "mid-stream," transportation of crude and oil products, whether by oil tanker, barge or pipeline, is a particular concern in the Y2K scenario. Shipping's reliance on electrical and telecommunications systems for movement and monitoring of product flow exposes many companies' shipments at transportation hubs to a high risk of disruption and spills. The Louisiana Offshore Oil Port, Capline and Seaway crude pipelines and the Colonial products pipeline are all planning a cessation of operations just before and after midnight New Year's Eve. Canada's Enbridge Pipe Line will not suspend throughput and Alyeska Pipeline Service Co. has not yet made a decision either way regarding the trans-Alaska pipeline. All U.S. ports will be open during the year changeover, according to the Coast Guard's Chief Information Officer, Rear Admiral George Naccara. However, a ship may be required to stay offshore if it presents sufficient Y2K risk, as determined by a database of vessel information based on an assessment of navigation, propulsion and firefighting systems and other factors. As previously reported, some companies plan to keep their vessels offshore during the changeover as an extra precaution. Louisiana Offshore Oil Port LLC plans to have tankers cease movement three hours before midnight GMT, or 3 p.m. local time, according to Superintendent of Scheduling Mark Bugg. They can change position after midnight if they need to but will most likely remain stationary until daylight, he said. LOOP handles about 900,000 b/d of oil unloaded offshore from tankers. Tankers moored to buoys for offshore discharging will stop one hour before midnight local time. Between midnight and 2 a.m., LOOP plans to test the system and gauge its readiness to restart, slowly resuming operations after 2 a.m. Exceptions to the shutdown plan will be reviewed just like any other request from a customer, Bugg said. Y2K plans in the pipeline sector are conservative, with major pipelines in the U.S. planning temporary shutdowns in addition to complete assessment and remediation of computer programs and embedded chips. The Equilon-operated Capline, which carries more than 1 million b/d of crude oil from St. James, La., to Patoka, Ill., will temporarily suspend operations two hours before midnight local time to 2 a.m. Atlantic Richfield Co. (ARC) will shut the Seaway crude oil pipeline between 10 p.m. New Year's Eve and 3 a.m. Jan. 1. ARCO is the operator of the 250,000-b/d line that it co-owns with Phillips Petroleum Co. (P) Like the Capline, Seaway is a Gulf Coast-Midwest conduit for foreign imports. Its terminus is in Cushing, Okla., the delivery point for oil delivered against the New York Mercantile Exchange crude futures contract. Alyeska Pipeline Service Co. has not yet decided whether it will shut down the Trans-Alaska pipeline, known as TAPS, at the year changeover, but it is being considered, spokeswoman Tracy Green said. Unlike pipelines in the lower 48 states, the 1.1 million b/d TAPS generates its own power, making it immune from any local utility power interruptions. Alyeska's Y2K plans currently include putting additional personnel in the field at pump stations to respond to any problems and Y2K drills. Canada's Enbridge Pipeline, the world's longest crude oil pipeline, is not planning a shutdown. "We've done very complete testing and remediation for Y2K problems and our confidence level is high," company spokesman Alan Roth said. Power and telecommunications contingency plans are in place. The complexity of the many-spurred system argues against a shutdown, Roth said. "It's more prudent to keep the system running (following thorough remediation), rather than take on the complexities of restarting a large pipeline system after a shutdown." Enbridge pipeline ships the bulk of Canada's estimated 2.1 million b/d of crude oil to markets in the U.S. midcontinent and Eastern Canada. Gasoline Marketers To Raise Service Station Stocks On the products side, Colonial Pipeline will shut down operations along the length of its Houston, Texas-Linden, New Jersey, pipeline for an eight-hour period before and after midnight on Dec. 31. The pro-active shutdown reduces the chances of product contamination that could occur, a process known as "transmix," were the pipeline to shut down unexpectedly. Colonial asked its shippers whether the shutdown would affect their ability to supply customers, spokeswoman Susan Castiglione said, and was reassured that it didn't present a problem. Shippers said "they would ship in advance or pick up a little additional volume afterward," she said. No impact is foreseen for the normal 10-day shipping cycles. The comment was consistent with remarks from marketers, who spoke of preparing for a 15% spike in demand in December. They said they're concerned about a self-fulfilling shortage, sparked by local news reports of long lines at the pump, and then consummated by drivers lining up to fill up before supplies ran out. To avoid that, they've planned to top off station tanks. "We will start much earlier in the month of December to increase our service station inventory and we will ask dealers to keep those tanks full during the last week (of the year)," Chevron (CHV) spokeswoman Nancy Malinowski said. Equilon and Motiva have a similar plan for their terminals and it is one that does not include stockpiling at refineries. "We don't want a lot of inventory at the end of the year," said Tom Gallagher, chief information officer for the Equilon and Motiva alliance members Shell Oil (RD), Texaco (TX) and Aramco. Routine refinery maintenance also plays a part in the downstream joint ventures' Y2K preparations, Gallagher added. Turnarounds that were scheduled for January have been moved up so that they're happening at the year changeover, he said. The U.S. Federal Energy Regulatory Commission, in association with the American Petroleum Institute, has sought to discourage consumers from overwhelming the gasoline distribution and retail system. "Assuming normal patterns of consumption, there is about 30 days of storage built into the system, and...fuel can usually be trucked expeditiously to any locality that experiences a shortage," FERC Chairman James Hoecker said Wednesday in announcing the results of the latest and final assessment of Y2K readiness in the U.S. energy industry. - by Beth Heinsohn, Dow Jones Newswires; 201-938-4435 - by Rose Marton, Dow Jones Newswires; 201-938-2059 - by Kristina Schurr, Dow Jones Newswires; 201-938-4424