Baker & O'Brien, Inc.

Energy Expert:  Issues in Focus

Case Studies

A quarterly review of disputes and complex issues in the energy, chemical, and related industries worldwide

FPSO Hull Conversion: Longer Schedule and Bigger Budget Project management complexities and challenges surrounded the conversion of an oil tanker to a Floating Production Storage and Offloading (FPSO) vessel.  In a dispute over late completion and cost overruns, Baker & O’Brien was retained to investigate the issues that could affect delivery, including original engineering design and design changes.  We reviewed the 3-D model for the conversion project, changes to equipment specifications, and evaluated fabrication activities to develop an expert report, which was defended in expert testimony.
Equipment Condition: Was an Insurance Claim Inflated Because of Poor Mothballing Practices? “Mothballing”—the practice of preserving and maintaining process equipment during an extended outage—can significantly impact the time and cost to resume operations.  An insurance dispute regarding repair costs following a plant explosion.  Baker & O'Brien identified which costs were directly attributable to the incident, and which may have been related to inadequate mothballing.  Our expert report addressed the adequacy of the mothballing and its influence on equipment condition at restart, and these effects on the amount of the claim. 
Refinery LP Models – Intimidating but Necessary Linear Program (LP) models are used extensively in refineries to optimize feed slate in order to meet anticipated market demand, which require specialty knowledge of plant configuration and production capability.  An LP was submitted by a refiner to support a business interruption insurance claim after a process unit fire.  Baker & O’Brien’s expertise with refinery LP models was an essential factor in analyzing the claim and preparing an expert report.
Who Has Construction Safety Responsibilities – the Owner or the Contractor? The OSHA General Duty Clause is relevant as it applies to worksite safety responsibilities between Owner and Contractor.  In this case, two workers were killed when a tank structure collapsed.  Baker & O’Brien reviewed the contract and construction documentation to assess who controlled the work.  
Not In My Back Yard A “legally non-conforming use” of an oil and gas production facility in an area  rezoned for urbanization was terminated.  Some jurisdictions allow for removal of use without compensation following a reasonable amortization period.  Baker & O’Brien determined the amortization period  based on capital investment, operating expenses, and fair return on investment.  Our expert report was presented in local public hearings.
Dominoes? Whether a series of failures are linked by a single proximate cause may affect insurance coverage as a single event or as multiple individual claims.  Baker & O’Brien assessed an ammonia producer’s equipment damages claim that three separate events were related by an unbroken chain of causation.  We provided expert opinion on the linkage of these damage events through evaluation of design documents, incident reports, piping and instrumentation diagrams, and plant operations.
EPC Contract Dispute - Underbid, Overbuilt, or Somewhere In Between? An owner and an Engineering, Procurement, and Construction (EPC) contractor had a dispute pertaining to a claim for a significant cost and schedule overrun.  Baker & O’Brien was asked to compare the functional specification in the bid package to the as-built facility to determine if the project was underbid, overbuilt, or somewhere in between.  A key aspect of the assignment was to review the technical merits of the project change orders.  
Worker Fall Incident: Evaluating the Adequacy of Protection Systems and Practices This particular case description shines a light on the relevance of OSHA fall protection requirements pertinent to the particulars of the working surface.  After an incident involving a fall from height, Baker & O'Brien investigated the adequacy of fall protection systems, hazard communication, and the roles and responsibilities of independent maintenance contractors.  We presented our findings and opinions in an expert report and delivered deposition and court room testimony.
Crude Oil by Rail Terminal – Project Development Dispute The development of a crude-by-rail (CBR) terminal project did not progress as the joint venture (JV) parties had originally expected.  In the dispute, the Claimant contended that one JV party interfered with development progress, the Defendant responded that the Claimant did not achieve critical milestones required to sanction the CBR project.  Baker & O’Brien provided an expert report that analyzed development activities, economic assumptions, industry trends, prevailing commercial conditions, and review of a valuation model.
A Refinery Changes Hands - Was the Facility Fit-for-Service or Out-of-Compliance? Alleging that the seller breached the sales agreement, the buyer of a refinery claimed that certain process equipment was not in regulatory compliance.  These claims pertained to design, maintenance, inspection, testing and safe operations of pressure vessels, hazardous area classification, tank overspill containment, and inspection of underground buried pipe.  Baker & O’Brien assessed equipment compliance and the reasonableness of compliance driven repairs with respect to recognized and generally accepted good engineering practice (RAGAGEP).
Petroleum Coke Pit Retaining Wall Collapse Collapse of a refinery coke pit retaining wall resulted in significant property damage and business interruption.  Baker & O’Brien was engaged to review the pit design to determine if it was fit-for-service, and if, at the time, the pit was operating within design parameters.  We provided depositions on process safety management procedures and practices for construction and operation.
Was an Engineering Design Flaw Patently Obvious? A dispute between a refinery operator and an Engineering, Procurement, and Construction (EPC) contractor ensued when an overpressure relief system failed eight years into operation.  Baker & O'Brien assessed whether the cause was pressure relief valve inlet piping design or if deficiencies in operating procedures and maintenance practices were to blame.  We reported on the cause and also provided court room testimony regarding the EPC contract indemnification clauses.
High Pipeline Pressure Forces Outage – Who’s to Blame? A pipeline operator and an NGL producer disputed the alleged cause of pipeline flow limitations, which resulted in a shutdown for cleaning.  At issue was whether contaminants on the filters causing high-pressure drops were attributable to a single producer or even a single contaminant.  After examining relevant documents on pipeline ingress, segment pressure drops, and sample collection, we provided an expert opinion on the probable causes of the flow limitations.
Compressor Station Failure – Flawed Design or Inadequate Operations and Maintenance Practices? Two years after a new compressor station was placed in service, a compressor experienced a failure that resulted in a fire and damage to it and nearby equipment.   The dispute between the operator and the equipment manufacturer concerned the bolt failure that led to the gas release and fire—flawed design or inadequate operations and maintenance.   We provided an expert opinion based on a design review, operating conditions, maintenance procedures, and attendance at the disassembly of compressors.
Refinery Repair Project Delay: Owner or Contractor Mismanagement? A refinery owner and contractor disputed the cost and schedule overruns for a time-and-materials contract to repair damages from a process explosion.  “He-said-she-said” — the contractor alleged that its performance was negatively affected by owner mismanagement.  The owner claimed that the contractor used inexperienced engineers, resulting in design errors and excessive field rework.  We produced an expert report of our assessment of the contractor’s performance, owner impacts, and standards of care.
Failure Following an Extended Interval between Turnarounds: Management Negligence or Pre-existing Defect? It was claimed that a postponed turnaround at a refinery was the cause of a catastrophic failure that resulted in a fire, injuries, and major equipment damage.  Among other potential factors, Baker & O'Brien assessed the practices and programs that led to the decision to postpone the turnaround.
Design Flaw Leads to Environmental Incident – Is Owner or Contractor Responsible? A dispute between a refinery operator and a construction contractor followed the discovery of oil outside of a diked tank area.  Our work included determination of whether each party followed applicable design and construction industry standards and best practices.  
Hooked on a Pipeline Damages to a subsea gas pipeline resulted in a hurricane-related insurance claim.  Due to the urgency of the need to repair it, several questions arose as to the schedule and costs.  We provided an expert opinion on the reasonableness of repair costs.
Ambiguity in Crude Oil Supply Agreement Leads to Pricing Dispute Two different interpretations of a long-term crude oil supply agreement led to an international arbitration.  The definition of “available alternative crude oil grades” was disputed, with opposing views on the intended breadth of the basket of crude grades for the basis.  We testified on the availability of alternative crudes, their production volumes/prices, optimal crude mix during the period, and the differences in refinery margins between actual and alternative cases.
Pipeline Rupture – Who was to Blame? A dispute between a pipeline operator and right-of-way maintenance contractor followed the discovery of crude oil leaking from a pipeline.  Baker & O'Brien's work included a determination of whether each party followed applicable pipeline industry standards and best practices.
Highly Specialized Steel Alloys Inflate Repair Costs An insurance claim followed an explosion and fire at a petrochemical complex.  Due to the extent of the damage, several difficult engineering problems were encountered.  The claim was complicated by the cost associated with repairing and replacing equipment constructed of specialized steel alloys.
How Much is “Old” Fuel Oil Worth? When a fuel oil-fired power plant was sold for demolition and site reclamation, the parties could not agree on the value of the residual fuel oil inventory.  Baker & O'Brien determined the “heel” in the residual product, disposition practices and options, and the ultimate product net value.  We analyzed the quality of the product and assessed its value.
The Explosion was the Owner’s Responsibility – But which Owner? Hazards attributed to multiple plant process modifications performed by two different owners led to a fire and explosion.  Baker & O'Brien analyzed the engineering design, operations, maintenance, and inspection during both periods of ownership within the context of prevailing industry standards and regulations in order to assist with the assigning of responsibilities.  Our findings and opinions were presented in an expert report.
Root Cause Analysis of a Plant Fire - First Appearances Can Be Deceptive First appearances can be deceptive when investigating the root cause of an incident.  Root cause analysis (RCA) can identify hidden underlying faults that, when corrected, will prevent reoccurrences. This article reviews an example where an RCA of a fire and explosion was able to identify hidden deficiencies in the plant’s control systems, in which modifications had not been properly integrated.
Sugar Not So Sweet When Fire Damages a Sugar Cane Mill This article pertains to the basis for a business interruption insurance claim for a sugar cane mill that sustained production losses after an explosion and fire.  We applied our process operations expertise to understand the basis of the claim as it pertained to sugar cane harvesting, mill operations, capacity utilization, reliability, operating costs, and bagasse utilization.  Our expert report—used by the parties in subsequent negotiations—addressed the key point of whether damages had been remediated in an appropriate and timely manner.
Should You Purchase Your Gasoline on Cooler Days? A multi-district class action lawsuit was filed on behalf of motor gasoline consumers against retailers over temperature-induced variations in product quality that resulted in alleged overcharges. Baker & O’Brien described the fuel manufacturing process and opined on temperature as a factor.  We provided an expert report and testified at the trial.
Power Failure – Who’s to Blame? A dispute cropped up when a refiner suffered production losses after its backup power from the grid did not function as expected during a power failure.  Baker & O'Brien's role was to sort out the responsibilities at the operational interface between refiner, power cogenerator, and the utility provider to understand why the incident happened.  Our testimony addressed the chronology of the failure, operational relationships, and the steps that each operator would have been expected to take.
Sorting Through Repair Costs Following a Process Unit Explosion After an accidental hydrofluoric acid release, explosion, and fire at a refinery, the insurer made a subrogation claim against a vendor. Baker & O'Brien's task was to distinguish between true repair work versus that which is considered expense betterment.  Our consultants visited the site and evaluated project documents to develop a “scorecard” to summarize costs as repair or betterment for use by the parties to achieve settlement.
A Project Gone Wrong – What Happened, and Who was at Fault? The developer of a natural gas processing facility had a dispute with the owner over the compounding of cost and inordinate delay in mechanical completion.  At issue were project planning and project management pitted against labor disruptions, lack of staff for key positions, industry cost escalation, and weather disruptions.  We submitted our opinion of the effects on project progress and costs in a technical report submitted to the arbitration tribunal, followed by oral testimony at the hearing.
Resin Producer’s Reliance on a Single Supplier Leads to Business Interruption A business interruption claim arose from the inability of a producer to obtain feedstock components.  Baker & O'Brien assessed the magnitude of the producer’s losses, with focus on the costs incurred to acquire alternative feedstock and lost profits from production.  Our consultants reviewed documents and calculations in preparation of the expert report and deposition with a detailed review of inventories, scheduling, and logistics for alternative supply and lost sales.
Hurricane Force Majeure or Poor Standard of Care? A supply dispute came about when there was a question of cause—hurricane force majeure or poor standard of care?  Baker & O'Brien was called in to investigate the series of events leading to the extended outage, including legal compliance and conformance with standard industry protocols.  We provided an expert report and deposition testimony with respect to the refinery complexity and integration, and on whether the operator acted prudently to restart as soon as possible.
Hurricanes Unravel Distribution and Branding Agreements In a contractual dispute, a hurricane was cited as a cause of unraveling a distribution and branding agreement.  Baker & O'Brien examined whether the shortfalls experienced by the retailer were unavoidable and how they compared to shortfalls experienced by the refiner’s other customers.  Our analysis included regional refinery-runs, hurricane-related shutdown periods, Gulf Coast-to-Midwest pipeline flows, and terminal shortfalls experienced by other customers.  We provided expert deposition prior to the case settling before going to trial.
When Hurricanes Hit, Storage Tanks Can Float—Archimedes’ Principle at Work Hurricane shutdown plans with respect to storage tank inventories can prevent tanks from floating during a flood surge.  Baker & O’Brien investigated events leading to an oil spill and the adequacy of procedures vis-à-vis the prevailing standard of care.  After submitting our report, the matter was settled.  
Mother Nature Intervenes and Causes a Business Interruption Claim An accident in a busy ship channel closed shipping traffic for a number of days, resulting in refineries and chemical plants having to adjust process rates to avoid shutdowns. Baker & O'Brien assessed the reasonableness of a refiner’s business interruption claim based on lower crude throughput, lower secondary processing, and ship demurrage charges.  Our independent review of the refiner’s actions and quantum of the losses figured in to negotiating a settlement.
Third-Party Objective Analysis Clears the Air Refinery air emissions led to repeated notices of violations and a threatened consent decree to implement costly pollution abatement equipment.  Baker & O’Brien was called on to independently investigate the causes of sulfur dioxide emission exceedances and to recommend measures to improve emission control reliability and reduce upsets.  Our expert report outlined an effective and acceptable solution.
High-TAN Crude Oil – Force Majeure Declaration Leads to Litigation When a refiner claimed force majeure for no longer being able to process a supplier’s crude oil due to corrosive properties, the parties entered into litigation.  The claims and counterclaims related to “high total acid number” (TAN) crude, which were the key issues that Baker & O’Brien investigated.  We were engaged to review the positions of the two parties and provide a written expert report.
Dispute Over a Flare Tip—What Constitutes Normal Wear and Tear? An insurance claim was filed for damages to a flare when a sour gas plant experienced an unplanned shutdown caused by an electrical power interruption.  Baker & O’Brien was retained to assess whether damage to the flare tip was associated with the shutdown or was the result of wear and tear.  Our expert report, which considered the flare age, wind, and flame patterns during normal operation, and wear patterns on the welds near the tip, was submitted as part of the mediation process.
Electrostatic Precipitator Sparks Cement Plant Explosion When sparks and hydrocarbon fuel come together in the presence of oxygen, a fire or explosion will ensue, even in a cement plant. Baker & O'Brien conducted a cause and origin analysis of an explosion in the electrostatic precipitator downstream of a kiln after an undetected flameout.  Our expert report provided findings and conclusions to enable resolution between the owner and its insurer.
Turnaround Workers Avoid Serious Injury—But Could a Flash Fire Have Been Prevented? A flash fire occurred during turnaround activities inside a petrochemical plant pressure vessel.  Our investigation identified causal factors that led to the incident, including vessel preparation and confined space entry procedures.  Our resulting opinion from the root cause analysis was submitted into evidence in litigation and facilitated settlement prior to trial.
Delay in Oil Refinery Turnaround Leads to Dispute over Causation An owner filed for arbitration against a contractor for lost profits resulting from a maintenance turnaround that extended beyond the planned completion date.  Baker & O'Brien reviewed the arguments by both parties and provided opinions on the productivity impacts, the reasonableness of damages claimed, and the quality of contractor work compared to industry standards. Our findings assisted the parties in settlement of the case during mediation, thus avoiding full arbitration.
The Value of Outsourcing a Specialty Chemical This dispute pertains to the acquisition of a specialty chemical business, whose product contained an ozone-depleting substance that could not be legally marketed.  Baker & O’Brien was called in to assess technology and the capital cost for improvements to meet environmental regulations as opposed to plant closure and alternative product outsourcing.  We presented our expert opinions during an arbitration proceeding.
The Case of the Disappearing Price Postings Although the price basis for a long-term liquefied petroleum gas (LPG) sale-and-purchase agreement had a mechanism to adapt to change, the discontinuance of the posting basis led to a dispute. Baker & O'Brien evaluated:  1) the structural changes in the market and their impact on availability of posted prices; and 2) the relationships between the original bases and other available price sources.  Our expert report characterized the dynamic market and offered recommendations for future price references.  The parties reached an agreement prior to the arbitration convening.
Out in the Cold: Freeze Damage or Normal Wear and Tear? A chemical process plant that had been idled through severe winter weather was discovered upon inspection some months later, with damaged piping and equipment.  Baker & O’Brien was retained to review the detailed property loss insurance claim through analysis of equipment damages, interviews, examination of design, and operational and maintenance information.  Our expert report proved instrumental in the owner and insurance company reaching a settlement.
Post-Incident Analysis Can Prove Invaluable in Prevention of Future Liability Root cause analysis was applied to a refinery naphtha tank overflow incident, which resulted in a toxic tort claim from workers at a nearby facility.  Baker & O'Brien investigated the timeline that led to the incident, actions taken during and after, review of procedures, training, incident reporting, and spill response actions vis-à-vis the Mutual Aid System.  After submitting our expert report, the matter was settled.
Warnings Regarding Ethanol-Blended Gasoline – Who’s Responsible? Mandated production of ethanol 10% (E10) gasoline precipitated a class action lawsuit against suppliers on behalf of watercraft in a certain market region alleging damages to engines and fuel systems.  This article summarizes the development of our opinion based on regulations, detrimental effects of ethanol, E10 formulation, and marketing.  Our expert report provided in-depth analysis of the supply chain.
Rapid System Depressurization Leads to Operator Injury When a compressor shut down and the blowdown valve was manually opened to relieve pressure, the sudden and catastrophic failure of a piping system injured a worker.  Root cause analysis was applied to identify from a myriad of potential causes, why this incident happened.  Baker & O’Brien considered the possible factors of people, equipment, policies, procedures, environment, and materials to draw conclusions presented in an expert report.
Fast Actions Could Have Saved the Day (and the Pipe) An insurance claim for pipe damage losses had been attributed to the presence of residual brackish water after a hurricane.  At issue were the timeliness (or lack thereof) for corrective cleaning and treating after exposure, and a comparison of the clean and treat costs to pipe replacement.  
Construction Dispute Arises Over Interpretation of “RAGAGEP” Different interpretations of recognized and generally accepted good engineering practices (RAGAGEP) led to a dispute during construction of a gas plant.  Baker & O'Brien consultants provided expert opinions on RAGAGEP, including issues of control room siting, safety system design, pressure relief systems, and material selection, among others, required for conformance with codes, standards, regulations, and laws.  
A Safety Net for Fast-Track Due Diligence Leads to Arbitration An energy company entered into an agreement to purchase natural gas gathering and processing assets, including an escrow account to correct deficiencies that might be discovered post sale.  This article summarizes Baker & O'Brien's investigation of facility compliance with applicable laws, conformance with recognized and generally accepted good engineering practice (RAGAGEP), and operability to meet obligations to producers.  After a site visit and analysis, we submitted an expert report and presented oral testimony as evidence to the arbitration panel.
Crude Oil Storage – Sludge Happens In this article, crude oil sludge formation during storage was at the center of a dispute over lost volumes of oil by a crude terminal operator.  Baker & O’Brien provided expert opinions on industry practices for dealing with and minimizing sludge, reasonable quantities of sludge, and industry accounting for sludge accumulation.  Our written expert report enabled parties to settle early in the process.
Does Splash Blending of Ethanol Comprise a Trademark Infringement? Legislation requiring refiner-marketers of blended ethanol-gasoline to make available unblended gasoline suitable for splash blending by third parties led to a lawsuit of trademark infringement over lack of product quality control.  This article describes the essence of our work to present a detailed description of the ethanol blending processes and the accuracy of quality control for in-line blending versus splash blending.  The investigation and findings were entered into evidence and a Baker & O'Brien consultant provided testimony in deposition and at trial.
Prelude to Arbitration? Presented here was an attractive alternative to the cost of arbitration for the producer and buyer who disputed the definition of Market Price for a petroleum derived product.  As the recognized industry expert, Baker & O’Brien was able to analyze the limited market with confidential pricing information to establish a price that best fit the Market Price definition.  The expert report was used in the decision on how to resolve this matter.
Dissecting the Root Cause of Equipment Failure – Was the Hurricane to Blame? Following a hurricane, there was disagreement over whether a series of failures at a refinery had the same common root cause. Detailed statistical analysis of the failure events was employed by a team of Baker & O'Brien consultants, while sifting through the data to identify the mechanisms underlying each individual event.  Our expert report facilitated resolution of the insurance claim for business interruption.
When a Refinery Joint Venture Ends in “Divorce” – What are the Assets Worth? This refinery valuation was more complicated than typical.  When the joint venture relationship went sour, fair market value of the refinery had to be determined despite intemperate private block share transactions, skewed competitive market, and a lowly maintained facility.  After site visits and the review of relevant operational, maintenance, and financial information, we presented our value opinions in two expert reports and testified before the arbitration panel.
“Peeling Away the Onion” to Determine Root Cause A refinery hydrocarbon release resulted in a fire from equipment that had not been in service since modification 15 years prior. Determination of the cause required analysis of the modification scope and time frame, location, contractors that had worked in the area of the modification, and systematic elimination of contractors not meeting the criteria.  We provided expert testimony in this arbitration.
Is Condensate “Highly Marketable”? What are the Limitations? A marketing dispute came about when a refiner commenced purchasing a special grade of condensate directly from the producer, bypassing the trader.  Baker & O'Brien was engaged to opine on whether the contract was binding, uniqueness of the condensate, other potential comparable and substitutable condensates, and monetary impact to the trader.  Our expert report and subsequent two rebuttals, based on the market for condensate and future price projections, were entered into evidence and arbitration testimony was given.
The Importance of Work Scope Definition for Turn-key Construction Contracts The oft-learned lesson of an ounce of prevention is worth a pound of cure certainly applies to planning and executing turnkey construction jobs in the hydrocarbon processing industry.  Baker & O'Brien was engaged to review and assess contractual requirements, plans, estimates, schedules, and responsibilities for cost escalation and completion delays.  We provided an expert report and testified at the arbitration.
Defining Ethanol’s “Cost-of-Production” - What’s Included? A “cost-of-production” price dispute emerged for ethanol supplied to a gasoline retailer within the context of the United States Government Renewable Fuel Standard.  As the ethanol market matured and prices settled, the original formula was challenged as an inaccurate reflection of costs.  Baker & O’Brien investigated the comprehensive ethanol plant production costs, products, and revenues, and provided an opinion to the arbitrators.
Off-Specification Gasoline—Finding the Source and the Solution Complaints were presented that gasoline marketed by a large refiner had caused filter problems at retail filling stations and customer vehicles.  A class action lawsuit was filed against the refiner for replacement of filters and tanks.  Baker & O’Brien reviewed the gasoline production and testing records, and opined on the contamination source.
LPG Contamination in a Pipeline – Who’s to Blame? Identifying the source of liquefied petroleum gas (LPG) contamination in a long-distance pipeline with numerous suppliers presents challenges.  A pipeline operator alleged that one supplier contaminated the product with heavy hydrocarbons, resulting in a two-month outage for maintenance and cleaning.  Expert opinion was based on the review of the nature of the contaminants, when they were observed, and concentration levels along the pipeline. 
Force Majeure: Were Supplier Actions “Foreseeable” and “Controllable”? When a petrochemical plant turnaround took three months longer than the originally planned two months, a downstream customer filed for arbitration seeking damages for sourcing an alternative feedstock.  The dispute centered on whether or not the extended delay was the subject of unforeseeable circumstances, i.e., force majeure.  We presented an expert report that examined whether compressor delivery and installation delays were foreseeable and controllable.
Equipment Failure or Operational Error? – The Answer is in the Details A tank explosion resulted from an overfill incident at a refined products terminal, which prompted claims by product suppliers for extensive business interruption losses.  At contest was the root cause of the tank overfill—whether equipment failure, operational error, inadequate maintenance, improper construction, or some combination.  Data analysis pertaining to these potential causes, including site visits to the terminal and monitoring system manufacturer, formed the basis of opinion of what happened and why.
Determining the Root Cause of Project Delay – Not as Easy as it May Appear In this case, a dispute between a refinery owner and turnaround contractor concerned a two-month schedule overrun.  The analysis required a clear view of what transpired versus what was planned, including a disruptive accident, late completion of repairs essential to start-up, and weather-related events.  Our expert insight into turnaround execution, in conjunction with building a timeline of events, formed the basis of opinion that helped guide the settlement.
Old Refineries Never Die – Nor Do They Just Fade Away Soil and groundwater contamination is often a legacy issue for refineries that began operations early in the 20th century, and had subsequently been shut down for nearly 50 years.  Residents claimed pollution of their town’s groundwater against the new owner of a refinery, a major oil company.  We provided expert opinion on typical standards of care, maintenance practices of the day, and leak detection practices.
Operations and Maintenance Contracts – Not Always What They Seem A dispute arose over a pipeline operations and maintenance (O&M) agreement about responsibilities for equipment and staffing for the O&M activity.  At issue were the contractual scope of work, industry practices, typical staffing, and usual overhead costs.  Based on site investigation findings and experience with similar facilities around the world, we provided an expert report, a rebuttal report, and testified at the arbitration hearing.
When “All Risks” May Not Cover “All Losses” When a refiner failed to provide product volumes, per a crude oil tolling agreement, the trader filed a lawsuit against the refiner and a loss claim to its insurance provider.  Baker & O’Brien was engaged to verify the extent of the losses incurred and evaluate the cause of the losses—inefficiency processing or theft—and provided expert testimony at trial.
When Failure to Operate “Prudently” Can Trump Force Majeure A refiner and a petrochemical producer disputed whether unfulfilled feedstock supplies from the refiner were the result of unforeseeable force majeure events.  The events included changes to crude oil quality, contractor performance, off-site equipment failures, and technology performance limitations.  We opined on prudent operating procedures and provided written and oral testimony to the arbitration hearing.
Is There Such a Thing as a “Foolproof” Process Design? When a chemical company experienced a runaway catalytic reaction, the owner filed arbitration for damages it believed were caused by a design flaw with the emergency shutdown (ESD) system.  This case required Baker & O’Brien to investigate the root cause, the design and function of the ESD system, and operator competency.  Several expert reports were prepared and submitted as evidence in the arbitration, and we were cross-examined at the hearing.
How “Frozen” Assets Created a “Cold Cash” Obligation A crude oil “quality bank”  is used when crude oils of differing quality are often commingled together in the same pipeline to produce a single “common stream.”  A series of events led to a dispute between a pipeline operator and a shipper.  Baker & O'Brien was engaged as an expert to review the pipeline operator’s quality bank calculations and determine whether they had been performed in accordance with the methodology outlined in the pipeline’s tariff agreement.  We presented our testimony to the arbitration panel.
Death by 8,000 Cuts – How Changes During Construction Can Impact a Project A jury trial considered how design and construction changes in a chemical plant project affected cost and schedule.  The opinion was developed based on the analysis of each party’s rights under the lump sum contract, the change orders, and the construction process.  
How “Petroleum” is Defined Can Have Important Contractual Implications The definition of “petroleum” was front and center in a lawsuit about compensation related to an oil and gas partnership agreement.   Liquefied petroleum gas (LPG) had been converted to derivative products, sold at world market prices; however, a consultant’s override was based on sales revenues from downstream products.  Expert opinions based on a working knowledge of petroleum production contracts, natural gas processing and LPG production, and other derivative products helped facilitate a settlement.
When “Manifest Error” May Not be “As Plain as the Nose on One’s Face” “Manifest error” is often described as an error as plain as the nose on one’s face.  In this case, the principle of manifest error pertains to disputed technical decisions made by the Independent Engineer (IE) for an oil refinery modernization project.  Three arbitral tribunals relied on our expert reports and testimony to decide if the IE had ruled correctly, within limits of its responsibility, and if there was manifest error.
Static Electricity Sparks Dispute This insurance dispute pertains to whether regulatory changes justify facility improvement costs that exceed replacement-in-kind. Following a fire initiated by static electricity, the owner and insurer disagreed as to whether a different and more costly design was required to ensure plant safety.  The pre-arbitration mediation required expertise in applicable engineering codes, normal industry practice, and fire origin and cause expertise pertaining to hydrocarbons and static charge.
What is the Present Value of an Idea? Tangible value is created during the project development cycle through achievement of project milestones.  The estate of a decedent claimed efforts to develop oil and gas storage facilities created significant tangible value.  Key areas of analysis included market demand for the project type, prospects for financing, and the amount of remaining work to establish the enterprise.
When Good Gas Goes Bad: Gas Field Development Dispute This dispute relates to a lump-sum engineering, procurement, installation, and construction (EPIC) contract for development of an offshore gas field. The EPIC contractor was instructed to demobilize after analysis of produced gas indicated contaminants outside of the design basis.  The arbitration panel relied on Baker & O’Brien’s expertise to assess the value of construction defects, liquidated damage liability, reconfiguration work, and the effects of contaminants on processing facilities.