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Baker & O'Brien Releases First Quarter 2020 Edition of Energy Expert: Issues in Focus

May 18, 2020

This quarter’s Energy Expert newsletter profiles three recent Baker & O’Brien engagements, including a gas supply shortage, a Force Majeure dispute, and a Business Interruption claim.  We hope you find the articles interesting and insightful.

Aaron Imrie:     Fertilizer Plant Makes a Stink About Gas Supply Shortages

Gas Supply Agreements (GSAs) establish commercial and technical conditions, which typically include a method for determining damages if the buyer fails to take the contracted volume or if the seller curtails supply.  Baker & O’Brien was retained to prepare an assessment of damages resulting from a dispute between an ammonia producer and a natural gas supplier.  We produced an expert report based on the GSA mechanism for damages, including plant operating performance and the ammonia producer’s contribution margin.

Charles Kemp:    Force Majeure… or Not?

A refiner declared a force majeure that delayed a ship scheduled to dock and load product after the local port authority closed the port during a hurricane.  When the refinery extended the force majeure claim beyond the reopening of the port, the shipper claimed demurrage costs.  Baker & O’Brien assessed the basis for the force majeure extension by performing an analysis of refinery operations, planning, and scheduling. 

Dan Finelt:     Refinery Fire Leads to Substantial Business Interruption Claim

As a result of a fire occurring at a refinery’s crude distillation unit, a refiner experienced a business interruption loss that led to a claim being submitted to its insurer.  To assess the loss, Baker & O’Brien considered the pre-incident operating plans to develop the “but for” operating case for calculating the business loss.  Our analysis and opinions were summarized in an expert report, which was used by the client in settlement negotiations.

The complete newsletter can be found at the following location:  Energy Expert Newsletter - April 2020