An engineering, procurement and construction (EPC) company designed a grassroots marine fuels production facility on the U.S. gulf coast (USGC) for a client. As operations commenced at the facility, which uses crude oil as the feedstock, the EPC company’s client had difficulty getting the facility to meet performance as it relates to specification and volume set forth in the contract between the two companies. At the time, their client could only produce on specification product at sixty percent (60%) of design charge rate.

The EPC company and its client sought resolution. However, their client chose not to follow the contract resolution and remedy process and instead sought third-party remedies. Litigation followed in an effort to recover the associated expenditures (including some that could be considered upgrades). The EPC company obtained a law firm to defend itself. The law firm representing the EPC company then hired an Oil & Gas Consultant firm to conduct a detailed evaluation by performing analyses, producing reports, etc. in an expert witness capacity.

The Oil & Gas Consultant firm approached KP Engineering at a well-known industry event and indicated they didn’t have personnel with an efficient skillset for a detailed, rigorous evaluation of this type. KPE introduced one of our Principal Process Engineers who has an extensive background as a consultant and has also worked in refining operations for integrated oil refiners. This engineer’s experience in conceptual and detailed design of crude oil refining, operations and consulting made him the perfect fit for an assessment of this type. The Oil & Gas Consultant firm agreed and onboarded KPE to perform the detailed evaluation.

The approach was structured to keep a degree of separation between KPE and the litigants to remove any potential bias (i.e. perform an unbiased engineering analysis with the information provided). There was no information shared with KPE regarding specific disputed areas of performance regarding equipment. Process flow diagrams, equipment datasheets, design basis feed and performance specifications were the only information conveyed (no H&MB).

Working within this structure, KPE performed rigorous modeling and performance analyses to assess the as-built equipment versus the contractual performance guarantees. KPE was able to identify areas which could inhibit achieving the performance at the intended operating conditions. Further, because of our operational experience, KPE was able to suggest and demonstrate alternative operating conditions to minimize the areas requiring redesign. Due to KPE’s experience in other areas of construction and engineering, the scope of the project grew beyond solely chemical process engineering work. As the scope grew, other disciplines were involved in estimating the total installed cost necessary to effect any recommended changes to the facility to produce the amount of on-specification product as defined in the original contract. KPE proposed a time & materials contract with our client, so they would only be billed for the work done, similar to the way a law firm bills their own clients.

After completing the necessary process engineering analyses, KPE was able to provide the Oil & Gas Consultant firm with a combination of operational conditions and minimal equipment changes with total installed cost (TIC) estimates to confidently meet contractual performance guarantees with conforming crudes. This information was vital to the EPC company’s ability to defend itself.