Some of the Holloway Consulting on-shore and offshore oil and gas pipeline projects to be addressed here over the coming weeks include:

Oil and Gas Pipeline Construction Claims Consultant Expert

GAS PIPELINE (BOMBAY/NEW DELHI) AND GAS TRANSMISSION COMPRESSOR STATIONS; INDIA

This ICC arbitration dispute involved the construction of (1000 km) on-shore gas pipeline from the off-shore gas fields near Bombay to New Delhi and the associated gas compression stations. A French contractor was the claimant and the gas compression equipment supplier, Holloway’s client, was the defendant. The essence of the $55 million dispute centered around the plaintiff’s position that delays and extra costs resulted from the gas turbines failure to meet the contract specifications associated with BTU output and fuel efficiency. Our client’s position was that the project delays and extra costs were primarily a result of pipeline and compression problems for which the contractor was solely responsible.

The case settled during ICC arbitration.

ONSHORE REFINED FUELS TRANSPORTATION PIPELINES AND PUMPING STATIONS; TEXAS, OKLAHOMA, KANSAS, ILLINOIS

The fuels pipeline Owner contracted with the Turnkey Contractor for, among other things, the engineering, procurement, and construction management of 12 pump stations along the 24″/36″ pipeline that runs from Texas to Illinois. The pipeline transports fuels from Gulf Coast refineries and import facilities to markets in the central United States. To manage the construction of the 12 pump stations, the Contractor created five construction packages. Disputes and claims arose between the Turnkey Contractor and the Construction Contractors on most of the sites over design revisions, schedule delays and additional costs.

Holloway analyzed the bid and construction drawings and specifications, and concluded that these documents were within industry standards. Holloway also examined the Change Orders approved by the Contractor and concluded that they did not extend the station completion dates.

The Contractors also did not meet the Standard of Performance provisions of the Contracts.  For example, the first hydrostatic tests of the piping systems at the pump stations were inadequate and had to be repeated, and the Contractors did not properly manage its concrete subcontractors, who failed to diligently perform their subcontracted work.

The Contractors did not meet the industry standard of care in the pipeline construction industry with respect to the project schedules they maintained for the three pump stations.

And, the Contractors alleged that the number of changes issued by Turnkey Contractor amounted to “cardinal change”.  The results of Holloway’s analysis was that the design revisions and engineering clarifications did not constitute “cardinal change.”  The Contracts contemplated that changes would occur, and changes did occur.

GAS TRANSMISSION MAINLINE AND LATERALS, OREGON

Here, the County-Owner terminated the pipeline contractor for caused, hired a replacement contractor, and sued the terminated contractor for the cost of completion. This claim and dispute involved Holloway Consulting’s analysis of (1) the causes of the County’s termination of the original pipeline contractor, (2) the County’s claims for the additional costs associated with the replacement contractor’s completion of the work, and (3) the terminated contractor’s claims for termination for convenience.

The details for the oil and gas pipeline projects and disputes listed below will be provided in the near future.

GAS PIPELINE, CANADA TO ILLINOIS, LNG PLANT

OIL AND BRINE PIPELINES; STRATEGIC PETROLEUM RESERVE, LOUISIANA AND TEXAS

These claims and dispute involved Steve Holloway’s analysis on behalf of the JV of the causes of the delays to the contractors’ pipelines completion delays, and the resultant adverse impacts on SPR operational dates.

OFFSHORE CRUDE OIL GATHERING PIPELINES, SAUDI ARABIA

The Saudi Arabia portion of these claims and dispute involved Steve Holloway’s analysis on behalf of ARAMCO of the causes of the delays to the contractors’ offshore oil and gas pipeline completion delays, and the resultant adverse impacts on Eastern Province production.

ONSHORE NATURAL GAS PIPELINES; SAUDI ARABIA

The project involved (the old Brown & Root’s) construct-only lump-sum contract of 36″/24″ pipelines from from the Abqaiq fields to the Uthmaniyah gas plant. A formal dispute did not arise, but Mr. Holloway assisted ARAMCO in the resolution of numerous change orders/requests, most of which involved the nature of subsurface soil and rock conditions.

ONSHORE OIL TRUNKLINE PIPELINE; SAUDI ARABIA

to be provided

PIPELINE COMPRESSOR STATION, COLORADO

Holloway Consulting was retained by the E&I subcontractor to provide consulting and expert witness services relating to the construction of a Compressor Station for the Owner, a Colorado Gas Company, The Owner contracted with the EPC contractor, who in-turn, subcontracted the entire construction scope of work to several subcontractors, including the electrical and instrumentation work. The subcontracts passed-through the provisions of the general contract with the Owner.

During the course of construction, Holloway’s client, the E&I subcobcontractor, issued more than 40 Extra Work Orders (“EWO”). These EWOs were incorporated into five invoices to the EPC contractor, which only addressed the direct cost of the work. However, these EWOs, invoices and payments specifically excluded indirect costs associated with impacts and consequential costs.

Causal Factors

The duration of the E&I subcobcontractor’s work grew from 74 days planned to 186 actual calendar days, an increase of 150%. And, the E&I subcobcontractor’s contract amount grew from $294,000 to $455,642.01, via approved EWOs, an increase of 41%. These two causal factors, percent of schedule overrun and percent of change order growth, were directly correlated with subcontractor’s cost overruns. Other causal factors, such as poor general contractor scheduling and coordination, design problems and other trades running behind schedule, were also correlated with the subcontractor’s cost overruns.

Due to these and other causal events, the E&I subcobcontractor was unable to begin its work as early as contemplated in its proposal. The E&I subcobcontractor notified the EPC contractor that the delayed start would cause winter conditions impact and increase its price by $130,000. After the EPC contractor reviewed the details of the E&I subcobcontractor’s winter conditions impact and price increase, the EPC contractor unilaterally decided to increase the E&I subcobcontractor’s subcontract value by only $117,201 to offset some of the E&I subcobcontractor’s additional costs caused by the later construction start date.

Schedule Analysis

The E&I subcobcontractor’s electrical, instrumentation and controls work was necessarily preceded by other construction work, particularly the erection of the Auxiliary Building and Compressor Building, and large and small bore piping installation. However, the EPC contractor failed to complete this critical path work within the planned time-frame, which delayed the E&I subcobcontractor’s work and caused the E&I subcobcontractor to incur additional costs.

Conclusion in Arbitration

As a result of delays and other causal events for which the EPC contractor was responsible, the E&I subcobcontractor’s work force became inefficient, and incurred approximately $500,000 in extra costs and lost profits that were ultimately paid by the EPC contractor in arbitration.

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The Holloway Consulting Group, LLC
Construction Advisers, Managers and Experts
12081 W. Alameda Pkwy., #450
Lakewood, CO 80228-2701
Denver Phone: (303) 984-1941
International Toll Free: (888) 545-0666
Fax: (303) 716-0432

Email: steve.holloway@disputesinconstruction.com
Blog: disputesinconstruction.com
Web: hcgexperts.com

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