A refinery operator alleged that defective fabrication of a fired heater led to a catastrophic failure, resulting in extended downtime and significant economic damages. Baker & O’Brien performed an independent, detailed analysis of causation, repair costs, and lost profits, and assessed the opposing expert’s economic damage calculations. We submitted an expert report and a reply report and provided deposition testimony. The parties settled prior to trial.

Fired process heaters (furnaces) are one of the most common pieces of equipment in petroleum refineries. Refineries use furnaces to heat process streams to the temperatures required for the desired reaction and separation operations. Despite their ubiquity, furnace designs are far from standardized—every furnace requires “bespoke” sizing and configuration based on specific operating parameters and process performance requirements.

A North American refinery operator (the “Refiner”) contracted a specialty engineering firm to design and fabricate a new furnace (the “Furnace”) as part of an upgrade (revamp) of the Refiner's naphtha reforming unit. After approximately a year of operation, the Furnace catastrophically failed, leading to an unplanned and extended shutdown of the reforming unit and knock-on impacts to overall Refinery operation. Subsequent inspections revealed metallic debris in the Furnace. The Refiner filed a claim against the engineering firm and the fabricator.

Baker & O’Brien was engaged to provide expert services. We conducted an in-depth analysis focusing on several key areas: the source of the debris, the incident's causation, the repair costs incurred, and economic damages—specifically the Refiner’s lost profit opportunity (LPO).

Our causation analysis assessed the impact of the metallic debris, refinery operations leading up to the furnace failure, the Refiners' repair, recovery, and restart efforts, and refinery operations following the restart. We evaluated the Refiners’ and opposing experts’ LPO calculations, which encompassed testing assumptions related to “but for” operations, reviewing operating costs, and reviewing the Refiners' efforts to mitigate the economic impacts of the outage.

Baker & O'Brien's report provided a comprehensive evaluation of the incident, highlighting the need for a thorough and accurate causation analysis. Also, reasonable and reliable economic damage assessments must incorporate all technical, operational, and economic factors when setting key assumptions. We submitted an expert report and provided deposition testimony. The parties settled prior to the trial.