Heat Exchanger Performance Failure - What Went Wrong?

International Arbitration, Asia Pacific

Specialty equipment is essential to the effective and efficient operation of process plants; hence, original equipment manufacturers (OEM) may guarantee that installed-performance meets owner specification parameters. In this case, the owner claimed a flawed design of new heat exchangers while the OEM countered the equipment was being operated outside of owner-provided design specifications. Baker & O'Brien produced an expert report that reduced a very complex technical and economic evaluation into readily understandable concepts.

Heat exchangers, important pieces of equipment in refineries and petrochemical facilities, are used for heating, vaporizing, cooling and condensing various process streams. By enabling the efficient transfer of energy from "hot" streams that require cooling to "cold" streams that require heating, without mixing the two streams, they reduce facilities' energy consumption and carbon emissions.

An owner (Owner) purchased specialty heat exchangers from an original equipment manufacturer (OEM) for use in a new petrochemical facility. Due to the importance of the heat exchangers to the stable operation and energy efficiency of the new facility, the OEM had to guarantee that the heat exchangers would meet specific thermal and hydraulic performance parameters. Shortly after start-up of the facility, it appeared that the heat exchangers were not meeting the minimum level of performance guaranteed by the OEM. The Owner claimed that the OEM designs were flawed, while the OEM claimed that the heat exchangers were being operated outside of the parameters supplied by the Owner and for which they had been designed.

The matter went to arbitration and Baker and O'Brien was retained to evaluate: (1) differences between the actual and design operating conditions; (2) whether the heat exchangers met the guaranteed thermal performance criteria; and (3) whether there were any economic damages. We reviewed all pertinent documentation for the heat exchanger design and construction, actual operating data once the heat exchangers were in service, and several technical evaluations of the heat exchangers' performance. The matter involved several very complex technical concepts and issues, which we simplified and explained in an expert report.

Gary N. Devenish

Vice President

Chemicals and Petrochemicals
Insurance Claims / Commercial Contracts / Technology Assessment / Engineering, Procurement, and Construction (EPC) / Standard of Care / Litigation / Arbitration / Expert Witness Testimony / Intellectual Property / Quantum/Damages Assessment
Asia Pacific