petrochemical/ chemical related services€¦ · experience throughout the diverse and yet highly...

Baker & O'Brien consultants offer technical expertise and commercialexperience throughout the diverse and yet highly specialized chemicalindustry. Our expertise in the chemistry and manufacture of basicchemicals, fertilizers, olefins, aromatics, intermediate chemicals,plastics, and a wide variety of specialty chemicals has been applied totechnology assessment, construction and operation of plants,investigation of accidents, and regulatory issues. Our experience inmanaging these businesses has been instrumental in the valuation offacilities and businesses, preparation of insurance claims, andevaluation of intellectual property issues.

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RELATED SERVICES

Accident/Incident InvestigationAsset ValuationsDue Diligence and Advisor toLenders and InvestorsEngineering, Procurement,and Construction (EPC)Merger and Acquisition SupportProperty Damage andBusiness InterruptionInsurance ClaimsTechnology Assessment

Donald L. Flessner

Executive Vice PresidentDallas

Alan W. Reynolds

Vice President, Managing Director, Baker & O'Brien (UK) LLPLondon

1 of 12© 2014 Baker & O'Brien, Inc. All rights reserved.

PETROCHEMICAL/ CHEMICAL

RELATED EXPERIENCEAir Emissions DisputeReviewed air emissions data and categorized events; provided understanding and analysis to air eventswith respect to process equipment and refinery and chemical plant operations. Ammonia Manufacturing LitigationAssisted a major equipment supplier in defending allegations that its equipment was the cause of amulti-million dollar business interruption claim. Assisted in discovery, evaluated operating records,estimated business interruption losses due to a power outage, and provided expert testimony. Ammonia Plant Insurance DisputeAssisted in a claims dispute between a major ammonia manufacturer and claims adjusters. Evaluatedclaims involving construction defects and warranty work amounting to $3 million. Assisted in documentingclaim, inspected plant, evaluated project records, and reviewed maintenance records. Ammonia Plant Project FinanceServed as independent engineer on behalf of a major European bank for the relocation of a 750 TPDammonia plant. Prepared a technology assessment, analyzed feedstock supply, reviewed contracts, andinspected progress prior to close of financing. Monitored construction progress and mechanical completion,and witnessed the plant performance test. Ammonia Plant Project FinanceServed as independent engineer on behalf of a major European bank for the construction of a new

Richard X. Thomas

ConsultantHouston

Kevin G. Waguespack

Senior Vice President, Business Development ManagerHouston



world-scale ammonia plant. Prepared a technology assessment, analyzed feedstock supply, reviewedcontracts, and advised with negotiation of contracts. Monitored construction progress and mechanicalcompletion, and witnessed the plant performance test. Ammonia/Urea PlantWorked in support of client and its attorneys to investigate the cause of a reactor failure and defense againstclaims by OSHA and third parties. Effort required extensive knowledge and analysis of process equipmentand operating practices. Benzene Production StudyStudied benzene production economics for inland refiner, including benzene price forecast andtransportation cost to USGC. Reviewed benzene consumers and future market potential. Estimated thecapital cost for benzene production and shipping facilities. Biodiesel Plant Due DiligencePerformed a site inspection and advised a potential investor on the commercial and technical risksassociated with converting a chemical plant to biodiesel production. Business InterruptionPerformed an analysis of the schedule delay and financial impact from chemical plant downtime due to amajor equipment fabrication error. C4 Upgrade Project Due DiligenceConducted preliminary due diligence for a project to upgrade various mixed C4 streams into a range ofhigher valued butylenes streams and chemical products. Chemical Pipeline Market StudyOn behalf of an acquisitive client, researched, identified, and characterized chemical pipeline operations inthe U.S. to form a database of prospective business opportunities. The engagement included contactingeach prospective target to ascertain an initial level of interest in pursuing commercial arrangements with theclient. The study identified several attractive prospects and provided an overall measure of the marketdimensions. Chemical Plant Accident InvestigationInvestigated an accident at a polyethylene production and storage facility. Reviewed equipment design,inspection and repair history, training of personnel, industry practices, and standards of care. Chemical Plant EvaluationProvided an independent assessment at a chemical plant of recent maintenance and sustaining capitalprojects. Chemical Plant Fair Market Valuations for Ad Valorem Tax Appeals



Chemical Plant Fair Market Valuations for Ad Valorem Tax AppealsDeveloped fair market valuations for two major chemical plant installations on behalf of the local appraisaldistrict. The engagement included valuation by discounted cash flow, depreciated replacement cost, andcomparable sales approaches, as well as a critique of the petitioner's methodologies and assumptions. Chemical Plant Insurance Claim SupportProvided comprehensive technical and accounting support for a property damage claim settlement andanalysis for a chemical manufacturing plant that was damaged during Hurricane Ike. Work included reviewand vetting of all repair cost estimates and invoiced repair invoices, as well as analysis of claimed damagesdiscovered and submitted post-recovery. Assistance was also provided to the client during final claimsettlement negotiations. Commercial Contract LitigationAssisted in a claim related to a force majeure incident related to the recommissioning of a facility after ahurricane. Examined conformance with standard industry protocols and applicable laws, standards, andregulations. Assessed whether the facility operator acted in a reasonably prudent manner with respect tothe commercial and technical issues necessary to safely restart the facility as soon as possible. Conceptual Design of Technical Services DepartmentPerformed a conceptual design of a Technical Services Division for a petroleum refining technologylicensing company. The objective was to restructure the company's technology delivery methodology togenerate improved gross margins, increase customer satisfaction and retention, and additional products andservices. Advised the client on defining the critical aspects of the Technical Services Division and the bestapproach to designing and implementing the new group structure and function. Construction Dispute - Petrochemicals PlantPrepared a confidential "Cold Eyes Review" assessment concerning a contemplated claim between anowner and a contractor of a grassroots petrochemical facility. Reviewed draft claims, researched evidence,and interviewed key personnel in order to produce an independent view of the claim. Construction IncidentAssisted in a property damage and business interruption claim that resulted from dropping the main reactorduring construction of a polypropylene facility. Contract Dispute ResolutionEvaluated inter-company petrochemical stream transfers and cost allocations pursuant to the mutuallyagreeable resolution of a contractual dispute between entities engaged in multiple across-the-fencefeedstock and product exchanges. Defective Product Lawsuit



Defective Product LawsuitProvided an expert report on behalf of a pressure safety relief device manufacturer in defense of a claimthat a device did not operate as designed in a reactor overpressure incident. Economic Damages from Power LossDetermined economic damages resulting from extensive power loss due to a circuit breaker failure at threelarge complex refining and petrochemical facilities owned by three major energy companies. Economic Damages Litigation - Plant ExplosionRetained concerning claims of design errors and failures in project management, following explosions andfires at a petrochemical plant. Conducted in-depth reviews of engineering, procurement, and constructionagreements; process technology and design basis; construction records; owner's operating procedures; andactual operating history since start-up of the plant. Evaluated operating system provided against prevailingindustry standards and examined potential for equipment failure. Economic Damages Litigation - Plant FireFollowing furnace damage and rebuild, worked on behalf of insurer/defendant to assess property damagecosts and ensure that normal maintenance/scheduled turnaround/betterment costs were accounted forseparately. Similarly, business interruption costs were compiled with reference to market situation andplaintiff's ability to mitigate by using product volumes that were available from inventory. Ethylene Oxide Plant ExplosionAnalyzed the reasons for an explosion in an ethylene oxide purification distillation tower that resulted inproperty damage estimated at $100 million. Reviewed procedures and practices in response to OSHAallegations. Fertilizers Company PrivatizationPerformed due diligence for the purchase of several fertilizer plants located near Moscow on behalf of aninvestor. These plants manufactured nitrogen fertilizers, phosphate fertilizers, methanol, and other relatedindustrial chemicals. Inspected company assets, assessed technology, analyzed feedstock and productmarkets, reviewed contracts, evaluated capital investment programs, and analyzed comparativemanufacturing economics. Financial ModelDeveloped a financial model for a large private equity firm to enable estimates of the future financialperformance for the major business segments of a large international refining and petrochemical company. Force Majeure DisputeProvided expert report relating to a claimed force majeure event, due to defects in critical equipment thatwas required to be installed during a turnaround. The correction to the defects then resulted in the late



was required to be installed during a turnaround. The correction to the defects then resulted in the latedelivery of the equipment that extended a petrochemical plant turnaround. Formaldehyde Plant Construction LitigationAssisted an engineering and construction firm in defending allegations that completion delays and poorplant performance at a European formaldehyde plant resulted in a multi-million dollar damage claim. Assisted with discovery, inspected plant, evaluated plant operating records, reviewed constructioncontracts, valued the plant, and calculated damages. Presented and defended conclusions at ICCarbitration. Global Gasification Feedstock AnalysisConducted an analysis of the potential low-cost carbon feedstocks for a grassroots gasification project toproduce a combination of synthetic fuels and electricity. The study investigated sources and delivered costsfor various feedstocks, including coal, petroleum coke, and low-valued refinery streams such as residuumand cracked fuel oils. Historical data was used to assess pricing mechanisms for world petroleum cokeprices, including delivered coal prices to Japan and Western Europe. Global Polyethylene StudyConducted a global market analysis to determine export market potential for a proposedethylene/polyethylene complex. The study encompassed development of global supply/demand balancesand price forecasts, as well as an analysis of prospective competitors' process economics. HF Alkylation IncidentInvestigated facts related to pump casing rupture where hydrofluoric acid was released. Reviewed refineryoperations, training, and safety practices. Advised attorneys on generally accepted industry engineeringpractices and standards regarding design, operation, and maintenance of hydrofluoric acid alkylation unit. Hurricane Rita ClaimA petrochemicals company experienced a loss of steam supply and subsequent unscheduled shutdownresulting in production losses and major damage to the facility. The steam supplier attributed the steamoutage to boiler damage caused by Hurricane Rita, which made landfall several months earlier. Assistedthe insurers by investigating the link between Hurricane Rita and steam supplier boiler outages. Incident Analysis - PetrochemicalsPerformed an investigation analysis following fire and explosion incidents at a major Gulf Coastmanufacturing facility. The engagement entailed development of the sequence of events, root causeanalysis, assessment of the decision to rebuild, and reconstruction monitoring. An independent projectschedule and cost estimate for the plant reconstruction was developed. Industrial Incident



Industrial IncidentInvestigated cause of dust cloud deflagration at a Vitamin E production facility. Assessed that bulk solidshandling procedures were modified without considering the original safety design basis for the equipment.Developed expert opinions on causation. Ion-Exchange Resin PlantPerformed market study and competitive analysis of an ion-exchange resin plant on behalf of a majorgovernment agency bank. Study evaluated the financing of an ion-exchange resin manufacturer in thecontext of possible sale of the plant. Lender's Independent EngineerServed as independent engineer for a "grassroots" olefins project in China. Prepared the technical duediligence for a US$4 billion facility on behalf of international export credit agencies and onshore andoffshore lenders. M&A DisputeEvaluated the foreseeability of project cost overruns that negatively impacted the economics of theacquisition of an EPC Firm. Marine Cargo ContaminationInvestigated possible causes for poor quality heavy fuel oil transported by barge. Work included review offuel oil blending practices, product specifications, blend stock incompatibility issues, and quantification ofeconomic damages. Marine Terminal DevelopmentReviewed design requirements and monitored construction, start-up, and operation of a project to develop abulk liquids terminal on the Red Sea. Work included review of dredging requirement, schedule, andinterfaces between this project and a project to export ammonia from the terminal. Multi-Refinery SynergiesAnalyzed the synergies and economic advantages of companies that operate multiple refineries on the U.S.Gulf Coast. Analysis included advantages in crude acquisition; turnaround and routine maintenance;feedstock and product transportation; efficient processing of intermediate streams; and optimal capitalinvestment. Nitroparaffins LitigationAssisted in a dispute between an operator and and EPC firm concerning allegations that the process designcontributed to an explosion at a nitroparaffins manufacturing plant. Assisted in discovery, evaluated designissues, and provided expert testimony. Paraxylene (PX) Contract Dispute



Paraxylene (PX) Contract DisputeOn behalf of a major international buyer of paraxylene, prepared an expert analysis concerning damagesclaimed by a large US based supplier. Analysis included a detailed evaluation of supplier's paraxylenemanufacturing economics. Petrochemical Business PrivatizationsDeveloped market valuations, evaluated strategic business alternatives, and formulated short-term planningobjectives for several diversified East European chemical companies undergoing the transition from statecontrol to private ownership. Engagements included marketing efforts directed to attracting investors andjoint venture partners. PVC Plant LitigationAssisted a major manufacturer of PVC resins with defending claims that an explosion was due to a poorprocess design that failed to meet government regulations and engineering standards. Assisted indiscovery, inspected the plant, evaluated procedures and work methods, reviewed applicable standards,and reviewed operating records. Polyurethane Foam LitigationAssisted in claims concerning polyurethane foam system products that were alleged to be defective or unfitfor their intended use. Assisted in discovery, observed and reviewed work environment and work methods,evaluated manufacturing records, reviewed warranty claims, and prepared trial exhibits. Refinery and Chemical Plant Feedstock ValuationsIdentified and developed the financial impact due to the non-compliance with interplant agreements forfeedstock and product transfers between a refinery and an adjacent chemical plant. Potential claimsexceeded $25 million. Substitute Natural Gas Market StudyDeveloped comprehensive market profile of SNG industry and market in North America, including operatingand planned facilities, feedstock outlook, project incentives, and environmental issues. Piping Subcontractor Claim EvaluationEvaluated the claims by a piping subcontractor for additional quantities of materials due to owner causeddelay and disruption on a specialty chemical plant project. Technical ReviewPerformed technical review of chlor-alkali and calcium chloride processes and project plan on behalf ofprospective lender. Reviewed the process design packages for the chlor-alkali and calcium chlorideproduction facilities and provided opinions regarding the selected processes and their technicalcompatibility. Reviewed the project schedule and cost estimate for the facilities and provided input to the



compatibility. Reviewed the project schedule and cost estimate for the facilities and provided input to theprospective lender regarding the appropriate level of contingency. Evaluated the contracting strategy andproject execution plan and provided opinions. Pressure Vessel FailureInvestigated the cause of a hydrocarbon release resulting from the brittle fracture of a pressure vesselduring start-up at a petrochemical plant. Incident involved multiple injuries and deaths and extensiveproperty damage. Issues studied include ethylene plant design, operating practices and procedures,start-up operations, instrumentation, and safety training. Poly Olefins Plant ExplosionAssisted attorneys and company in preparation for litigation and negotiation with government agencieswhile investigating the cause of an explosion which caused the death of over 20 people. Assisted riskmanagement in preparing and negotiating property damage and business interruption claims in excess of$1.3 billion. Propylene ProductionStudied the feasibility of reconstruction and expansion of a catalytic dehydrogenation plant at a large GulfCoast refinery for the production of propylene from propane. The study included evaluation of the currenttechnology, development of costs for reconstruction and expansion, estimation of operating costs, andassessments of regional markets for propylene. Polypropylene Manufacturing FacilityProvided a cash flow valuation of a polypropylene complex in support of an ad valorem tax matter. Thevaluation included analysis of recent historical operations, review of the markets for feedstocks andproducts, development of operating costs, and analysis of industry trends. Polypropylene ManufacturingAssisted in establishment of insurance claims for property damage and business interruption in connectionwith a reactor incident during construction of the production facility. Polyethylene ProductionAssisted client and their attorneys in the on-site investigation of a major explosion and fire at a high-densitypolyethylene (HDPE) facility. Work required extensive knowledge of process, technology, and equipment. Polyethylene and Polypropylene Facility ValuationsAssisted clients in their appeals to local taxing authorities to lower the valuation bases for their polyethyleneand polypropylene facilities. Vapor Cloud ExplosionInvestigated the cause of a vapor cloud explosion at a paint and resins manufacturing facility. Multiple



Investigated the cause of a vapor cloud explosion at a paint and resins manufacturing facility. Multipledeaths and personal injuries, along with extensive property damage, resulted which required significanttechnical and economic input to attorneys and risk management department. Process Plant Leasehold SettlementsAssessed the market value of residual operating interests held by a major financial entity in several leasedchemical processing facilities. Each engagement included an ongoing advisory role pursuant to successfulnegotiations for sale of the institution's ownership interests. Strategic Sourcing: Refining Materials and ServicesAssisted a major, integrated oil and gas company in implementing a strategic sourcing initiative for itsrefining and petrochemical businesses. The initiative focused on developing a strategic and low cost supplyof sulfuric acid, process chemicals, and maintenance services to the client's various refining andpetrochemical facilities, which achieved cost savings of up to 25%. Refinery Force Majeure ClaimsPrepared expert reports and testified in an international arbitration involving multiple product supplydisputes between a refinery and an adjacent chemical plant. Reviewed force majeure claims related tocatalytic cracking technology, product supply contracts, and utility supply interruptions. Misappropriation of Trade SecretsUsing chemical engineering expertise, process design background, and experience in operations andmanufacturing, provided an opinion on the likelihood of another firm’s ability to produce the samepharmaceutical chemical with comparable quality and value as the original product without utilizing tradesecrets learned from the intellectual property owner. Plant Commissioning ReviewProvided initial guidance and comments regarding the development of a commissioning and start-upschedule for a polypropylene plant. Provided initial input into how plant start-up incidents affected thecommissioning schedule. Tube Sheet, Flare Tip MatterInvestigated the cause of tubesheet and flare tip damage related to an unplanned sudden shutdown of thefacility. Evaluated whether damage was caused by the shutdown, long-term wear, or contractor errorduring installation. Provided expert support through mediation and settlement efforts. Strategic Sourcing: Refining Materials and ServicesAssisted a major, integrated oil and gas company in implementing a strategic sourcing initiative for itsrefining and petrochemical businesses. The initiative focused on developing a strategic and low cost supplyof sulfuric acid, process chemicals, and maintenance services to the client's various refining and



of sulfuric acid, process chemicals, and maintenance services to the client's various refining andpetrochemical facilities, which achieved cost savings of up to 25%. Technical ReviewPerformed technical review of chlor-alkali and calcium chloride processes and project plan on behalf ofprospective lender. Reviewed the process design packages for the chlor-alkali and calcium chlorideproduction facilities and provided opinions regarding the selected processes and their technicalcompatibility. Reviewed the project schedule and cost estimate for the facilities and provided input to theprospective lender regarding the appropriate level of contingency. Evaluated the contracting strategy andproject execution plan and provided opinions. TEL Usage in Southeast AsiaOn behalf of a chemical supplier, reviewed the use of tetraethyl lead (TEL) as a gasoline additive in aSoutheast Asian country from 1999 to 2005 compared to the technical requirement based on the quality ofthe country's base gasoline and the required octane target. TEL vs. MMT Blending StudyOn behalf of a chemical supplier, reviewed the use of tetraethyl lead (TEL) as an octane enhancing gasolineadditive in a Middle Eastern country from 2000 to 2006 compared to using methyl cyclopentadienylmanganese tricarbonyl (MMT). Vapor Cloud ExplosionInvestigated the cause of a vapor cloud explosion at a paint and resins manufacturing facility. Multipledeaths and personal injuries, along with extensive property damage, resulted which required significanttechnical and economic input to attorneys and risk management department. Plastics Recycling Feasibility Study Evaluated a small German refinery for potential conversion to a plastics recycling plant. Assessedtechnology, retrofit requirements, operating costs, and logistics. Presented economics, capital investmentplan, and likely subsidy requirements to the board of directors. Independent Planning Consultant In the early 1990s, a major oil company agreed to purchase a former Soviet block country’s refining andmarketing assets. Additionally, there was an agreement to build a state-of-the-art grassroots refinery. Untilthe streaming of the grassroots refinery later in the decade, the oil company operated the existing refiningassets on behalf of the national office of privatization. The role of the independent consultant was to ensurethat the operation was not “optimized” at the expense of the country’s taxpayers. Participated in thepreparation of monthly operating plans with the operating company and presentations to the national officeof privatization over a two-year period.



of privatization over a two-year period. Privatization of Olefins Plant Evaluated an olefins plant for competitiveness in operating costs, yields, feed supply, and productmarketing. Identified and documented strengths and weaknesses and presented the key initiatives, whichwould be needed to ensure a successful transaction. Estimated the fair market value. Maintenance and Reliability Improvement Program Managed the development of a client’s routine maintenance and reliability improvement program thatidentified areas of concern and implemented new work practices aimed at improving competitiveness.Efforts reduced maintenance costs and improved operating performance. Turnaround Optimization Studies Performed numerous turnaround optimization studies and execution reviews for refineries andpetrochemical companies worldwide. Areas of focus included analyzing the work selection process,reviewing work execution schedules, evaluating the facilities preparedness to perform the turnaround, andoptimizing turnaround cycles or start dates. Maintenance Contracting Strategies Worked with international clients to analyze existing maintenance and turnaround contracting strategies,contractor availability, and local cultures to identify areas of concern and develop strategies forimprovement. Reliability and Maintenance Continuous Improvement Initiatives Improved efforts to eliminate equipment defects and unscheduled outages by developing and incorporatingthe use of reliability indices to identify problem equipment. Reliability teams were then able to prioritizeconcerns to focus reliability improvement initiatives in areas of highest risk to safety, operationalperformance, and profits. This defect elimination program was utilized as the cornerstone for the plant’scontinuous improvement initiatives. Performance Improvement - PetrochemicalsAssisted in a global study focused on analyzing the operating performance of steam crackers. Participatedas a member of a multi-disciplined team responsible for: reliability and operations data gathering, analysis,plant personnel interviews, and industry benchmarking of performance. The study concluded withnumerous recommendations to company senior management aimed at improving worldwide plantoperational availability.



petrochemical/ chemical related services€¦ · experience throughout the diverse and yet highly...

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