Watson Millican experts were requested to assist the seller, an international energy company, with the investigation of the fire and crude vacuum tower collapse incident. We were also requested to determine what was known and unknown to the seller and the buyer at the time of the closing of the sale. The undisputed cause of the hydrocarbon release was a rupture failure of the outlet piping to the crude vacuum tower due to high temperature sulphur corrosion of a short section of carbon steel pipe which had not been identified prior to the failure. The buyer alleged that this piping should have been constructed of alloy steel and that the seller failed to identify and disclose this carbon steel pipe section which was severely corroded.

Watson Millican experts reviewed the documents and data provided to the sellers in the sale data room along with all communications between the seller and the prospective buyers, as well as, conducted interviews with several of the seller’s site managers. Additionally, the buyer’s post-closing inspection and positive material identification programs were reviewed. It was determined that the seller was in compliance with prevailing refining industry practices for positive materials identification and inspection practices. It was also determined that the seller had in place programs that would have likely identified the corroded pipe had the buyer continued with the seller’s programs. The buyer’s experts ultimately accepted Watson Millican’s conclusion prior to the arbitration hearing. Additional technical claims concerning the seller’s knowledge of refinery conditions and the buyer’s claims for reimbursement under the sale contract were addressed by Watson Millican experts at the ICC arbitration.