Refining and Chemicals

Watson Millican & Company brings together considerable technical expertise, operating company experience, and commercial knowledge to assist clients with unique issues in petroleum refining and chemicals production including petrochemicals, chemical derivatives, gasification and specialty chemicals.

Over the last 35 years, the refining industry has been called upon to re-invent its operating practices to improve performance and safety and to re-invest in order to meet new environmental and other regulatory requirements. It is now facing the challenge of the energy transition to lower carbon fuels and emissions.

Our consultants have performed numerous dispute related assignments involving mid to mega scale refining and chemicals construction projects globally for international arbitrations and court cases. Our consultants have performed numerous refinery valuations both for ad valorem tax purposes and during due diligence associated with an acquisition or divestiture of assets.

Clients have asked us to assist with studies to reduce operating expenses, improve maintenance practices, and increase equipment reliability and availability. Our investigations of accidents including explosions, fires and fatalities have been performed for operating companies, as well as legal and insurance clients. We have reviewed interplant contracts between refineries, chemical facilities and other types of process facilities for dispute resolution and compliance.

Construction Disputes

SIAC Refinery and Petrochemical Facility Construction Arbitration

Analyzed issues related to FEED compliance, value engineering, detailed design completion, schedule delays, defects, and performance testing on behalf of the EPC contractor. The EPC contractor worked on behalf of the owner to design and construct a new green field $9.0 billion refinery and petrochemical facility project in SE Asia. Prepared several expert reports, supplemental reports, and joint expert reports detailing the basis of opinions and findings and provided evidence at multiple hearings.

ICC Refinery Revamp and Expansion Construction Arbitration

Analyzed issues related to FEED completion, cost estimation, detailed design completion, procurement of equipment, and modularization of pipe racks on behalf of the EPC contractor. The EPC contractor worked on behalf of the owner to design and construct a $6.0 billion refinery expansion project in Latin America. Assessed the allegations and the performance of the works with reference to the industry standards, contractual specifications & procedures, and common industry practice. Prepared an expert report, supplemental reports, and joint expert reports detailing the basis of opinions and findings and provided evidence at the hearing.

Refinery and Pipeline Construction Arbitration

Analyzed numerous construction and design defect issues on behalf of the Engineering, Procurement and Construction (EPC) contractor involved in a lump sum $1.6 billion refinery and pipeline project in Central America. Assessed additional work order claims and defect claims for new crude oil, product pipeline, and pump station construction in reference to contractual requirements and normal industry practice. Prepared expert reports, including quantum analysis, detailing the basis of opinions and findings and testified in International Chamber of Commerce (ICC) arbitration hearings.

AAA Petrochemical Facility Construction Arbitration

The construction contractor worked with its joint venture engineering and procurement partner on behalf of the owner to design and construct a $2.0 billion petrochemical facility producing both high and low density polyethylene in south Texas. Analyzed issues related to detailed engineering completion, maturity of designs, and reporting of detailed engineering progress. Performed detailed analysis of the nature and timing of Issued for Construction deliverables, including piping isometrics, to the construction company and revisions of the same. Prepared an expert report detailing the basis of opinions and findings and provided evidence at the hearing.

Litigation Support

LCIA Refinery Construction Re-Build Arbitration

Analyzed numerous claims brought by the refinery purchaser against the seller associated with a crude vacuum unit fire event and resulting reconstruction efforts on behalf of the seller. The refinery was located in Europe. Assisted with the identification of major delay milestones resulting in the elongation of reconstruction activities. Prepared expert reports detailing the basis of opinions and findings. Analyzed opposing expert witness report and prepared responses. Provided arbitration testimony.

Refinery Property Damage & Business Interruption Claim Review

On behalf of mechanical service firm, evaluated a BI and PD claim made by a refining company against the firm who provided inspection services at a refinery. Analyzed the refinery operating data and information to evaluate claims that the actions by the service firm caused an emergency shutdown of several refinery process units and more than $100 million in losses.

Refinery and Chemical Plant Inter-Plant Contract Disputes

Assessed the financial magnitude and contract basis for numerous claims of non-compliance and non-performance with contracts between adjacent refineries and chemical plants. Issues included feedstock transfers, pricing, expense allocations, material balance, and reporting. The disputes involved three different clients and three different sets of plants.

Due Diligence

Refinery Acquisition and Divestiture Due Diligence

Performed due diligence on behalf of potential sellers and buyers on refineries being offered for sale. Work included assistance with discovery, analysis of refinery yields, operating costs, investment plans and preparation of financial models to support the valuations of the refineries. Activities involved data room document reviews, determination of value using the discounted cash flow (DCF) approach, site reviews and management interviews.

Operations and Maintenance Practices

Environmental Contamination from Industrial Sites

Evaluated operating and maintenance practices, both current and historical, that led to ground and groundwater contamination at various refinery and chemical plant sites. Provided expert testimony for clients representing both owners and the Environmental Protection Agency.

Analysis of Refinery Performance and Operating Practices

Participated in projects for both domestic and international clients analyzing refinery performance gaps relative to peer refineries that were similar in size and complexity. The completed analyses resulted in target setting or multiple maintenance and operating improvement initiatives aimed at achieving cost savings and gross margin increases. The work involved site visits, employee interviews, final reporting, and presentations to company management.

Refinery Business Interruption and Property Damage

Participated in projects for both domestic and international clients analyzing refinery performance gaps relative to peer refineries that were similar in size and complexity. The completed analyses resulted in target setting for multiple maintenance and operating improvement initiatives aimed at achieving cost savings and gross margin increases. The work involved site visits, employee interviews, final reporting, and presentations to company management.

Refinery Operations & Maintenance Practice Review

Performed a review of the refinery operations and maintenance practices following a refinery shutdown and declaration of force majeure event. Reviewed operations, routine maintenance, turnaround maintenance, and inspection records of major refinery units in an effort to determine whether major mechanical work performed was at all related to the triggering event. Completed an expert report and provided expert testimony in this matter.

Power and Steam Producing Utility Reliability Improvement

Led a team that performed a critical analysis of incidents, operating design, and operating practices for an integrated power plant providing steam and electricity to a major petrochemical complex. Results of the efforts led to modifications in operating practices and equipment redesign that increased production reliability.

Refinery Turnaround Performance Improvement

Led the evaluation of multiple refinery turnarounds on crude, fluid catalytic cracking, coking, and hydrocracking units. Evaluated existing practices and resulting performance relative to the “best” performers in industry. Provided management assistance in setting goals and objectives which targeted significant financial savings and unit availability increases.

Refinery Planning and Economics

Reviewed existing work and communication processes between the refinery and company headquarter personnel. Recommendations included a new LP model platform, structured evaluation methods, standardized schedule and reports, a rolling four-week plan, and hindsight evaluation.

Asset Valuations

Refinery Ad Valorem Valuations

Prepared fair market values of many refineries for owners and tax assessors for ad valorem property tax purposes in California, Illinois, Louisiana, Montana, New Jersey, Oklahoma and Texas. Prepared reports on fair market values using the three standard approaches to value including cost, comparable sales, and income. Provided expert testimony in litigation.

Incident Investigations

Refinery LPG Fractionation Tower Collapse and Fire

Investigated and assessed actions and safety practices of the operators and contractors that led to LPG release, vapor cloud ignition, collapse of 125 foot tall LPG tower and fire at U.S. Gulf Coast refinery.

Market Studies

Refinery Expansion Economic Study

Performed economic evaluation of a potential major expansion of capacity at a large Gulf Coast refinery, including development of capital costs, operating and maintenance expense estimates and projected range of refining gross margins.

Insurance Claims

Refinery Fire Damage & Reconstruction Claim Review

Analyzed numerous claims brought by the refinery purchaser against the seller associated with a crude vacuum unit fire event and resulting reconstruction efforts on behalf of the seller. Prepared expert reports detailing the basis of opinions and findings. Analyzed opposing expert witness report and prepared responses.

Project Development

Capital Project Engineering

Provided project engineering coordination on multiple major refinery projects. Led the successful engineering and field construction of a major lights ends debottlenecking project. Successful completion of project construction during the unit maintenance turnaround led to increased recovery capacity of high valued products.