United States District Court, District of Wyoming
SINCLAIR WYOMING REFINING COMPANY, a Wyoming corporation, Plaintiff,
v.
PRO-INSPECT INC, a Texas corporation dba Moody International Asset Integrity Services Inc, Defendants.
OPINION AND ORDER STATING FINDINGS OF FACT AND
CONCLUSIONS OF LAW
ALAN
B. JOHNSON, UNITED STATES DISTRICT JUDGE.
This
matter is before the Court following a nine-day bench trial.
At trial, the plaintiff Sinclair Wyoming Refining Company
("Sinclair") was represented by Patrick R. Day,
Buck S. Beltzer, and Geraldine A. Brimmer. The defendant
Pro-Inspect, Inc. (d/b/a Moody International Asset Integrity
Services, Inc., a Texas Corporation) ("Pro-Inspect"
hereafter for purposes of this order) was represented by Paul
J. Hickey, O'Kelley H. Pearson, John J. Kenney, and Jules
R. Cattie, III.
Having
carefully considered the testimony and evidence presented and
the arguments of counsel, the Court makes the following
findings of fact and conclusions of law.[1]
Introduction
and Brief Summary of Contentions
Sinclair
owns and operates a refinery located at Sinclair, Wyoming,
processing crude oil, including sour crude from Canada.
Sinclair is a Wyoming corporation, with its principal place
of business in Utah. Pro-Inspect is engaged by refiners to
perform inspection services at their facilities. Pro-Inspect
is a Texas corporation and its principal place of business is
in Texas. Sinclair has asserted two claims against
Pro-Inspect, breach of contract and negligence.
Sinclair's complaint was filed August 30, 2012, seeking
to recover approximately $7.5 million in property damages and
$50 million in other "business interruption" losses
it claims are attributable to the fire that occurred on
September 1, 2011, when a pipe containing high temperature
slop oil ruptured. Pro-Inspect has denied all claims and
disputes that Sinclair is entitled to recover damages in any
amount. This Court has diversity jurisdiction pursuant to 28
U.S.C. § 1332. Venue is proper in this district pursuant
to 28U.S.C. §1390.
Broadly,
Sinclair contends that Pro-Inspect's inspector, Josh
Kiss, was required by the parties' contract, and by the
American Petroleum Institute (API) Codes governing piping
inspections by API 570 certified inspectors, to review all
the data gathered by technicians Malave and Hulsey and
carefully consider potential risks to the piping circuit.
Sinclair contends it hired Pro-Inspect specifically to
provide a knowledgeable API 570 certified inspector to
conduct inspections at the refinery. Sinclair contends the
API Code obligates inspectors to, among other things: (1)
review all ultrasound data; (2) consider prior inspection
histories; (3) confirm that piping systems are properly
classified for risk; (4) evaluate the need for, and determine
the proper number of corrosion monitoring locations (CMLs);
(5) ensure that CML locations are placed on a circuit and
that thickness data at those locations are collected; (6)
consider the data collected for the risk of failure; (7)
calculate the remaining life of the piping in the circuit;
and (8) immediately report thin pipe to the refinery owner
for further evaluation and action. Sinclair contends these
obligations are all components of a standard industry
inspection and are spelled out in API 570, the applicable
piping inspection code. Sinclair contends that
Pro-Inspect's inspector, Josh Kiss, failed to do every
one of these tasks, causing a significant stretch of
paper-thin pipe to be missed, proximately causing the
explosion and fire and resultant damages. The section of pipe
involved in the fire has been lost or destroyed by Sinclair
and as a consequence could not be inspected or tested by
Pro-Inspect.
Pro-Inspect
denies Sinclair's allegations and denies any liability
for the September 1, 2011 fire. It asserts that its
employees, Josh Kiss and Michael Fitzpatrick, were directed
by Sinclair to perform two assignments: one, to organize
certain refinery piping systems into manageable circuits in
order to facilitate the inspection process (i.e., to
systemize and circuitize); and, two, to conduct an external
visual inspection to look for external damage to the piping
structure, which was wrapped in thick, non-transparent
insulation. The only work that Pro-Inspect did on the circuit
which is the subject of this lawsuit, 02-04-02, was external
visual inspection of the piping by Kiss. Neither Kiss nor
Fitzpatrick, nor any other person at Pro-Inspect, was asked
or directed by Sinclair to make ultrasonic thickness
("UT") readings to measure internal corrosion of
the pipes. Sinclair had hired a different contractor,
TechCorr, to perform that service through its employees, Juan
Malave and Russell Hulsey.
Pro-Inspect
maintains that its inspectors performed all of the tasks that
Sinclair directed them to perform, and that they did so, with
no complaints or other instructions from the Sinclair
personnel overseeing their work. Pro-Inspect asserts that it
fulfilled its contractual obligations to Sinclair and cannot
be held responsible for the fire. Furthermore, Pro-Inspect
urges that any acts and omissions Sinclair complains of were
the acts of Sinclair or TechCorr, the employer of Malave and
Hulsey, and not Pro-Inspect. Pro-Inspect asserts that the
proximate cause of the fire and resulting damages was
Sinclair's poor management of its own refinery and not a
result of anything Pro-Inspect did or failed to do.
Standard
for Non-Jury Trial
Fed. R.
Civ. P. 52(a) provides that in all actions tried upon the
facts without a jury or with an advisory jury, the court
shall find the facts specially and state its conclusions of
law separately.
Thus,
the role of this Court in this action tried upon the facts
without a jury is to find the facts specially and to state
separately its conclusions of law thereon. OCI Wyoming,
L.P. v. Pacificorp, 479 F.3d 1199, 1203 (10th Cir.
2007)(citing Fed.R.Civ.P. 52(a)). The Court's findings of
fact "should be sufficient to indicate the factual basis
for the court's general conclusion as to ultimate facts[,
] ... should indicate the legal standards against which the
evidence was measured[, ]... [and] should be broad enough to
cover all material issues." Id. (citations
omitted). The Court is not required to undertake this task in
excruciating detail. Id. at 1204. "The judge
need only make brief, definite, pertinent findings and
conclusions upon the contested matters; there is no necessity
for overelaboration of detail or particularization of
facts." Id. (citations omitted).
Findings
of Fact
On
September 1, 2011, there was a fire at the Sinclair Wyoming
Refining Company, which occurred after a pipe ruptured in the
refinery's 585 Vacuum Unit at Circuit 02-04-02.
Fortunately, no one was injured in the fire. Sinclair's
claimed damages include property and business interruption
economic damages. Sinclair alleges that the fire and claimed
resultant damages were caused by Pro-Inspect's breach of
contract and negligence in the inspection of that same
circuit in January of 2011, nearly nine months before the
fire. Pro-Inspect denies these claims and asserts that the
fire was the result of Sinclair's own failures and states
that it fulfilled all contractual obligations owed to
Sinclair and was not negligent in the performance of its
duties.
There
are two main crude processing units in Sinclair's
refinery: the 582 unit processes sweet crude and the 581/583
unit processes primarily sour crude. Raymond Hansen, who was
the operations manager at the facility in 2011, testified
about production at the Sinclair refinery. He explained there
are a number of intermediate units which process oil from the
crude units into marketable products, such as LPG, gasoline,
jet fuel, diesel, sulfur, and other products for consumers.
There are two components of the 581/583 unit including the 5
81 atmospheric distillation tower in which sour crude is
heated and distilled into different fractions; reduced crude
which is not distilled by the 581 unit is piped into the 583
unit, which separates reduced crude further in the 583 vacuum
tower.
A 2008
revamp of the refinery was intended, at least in part, to
allow the processing of less expensive crudes. The 2008
revamp project involved a considerable investment by
Sinclair, approximately $90 million. It included extensive
pipe and heater replacements to allow production of the less
costly Canadian crude oils. The pipe that ruptured September
1, 2011 in the 02-04-02 circuit and which is at issue here
had not been replaced during the 2008 revamp, although some
modifications had been made to the line during the revamp.
The particular pipe that had been left in place during the
2008 revamp had been in service for 30 years at the time of
the September 1, 2011 rupture.
In
2010, less costly but more corrosive Canadian Cold Lake
crudes were introduced into the refinery. Canadian Cold Lake
and Western Canadian Select crudes were run in the refinery
in 2010 and in 2011. Beginning in October 2010,
Sinclair's refinery processed up to 40% Canadian Cold
Lake Crude. Jt. Ex. 31, Ex. Z11. Crude oil coming into the
refinery may be received from various sources, called a
"basket of crude," which might include Canadian,
North Dakota or Wyoming crude oils. Tr. Vol. I, Hansen, 94.
Hansen testified "[w]hat we try to do is run really as
smooth as we can because of the complexity of the refinery.
There's a push and pull between all these different units
and our incoming inventories, our outgoing inventories, and
so we try to run a crude that's really a consistent
sulfur on the sour unit, a consistent sulfur on the sweet
unit, and that it's a consistent density. We refer to
that as API gravity." Id. Hansen described
equipment, noting that there are massive amounts of piping
surrounding the units, with the piping and interconnecting
piping described as very complex. All of the piping and
equipment must be inspected periodically. After crude is
processed, products for sale are temporarily stored in tanks
and eventually transported out of the refinery through
pipelines. The Canadian crudes, also known in the industry as
"opportunity crudes," are poor quality, less
expensive crudes that can increase a refinery's
profitability. Ex. A12. Sinclair itself recognized that the
corrosive nature of these crudes was a concern long before
the September 1, 2011 rupture/fire happened. Ex. Q.
The
downside to using the cheaper opportunity crudes is that they
are highly corrosive and place greater demands on refinery
facilities, especially on piping systems. Heavy sour crudes
contain high amounts of naphthenic acid which can cause
extensive damage to refinery piping systems, and can cause
localized, accelerated corrosion greater than that caused by
sweeter crudes. With higher naphthenic acid content,
opportunity crudes can cause pipes to corrode by as much as
100 mils to over 200 mils per year.[2] There are different types of
processes that might corrode and degrade a refinery's
piping and equipment, much of which depends on the type and
quality of the crude oil being processed. Sulfidation is one
type of corrosion process that occurs inside a pipe as a
result of a reaction between the pipe's surface and
sulfur contained in crude oil. This is the generally expected
corrosion mechanism that affects much of the piping in
Sinclair's Crude/Vacuum Unit, including the vacuum tower
slop oil 02-04-02 piping circuit at issue in this case. The
characteristics of sulfidation are gradual thinning over time
and fairly uniform thinning throughout a piping circuit. In
other words, the various locations within a piping circuit
are generally considered to corrode at similar rates by
sulfidation. Sulfidation also results in an adherent sulfide
coating on the inside surface of the pipe which acts like a
barrier between the corrosive oil flowing through the piping
system and the steel wall so that it effectively slows down
the rate of corrosion. Sulfidation would have been the
expected corrosion mechanism operative in the 02-04-02 piping
circuit at issue here as all available information indicated
a fairly uniform pattern of thinning throughout the circuit.
Erosion
corrosion is another corrosion process described in API 571
and is exacerbated by crude oils containing high levels of
naphthenic acid. Erosion corrosion causes accelerated and
generally localized corrosion because of the erosive actions
of the oil flowing through a circuit. For this reason, API
570 directs placement of corrosion monitoring locations
("CMLs") at points on a circuit where flow changes,
rather than straight runs. Crude oils that are more
corrosive, such as those with more naphthenic acid, will
increase the rate of erosion corrosion in a piping system.
Vacuum-unit
piping such as the slop oil circuit 02-04-02, when exposed to
naphthenic acids, can suffer from severe erosion corrosion
and metal loss, depending on the particular variables of
temperature, velocity, sulfur content, total acid number
("TAN"), and the concentrations of naphthenic acid
within the piping circuit. Naphthenic acid corrosion is
another form of corrosion that does not occur uniformly
throughout a piping circuit. Instead, it may occur at
discrete locations within a piping circuit and can occur when
crude oil containing naphthenic acids, such as Canadian Cold
Lake crude, is put through the system. Naphthenic acid
corrosion is not predictable even when the TAN, the
temperature, and velocity are known. Naphthenic acid
corrosion is episodic, sporadic, and localized and can occur
at rates of 200 mils per year and higher. No. information was
made available to Pro-Inspect that would have alerted it to
any issues with this more aggressive corrosion mechanism.
However,
there is no disagreement that the particular piping that
ruptured had in fact corroded and was thin pipe at the time
and location that it ruptured in September of 2011. Whether
that thinning and rupture in that location was caused by
failures in performing the piping inspection nine months
earlier was clearly contested. This requires the Court to
consider what the parties' agreement for inspections
encompassed in this case.
James
Eggleston was a corporate project supervisor at the refinery
at the time of trial. Initially, he was hired by Sinclair as
an inspector and eventually he became the supervisor of the
piping inspection department, and was the supervisor at the
relevant times at issue in this case. The American Petroleum
Institute has published standardized procedures governing
inspections, including API 570, entitled "Piping
Inspection Code: In-service Inspection, Rating, Repair and
Alteration of Piping Systems." Joint Ex. 4. Eggleston
was certified in 2008 as an API 570 inspector employed by
Sinclair; all other full time inspectors reported to him. He
testified that various third party inspectors were also hired
at the refinery to provide inspection services, including
Pro-Inspect, among others. Eggleston was responsible for
directing Pro-Inspect's activities at the refinery prior
to and after 2010 during turnarounds and gave instructions to
inspectors.
Eggleston
sought and received approval in 2010 to hire TechCorr and
Pro-Inspect again for the update mechanical integrity
(sometimes "MI" or "catchup") project
because Sinclair personnel were unable to handle the big job
presented by the catchup plan. Thus, contract workers were
also used to help with the catchup inspections. Michael
Fitzpatrick, a Pro-Inspect contract inspector at the time,
was already onsite working at the refinery when the catchup
plan began. Fitzpatrick was not then an API certified 570
piping inspector; he was certified for API 510 vessel
inspection at that time. Fitzpatrick worked closely with and
received instructions from Eggleston during this time period.
Eggleston
himself was an API 570 certified piping inspector and had a
mechanical engineering degree from the University of Wyoming.
He had inspection responsibilities in addition to supervisory
duties. He arranged all piping inspections at the refinery.
He was responsible for reviewing inspection reports for
deficiencies, communicating deficiencies to the
refinery's reliability engineers and unit inspectors, and
for identifying and initiating corrective action. The
inspection department at Sinclair was expected to develop and
maintain the thickness monitoring program allowing for
monitoring of internal corrosion in the piping systems at the
refinery. Ex. A3, 6.3.1.
To
facilitate the catchup project, in addition to Sinclair's
own inspectors, as stated earlier, independent contractors
were also engaged. Eggleston outlined the scope of the work
he wanted done in the crude units in the beginning of the
project and assumed those instructions would be passed on to
Kiss by Fitzpatrick or others. He defined the scope of what
he wanted inspected. The scope of work was orally given to
Fitzpatrick to systemize, correct, circuitize, and perform
visual inspections. Eggleston maintained that he had not
undertaken the detailed planning of the project and that his
plan was simply to get the units inspected based on needs he
had identified. Eggleston acknowledged and agreed that he was
responsible for the inspection work performed on the 581 and
583 units. Eggleston, as inspection supervisor, had
supervisory authority over contract inspectors in addition to
Sinclair's inspectors and he was responsible for all
inspection work done at the refinery. At all times, Sinclair
retained supervisory authority over contract inspectors'
work.
Pro-Inspect
was started as a family owned company in 1996, with its
business described as the visual inspection of petrochemical
equipment, including piping, pressure vessels, storage tanks
in the refining and chemical plant industry. Pro-Inspect
arranged for and coordinated contract API certified
inspectors and licensed technicians for many refineries
needing inspections for piping, equipment, vessels and other
assets. Under the contracts between Sinclair and Pro-Inspect,
it was understood that Pro-Inspect would be providing API 570
inspectors, charging its customers an hourly rate for the
work performed by its contract inspectors, dependent upon the
inspector's experience, skills, and certifications. The
API 570 certified inspector is the highest qualified
employee, with the requisite years of experience and passage
of the API test demonstrating knowledge of the code.
Pro-Inspect charged Sinclair $72.77 straight time and $99.39
per hour overtime, for Josh Kiss, the API 570 inspector
working on this project. Josh Kiss was employed by
Pro-Inspect and provided services as directed by Sinclair at
the job site once he began work at the refinery in January of
2011.[3]
When
the catchup project was beginning, Pro-Inspect's
certified vessel inspector, Fitzpatrick, was onsite at
Sinclair, working on other projects. Eggleston had worked
with Pro-Inspect and Fitzpatrick previously during the 2008
upgrade to the 581/583 units. During that time, Fitzpatrick
had developed and used inspection work requests (IWR) to
recommend immediate repairs based on inspection findings. IWR
forms were presented to Eggleston for further consideration,
a standard process at the refinery. Because of their
favorable prior work relationship, Eggleston agreed to
Pro-Inspect's Fitzpatrick's request to participate in
the catchup inspection project. Eggleston and Fitzpatrick met
in late November 2010 to discuss and plan the work on the MI
catchup project. Work on the project included external visual
pipeline inspection, calculating and placing CMLs on piping
circuits, consistent with guidelines under API 570 §
5.6.3, among other things. Eggleston asked Fitzpatrick to
have Pro-Inspect bring another API 570 certified inspector on
board. Fitzpatrick was a certified vessel inspector, but did
not then have API 570 certification.
Kiss
was contacted initially by Brad Wells, of Pro-Inspect,
regarding a job in Sinclair in January of 2011. Wells
outlined the basic details of the job and asked if Kiss would
be interested, with Kiss responding yes. Kiss did not recall
specifically sending a resume to Pro-Inspect directly, and
indicated that he had used different websites, some with
recruitment companies, to learn about upcoming work. Kiss was
later telephoned by Mike Fitzpatrick, who outlined the job in
more detail saying that Sinclair was going to systemize and
circuitize three different units in a six month long project,
with two months per unit, and to perform any external visual
inspections as needed. Kiss was interviewed telephonically by
Fitzpatrick about work on the catchup project at
Eggleston's request. After that interview, Kiss was
called back by Brads Wells of Pro-Inspect about the job, and
met with Wells and possibly others in Pasadena, Texas to
discuss the job working at the Sinclair refinery. In January
2011, Kiss went to the Wyoming Sinclair refinery and reported
for work as a Pro-Inspect API 570 contract inspector on the
catchup project. He first reported to the safety council in
Rawlins for a safety training course and clearance before he
could begin work at the refinery. After that, Kiss went to
the refinery, met with Fitzpatrick at the construction
trailer and was given information about the scope of work.
Fitzpatrick introduced Kiss to the TechCorr technicians and
to Eggleston. To Eggleston, Fitzpatrick introduced Kiss as
the inspector who would be picking up on systemizing and
circuitizing and performing external visuals as needed.
Separate
contracts were entered into with TechCorr and Pro-Inspect,
with TechCorr charged with drafting isometric drawings and
taking UT readings of the pipe. UT readings provide a
snapshot of a particular piece of pipe at a particular
location. Alone, UT readings are not singular tools for
identifying troublesome corrosion, but the data gathered with
UT readings can be used to determine rates of corrosion over
time by comparing earlier or previous UT measurements to
newer, more recent UT readings. A corrosion rate is a
predictive tool but is not designed to identity locations
that are in the most urgent need of repair. UT readings are
taken at designated locations and intervals and are used to
calculate how much pipe wall is lost over time through
corrosion. The same CMLs are used for repeat or subsequent
measurements to generate meaningful corrosion data. Corrosion
rates aid in estimating the remaining life of any particular
piping system. This is calculated by determining how long it
takes for a thickness reading to reach a predetermined
minimum thickness, with the goal being replacement of piping
prior to reaching that minimum thickness. Minimum thickness
is defined by API 570 as the greater of pressure design
thickness or structural minimum thickness, but a refinery may
elect to utilize a higher thickness minimum value instead of
code-defined minimum thickness values in determining useful
life of piping, depending upon whether the policy at the
refinery is conservative and how much risk is acceptable. In
this case, Sinclair established a minimum thickness value for
all piping systems equal to the piping pressure design
thickness, which is the point where internal pressure would
cause the pipe to rupture. For the 02-04-02 circuit, this is
0.004 inches.
Other
tools are available, including radiography, that are also
used to monitor piping system health. Radiography samples a
larger area of a piping circuit than standard UT measurements
and may be more effective when evaluating localized
corrosion, such as that seen with the use of sour crude oil
with high concentrations of naphthenic acid in heavy Canadian
crude oil. Sinclair did not use radiography to monitor its
piping systems.
In
addition to visual inspections, an API 570 inspector might be
expected to locate and determine the number of necessary
CMLs, and after inspection, to submit a report. TechCorr and
Pro-Inspect worked hand in hand on the catchup project.
Eggleston reported to John Rosacker, who was in charge of the
Sinclair Process Management/Inspection Department. Eggleston
was responsible for the refinery's inspection program and
directed Sinclair's technicians and all of the
refinery's contract inspector technicians. Eggleston
directed Sinclair's refinery unit inspectors, the
employees responsible for managing inspections of the crude
units, and the activities of third party contract inspectors,
including Pro-Inspect among others.
On
January 1, 2010, Sinclair and Pro-Inspect entered into a
written contract, which was subsequently extended through
Pro-Inspect's work in 2011. Joint Ex. 3. The 2011
contract described the scope of work simply as follows:
Pro-Inspect will provide API Certified Inspectors NDE Techs
to access [assess] piping and vessels as directed by
Sinclair.
Joint
Ex. 3, PI-1656. The scope of work language was copied by
Pro-Inspect's Misti Jones in her own handwriting from a
previous 2009 contract that had been entered into between
Sinclair and Pro-Inspect. Jt. Ex. 2 ("Pro-Inspect will
provide API certified inspectors & NDE technicians to
assess piping & vessels as directed by Sinclair.")
Jones was authorized to sign contracts on behalf Pro-Inspect.
Jt. Ex. 2, PI-1558.
The
contract further provides "Contractor shall perform the
Work diligently and carefully in a good and workmanlike
manner according to accepted standards of construction"
and is an independent contractor with "full power and
authority to select the means, methods and manner of
performing the Work, being responsible to Company for all
materials delivered and for the results contracted for."
Joint Ex. 3, 1634. Excerpts from the deposition testimony of
Steve Wells, employed by Pro-Inspect between June 2006 and
April 2012, were read into the record at trial. Wells was
employed as coordinator and manager of field services for
Pro-Inspect, coordinating and sending inspectors to
refineries. He testified as to his expectations of API
certified inspectors, to the professionalism expected of
them, and to the expectation that they will exercise the
judgment and expertise that accompanies API certification.
They are expected to understand the API code, know where to
find answers necessary to implement the code, and to work
independently in a refinery.
Sinclair's
Eggleston explained that he was responsible for arranging all
of the inspections during 2011. Def. Ex. A3. Once the project
began, Eggleston claimed he was not involved in the actual on
the ground inspection of each circuit and that he received
progress reports from Fitzpatrick in morning meetings.
Eggleston claimed that he provided no additional direction
about the project. Minutes of morning meetings discussing the
project and its progress were received and are included at PL
Ex. 13. However, at the refinery itself, Eggleston for
Sinclair usually gave oral instructions to Fitzpatrick (who
was then with Pro-Inspect) outlining the scope of work on the
project and work that was to be accomplished. Oral
instructions were shared with API certified inspectors daily
or weekly, but those instructions were not written down. In
other words, details as to the exact scope of inspection work
to be accomplished were as provided and as directed by
Sinclair.
The
parties have disagreed about the scope of work for this
project. Sinclair asserts its inspection supervisor,
Eggleston, specifically told Pro-Inspect's lead
supervisor, Fitzpatrick, that Sinclair wanted a "full
API 570" inspection. Sinclair contends this would
include review of ultrasound thickness data (UT data),
placement of CMLs, calculation of the remaining life of
piping circuits and verbally reporting problems that might be
found. Pro-Inspect has asserted Sinclair only directed it to
conduct external visual inspections of the exterior of the
piping systems and related supports and says that review and
analysis of UT data was Sinclair's responsibility,
working separately to review data collected by the TechCorr
technicians. The Court agrees with Pro-Inspect.
GP
Amerispect worked at the refinery from 1999 to 2004 and did
some inspections in 2002. Between 2002 and 2008, there were
no inspections on the 583 unit. Inspections were conducted by
TechCorr in 2008; no corrosion rates were calculated from the
2008 inspections. The 2008 revamp of the 583 unit was
completed in August of 2008. As explained briefly earlier, in
2010, Eggleston began planning for the 2011 catchup
inspections, also called the MI (mechanical integrity)
project; his plans anticipated several phases of work, and
his catchup plan was approved by Sinclair. Joint Ex. 21.
Eggleston stated in his November 17, 2010 email to
Sinclair's Jim Larscheid, regarding the mechanical
integrity catchup plan (Jt. Ex. 21):
As you know, we have several phases of work to be completed
for the Mechanical Integrity program to become functional.
The first step is to start using the information that has
been gathered. I would like to move the Sinclair personnel
currently employed to a status of "Run and
Maintain" where SWRC personnel will begin re-surveying
areas of the plant and entering data into MaxiTrak on a daily
basis. This would not only move the MI program forward, but
allow scheduled time for SWRC's API certified inspectors
to obtain the necessary on the job training for certification
in NDE. Initially, I have stated a goal of one piping circuit
or pressure vessel external inspection per day from each
inspector not in the "Rover" position. This would
include gathering the UT data and field walkdown, analyzing
the UT data with past history and writing the inspection
report in the MaxiTrak program. Issuing IWR's for repairs
would be part of this process as well. Initially the unit
priority will be based on the Shutdown schedule for 2011 in
an effort to get data prior to shutdown on these units.
Another phase is to get the units that have been radically
revamped since the initial survey re-circuitized. The units
included here are 581/583 Crude, 582 Crude, Reformer, and
Hydrocracker units. Additionally, we have two small
subsections of the alky complex that were skipped over in the
initial survey effort, such as the cat-poly unit and the GRU.
I would like to utilize contract personnel to perform these
baseline surveys, consisting of one API 570 inspector, and
three to four technicians based on workload. These areas will
require revision to existing sketches and in many cases
complete new sketches, along with baseline UT data.
Both of these efforts will require support from insulation
and scaffold personnel. The main support will be from the
insulation personnel to install inspection ports in the
piping, every effort will be made to place insulation ports
in relevant locations that will be accessible without
scaffold on a long term basis. I am sure that I can
coordinate the scaffold support through the maintenance
department, but it might be a smoother process if I had
control of a subset of insulation personnel that can be
coordinated by my department to facilitate workflow of the
new systems.
The workflow has the following steps:
1.) Systemize the P&ID's and break into circuits.
2.) Send technician to sketch circuit.
3.) The API would calculate the number of CML's, and
assign on drawing with input on accessibility from
Technician.
4.) Assign package to technician to mark areas with paint on
piping.
5.) Assign package to insulation crew for inspection port
installation.
6.) Assign package to technical to gather UT data.
7.) The final step is data entry in to MaxiTrak. This can be
accomplished two ways:
a. By direct entry one circuit at a time, or b. By entering
multiple circuits into a spreadsheet and sending to Canada
for bulk entry.
I also envision a clerk to help put the information packages
together.
Jt. Ex. 21.
Collected
data was never entered into MaxiTrak system in a timely
manner by Sinclair. The purpose of the program was to
organize data and make information easily accessible and
retrievable. The program was also intended to perform
corrosion rate and remaining life calculations on piping
circuits. The program had been purchased in 2007, but
inspection data had not been entered into the program in
2011. The data management program was never implemented for
Unit 583 for any time period relevant to this litigation,
with Sinclair explaining it lacked manpower resources to do
so. Sinclair inspectors were the only inspectors with access
to the MaxiTrak program; contract inspectors did not have
authority to use that program.
From
his earlier work at the refinery, Fitzpatrick was familiar
with the 2008 581 and 583 unit upgrade project. That project
had altered some piping circuits that previously existed when
an earlier inspection was performed by GP Amerispect. For
inspections of the pre-2008 upgraded piping, including the
circuit in this case, Eggleston instructed Fitzpatrick to use
the prior 2002 GP Amerispect inspection data when conducting
the 2011 inspections. Fitzpatrick did not agree with
Eggleston on the number of CMLs and had suggested instead
that a CML calculation form he had used in work at other
refineries be used during the catchup project. Eggleston said
he thought GP Amerispect's placement of CMLs on the
circuits was not adequate and said he told Fitzpatrick he
wanted more CMLs placed on the circuits. Eggleston recognized
that the code really did not provide a specific guideline on
how many CMLs there should be. Eggleston stated that he had
"developed a CML calculation form to, urn, to settle
that argument, I guess, to define a number of CMLs for each
circuit based on the characteristics of the circuit, urn,
taking into account the length, the number of fittings, the
corrosion rate, the number of deadlegs, all of these are
factors in determining the appropriate number of TMLs for a
particular circuit." Tr. Vol. II, 378.
So,
Eggleston instructed that the CML Excel spreadsheet
calculation form that Eggleston had developed be used to
decide the appropriate placement and number of CMLs. There
was no training on use of the form. Thereafter, the workflow
for the catchup project began by segregating piping into
manageable circuits, then moved to creating an isometric
drawing of each circuit, locating CMLs, taking UT readings,
analyzing the UT readings and expanding the scope of the
inspections if so indicated by those readings, and preparing
an inspection report for the circuit. Eggleston required the
use of his CML calculation form by everyone on the project,
including UT techs and inspectors, such as Fitzpatrick and
Kiss. Interestingly, during trial Eggleston made mistakes
himself when he discussed how calculations were to be made
when trying to demonstrate proper use of this CML calculation
form. Subsequent to the fire at issue in this case, Eggleston
began to hold specific training classes for inspectors to
make sure that they understood how Eggleston wanted the form
to be used. Eggleston said the calculation form was based on
API 570 factors, including classification and material codes,
total length, number of fittings, deadlegs and corrosion
rates. PI. Ex. 138. The CMLs GP Amerispect had previously
placed on a circuit were to be entered on that form and
retained so as to reflect corrosion between 2002 and 2011. If
required, additional CMLs would provide baseline readings for
future inspections.
API 570
5.6.1 states:
CMLs are specific areas along the piping circuit where
inspections are to be made. The nature of the CML varies
according to its location in the piping system. The selection
of CMLs shall consider the potential for localized corrosion
and service-specific corrosion as described in API 574 and
API 571. Examples of different types of CMLs include
locations for thickness measurement, locations for stress
cracking examinations, locations for CUI[4] and locations for
high temperature hydrogen attack examinations.
Joint
Ex. 4.
To
accomplish this part of the project, at trial Eggleston said
he wanted the form to be filled out by an API 570 certified
inspector, which he testified required judgment calls and
input of the inspector. In practice, the form was used by
everyone on the project with information obtained during
external visual inspection, new UT ...