The Case of the Abandoned Pipeline
The Contractor performed all activities necessary to complete 19 miles of a 24” high-pressure natural gas transmission pipeline with all valves and pig-launchers. All welding and bending was in the field. All pipe and fittings were provided by the Owner. As a result of alleged budgetary over-runs and workmanship issues, the Contractor and Owner had disagreements near the end of the project. The original work order was terminated. A new agreement with added terms was placed enforce. There were 97 different heat numbers of 24” pipe from overseas and the remnant lengths were as short as 14’. The Contractor encountered numerous weld rejects at x-ray and many bends with unacceptable wrinkles.
Metallurgical evaluations of the X65 pipe, circumferential SMAW butt welds and field bending techniques were performed in the laboratory. Metallurgical and mechanical properties of the pipes varied greatly between each of the 97 heats. Welds and bends were compromised by the material property variations. Approved SMAW welding parameters were ineffective due to the alloy constituents in each pipe weld. Mechanical properties of the pipes varied between each heat as a result of inconsistent annealing and resultant embrittlement. The Owner provided onsite Inspection of welding and bending operations. There were indications that the Inspection results were adversely affected by mis-guided code interpretations for weld inclusions and bend wrinkles.
The Owner alleged that the Contractor was unable to continue work in a suitably workmanlike manner and ceased progress payments. The Owner claimed excessive weld rejects, unnecessary damage at pipeline crossings, and defective wrinkles in bends. Due to the financial dispute between the Owner and Contractor, the Contractor stopped work on the pipeline. The Owner alleged abandonment of the worksite, sealed-off the work area and equipment, enforced ‘No Trespassing’ laws and signage, and filed for ‘breach of contract’ damages.
The Lessons Learned:
In court, the owner was awarded actual damages for pipeline completion delays with interest, all court costs, and reimbursement of other associated charges. The Contractor did not understand the contract. The Contractor should have engaged legal contract advice from an attorney before starting work.