In a major recall of installed pipes in a Middle East gas ﬁeld, an ESi statistical analysis supported the initial premise that a large proportion of pipes failed to meet the technical speciﬁcations.
ESi was retained to assist in an international arbitration dispute entailing the recall of approximately 5.5 km/3.5 miles of installed superalloy pipe used in the transport of untreated sour gas.
The pipes formed part of a complex multibranch piping system on two artiﬁcial islands that were part of a multibillion-dollar gas development project in the Middle East.
The client’s decision to recall and replace all the pipe material was challenged as unnecessary and that a “test and replace” strategy could have been utilized to remove high risk material from the ﬁeld.
ESi was tasked to assess the amount of pipe in the ﬁeld that failed to meet the technical speciﬁcations and to determine if a “test and replace” strategy could have been utilized or if the complete recall was warranted.
Initially, ESi eﬀorts focused on statistical analysis of the production and test records associated with the manufacturing process’s capability to manufacture pipe consistent with the technical speciﬁcations.
Material test data, inspection records, and process records were consolidated and then statistically analyzed to quantify the probable proportion of pipes failing to meet the technical speciﬁcations. This analysis required ﬁltering through large data sets containing various production records and test results, to ensure unique and independent records were used in the analysis. Multiple requirements were considered in the analysis, so special care had to be taken to properly address the joint probability of the pipe failing to meet one or more of the requirements.
Results of this analysis indicated a failure to potentially meet multiple requirements of the technical speciﬁcations. To validate this hypothesis, ESi developed a sampling protocol for ﬁeld returned units. ESi then used its accredited laboratory to test and identify about 100 full sized samples. Tensile test records of the material properties, such as yield and tensile strength, were consolidated and then statistically analyzed.
The analysis revealed a bimodal population in pipe strength, which in conjunction with the metallurgical analysis and ultrasound inspection of another large sample of retrieved pipes, veriﬁed a substantive deviation from the technical speciﬁcations.
The ESi investigation of the manufacturing process revealed the intentional violation of required processes and controls. This resulted in the production of deﬁcient pipe material that was covered up by the issuance of falsiﬁed certiﬁcates. The ESi investigation revealed and substantiated the details of these fraudulent activities and identiﬁed the methods used to falsify records and test reports. Dr. Pettinger also identiﬁed correspondence where key witnesses directed employees to alter production records and test reports, including the means used to obfuscate these activities.
After submitting two extensive reports summarizing the ﬁndings, but prior to the testimony of ESi staﬀ, the parties were able to settle the dispute with favorable terms for the client, allowing them to recover the costs of the recall.
ESi’s statistical analysis of the data proved at a 95% conﬁdence level that a substantial percentage of produced pipe material failed to meet the measurable contractual speciﬁcations. The large percentage of defective material, high risk application, and identiﬁed root causes proved that a substantial portion of the installed subject pipes failed to meet the technical speciﬁcation in one form or the other.
The client’s decision to recall all pipe material was justiﬁed and consistent with prudent engineering practices and the prevailing standards on recall decision management.
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