A106 pipe standards conflict

Developed forensic case. ~$5B refinery built by financial-investor consortium during a period of pipe shortage. Pipe purchased to ASTM A106 with installation under ASME B31.1. One in-service leak; refinery rejected remaining 600 lengths and hired a long-distance consultant who applied non-destructive electromagnetic testing (12.5% wall-thickness flaw threshold) rather than the hydrostatic test the pipe was sold under. Tom, retained by the other side, inspected all 600 lengths over a week and found zero failures even by the stricter NDE threshold. Dispute value: $60M, ongoing at lecture date.

The codes — just like the one I handed out yesterday — A106. I said we'd talk about it because I discussed a problem at an oil refinery where they bought a bunch of pipe at a time when it was hard to get pipe, and they built things. They bought it to A106. It was going into a refinery. If it's going into a refinery, the people building it are going to purchase the refinery from the contractors. This might be a $5 billion refinery, purchased in this case by a bunch of investors. It wasn't a big existing oil company building this refinery — could have been an Exxon. Many times a new refinery might be built by a consortium of oil companies — Shell and Exxon might get together in a partnership. This was actually being built by a bunch of financial investors who didn't know much about things.

A petrochemical refinery purchased ~600 lengths of Romanian-mill ASTM A106 seamless carbon steel pipe (6–20 inch diameter) during a global steel-pipe shortage. The purchase order specified hydrostatic testing (the default in A106 §13, roughly 40% of yield, ~1500 PSI for the smaller diameters). After one leak was found in service, the owner had non-destructive electric testing (ultrasonic/eddy current/magnetic particle) performed, which uses a much more stringent 12.5%-of-wall flaw criterion not called out in the purchase order. Tom and colleagues spent August on site inspecting all 600 lengths and found no defects exceeding the 12.5% threshold. The owner nonetheless sought ~$60 million on an originally couple-million-dollar order, having already torn out installed pipe. Tom frames this as the canonical "you only get what you paid for" dispute and as a case of engineers unable to read their own purchase specifications or the English of the standard itself.

Let's talk about another example. This is actually the reason I decided to teach this class last fall. I was involved — or I am still involved — in a situation where someone bought some A106 pipe, which is also B31 something. Whether you're buying ASME or ASTM, there are like five different standards that cover this pipe. In fact they were using ASTM A106, which is the standard specification for seamless carbon steel pipe for high-temperature service. I handed this out because we're going to spend a little time talking about it. We talked about scope, and we talked about reference documents. What I made the students do last fall is take any standard — there's going to be a bunch of reference documents — and they actually spread this out to ANSI standards, military standards, federal standards, other standards.