Professional Services
Whitecase
Full Credential Description
The case study titled Untangling a failed energy startup highlights the critical challenges faced during the commissioning and startup phase of energy projects, particularly in the context of liquefied natural gas, power, renewables, and petrochemical sectors. This transitional period is fraught with potential liabilities, especially when mixed commissioning and startup teams are involved. The primary concern revolves around health and safety risks associated with introducing hydrocarbons or other precursors into a facility, which can lead to substantial damage and delays if not managed properly. To address these challenges, the case study emphasizes the importance of clearly defining the contractual allocation of responsibilities between owners and contractors. It notes that sophisticated owners often demand control of the facility at the mechanical completion stage, allowing them to manage commissioning and startup independently. In contrast, less experienced owners may rely on contractors for a turnkey solution, which can complicate liability issues if problems arise during commissioning. A specific incident is discussed where damage occurred during the commissioning phase of a large power generation facility due to a failure by an owners operations trainee, who was instructed by the contractors supervisor. This incident led to an arbitration panel ruling that the contractor bore some liability due to their duty to train and supervise the owners personnel. This outcome underscores the necessity for both parties to carefully consider the risks associated with mixed teams and to establish clear contractual to mitigate potential disputes. Ultimately, the case study illustrates that effective risk allocation and clear communication between owners and contractors are essential to navigate the complexities of commissioning and startup phases in energy projects, thereby preventing significant operational headaches and financial repercussions.