Recent research has shown that the effect of internal pressure can be detrimental to the fracture response of pipelines with circumferential flaws subjected to bending or tensile loading. In addition, recent work at SINTEF indicates that embedded defects under certain circumstances can be more critical than surface cracks with the same height and length. This is contrary to the common practice in ECA analyses of assuming that the results for surface cracks can be conservatively applied also to embedded defects given that the ligament height (distance from defect to pipe surface) is at least half of the defect height. Today's analytical equations that are the basis for most engineering critical assessments are not capable of accounting for the effect of internal pressure, and the industry does not have a common recognized practice for assessing the integrity of pipelines for longitudinal strains in the plastic range during operation. Finite element methods, however, can be used to accurately simulate the effect of biaxial loading. A finite element model with shell and line spring elements that incorporate the effect of internal pressure has been employed to efficiently investigate the fracture integrity of a pipeline during operation. The model is capable of analyzing surface cracks on both the inner and outer pipe surfaces under biaxial loading, as well as embedded defects with various ligament heights. The pipe model has been subjected to tensile loading while under internal pressure, and embedded defects have been compared to surface cracks of similar size. The results illustrate that embedded defects can cause a reduction in the strain capacity as compared to surface cracks.