For a long time, cracked structures have triggered various researchers to develop a structural integrity approach and design models to address the fracture problems. In the present study, a pipeline with an axial semi-elliptical surface defect was examined in detail. Recent works have highlighted the use of the classical finite element method (CFEM) as numerical tools to solve the fracture mechanics; however, this approach comes with a few difficulties in the modelling aspects. To overcome this issue, we proposed the use of the extended finite element method (XFEM), which was implemented in the commercial version of Abaqus software. Moreover, we have used the results based on this technique in the volumetric method to estimate the stress intensity factors (SIFs). Then, this parameter was employed to build the failure assessment diagram (FAD). The FAD curve was used in the current investigation because it is one of the conventional methods for the evaluation of flaws in steel pipes. The XFEM simulations enable us to draw an FAD curve that can be used as a practical reference for defect evaluation in pipeline systems in the industrial world.