Tag Archives: Alaska

Warding off Corrosion Alaska’s Aging Pipelines – A New Growth Industry

On Tuesday, the University of Alaska-Anchorage held a grand opening for its new BP Asset Integrity and Corrosion Lab. The new facility, made possible by a $1 million gift from BP, expands the university’s mechanical engineering program.

The lab’s birth comes as Alaska’s oil pipeline and the corrosion experts who know how to diagnose and manage it are both aging. It holds promise for both technological innovation and developing a home-grown workforce to keep pipelines in good working order for decades to come.

“Having well-trained engineers on staff that are very familiar with the fundamentals of corrosion is a great step in the right direction,” said Matt Cullin, a mechanical engineer and assistant professor at UAA, who will serve as the lab’s director.

Costly corrosion

The grand opening comes one day after BP’s court-ordered deadline to pay the state of Alaska $255 million for money the state lost in revenue when more than 5,000 barrels of crude oil spilled on the North Slope in 2006, forcing a pipeline shutdown.  The company’s Alaska and national reputation has been tarnished by spills, ensuing lawsuits, and criminal charges – all evidence of greater scrutiny by federal regulatory agencies.

Corrosion-weakened pipes caused the North Slope pipeline failure. The company also had to pay a $20 million criminal judgment and a separate $25 million civil judgment in connection with the spills. When the civil judgment was ordered in May 2011, it was the largest per barrel penalty levied by the Department of Justice to date.

In the years since, BP has spent even more money on its Alaska operations at Prudhoe Bay, the nation’s largest oil field. Replacing the old system that leaked and caused the spills cost upwards of $500 million. The company has tripled the amount it spends each year on corrosion prevention and maintenance – up to $120 million in 2011. It’s renovated other lines and doubled its pipeline inspections to 160,000 per year, 110,000 of which specifically look for corrosion.

“BP has spent the last several years systematically strengthening safety and risk management based on lessons learned from 2006. We have made significant improvements in safety and reliability on the North Slope,” said Dawn Patience, spokesperson for BP.

The $1 million gift to UAA for an Alaska-based corrosion lab offers another investment in the long-term maintenance and management of Alaska’s pipelines.

“This will dramatically increase the capability of integrity testing in Alaska — providing results in a timely manner (and) providing students with the opportunity of hands-on research and internships in multiple industries in Alaska – not just oil and gas,” Patience said.

‘Driving a Pinto’ 

”Corrosion is going to be the biggest single threat to flow assurance in the next century,” according to Cullin, who likens the condition of Alaska’s pipeline infrastructure to an old car. “We’re driving a Pinto around.”

To keep the old car going, you could rebuild it each month to keep everything in working order. But that’s not financially viable. Pipeline management, as with the car, is about striking the right balance, Cullin said.

Preventing corrosion isn’t as simple as replacing a bad alternator. “Every day,” Cullin said, “corrosion is trying to outwit you.”

The trans-Alaska pipeline and the pipelines of Prudhoe Bay that feed it have been in place more than three decades, moving the oil that for decades has largely paid for Alaska’s state government. New pipeline-integrity engineers will continue to be in demand.

In addition to oil and gas, corrosion experts are needed in the aviation, military, shipping, fisheries and water-wastewater industries.

Alaska’s ‘corrosion crime lab’ 

The crown jewel of Cullin’s program is a $250,000 scanning electron microscope capable of making tiny details visible to the human eye. It will be able to detect minute surface changes in sections of pipe, and also identify particles.

“I kind of think of this as the corrosion crime lab for the state of Alaska. It’s kind of like CSI Sherlock Holmes style. We want to track down the root cause of the failure,” Cullin said.

Answering those mysteries could determine if a corrosion problem was due to not enough inhibitor injected into the pipeline, or to a surface film that may have prevented the inhibitor from working, or if the pipeline’s main material was faulty from the start.

The exciting part for Cullin is that it will give all levels of academics the opportunity to get involved – undergraduates, graduates and faculty. The idea is to create a lab where industry-funded research projects take place, and also where state and government entities turn for new information and ideas. Through a “corrosion track” – a series of two courses broken up by field experience over the summer – students in engineering and other relevant disciplines should be able to hit the ground running after graduation, Cullin said.

Cullin expects the corrosion classes will have a lasting impact on his students, something he calls the “corrosion glasses” effect. Regardless of what discipline they enter, he’d like to see them always have an eye out for whether designs or other new ideas adequately account for corrosion control. “I absolutely feel that they will match up to anybody from any other school with their fundamental knowledge about corrosion,” he said.

In addition to cultivating a home-grown work force, there’s another upside for industry: a quicker turnaround on failure analysis when something goes wrong. Instead of packing up parts and sending them to Houston, the material could head to UAA.

“It’s really going to be an all-purpose facility,” Cullin said. His goal is for the lab to become self-sustainable within five years, paying for itself through private or government research projects and possibly renting out time on the new microscope, which other departments have already expressed interest in.

SOURCE: http://www.alaskadispatch.com/article/warding-corrosion-alaskas-aging-pipelines-new-growth-industry

BP gives $1 million for University Alaska Anchorage lab to study metals corrosion

BP Exploration (Alaska) Inc. announced Monday that it was donating $1 million to the University of Alaska Anchorage to help create a lab to study the effects of corrosion on pipe metals.

The gift will pay for the entire BP Asset Integrity and Corrosion Lab, according to Matt Cullin, who will be the director of the new facility. The money will also help cover some of the first year’s operational expenses.

“It’s a really quite a nice gift,” said Cullin, a UAA assistant professor of mechanical engineering.

The relatively low cost for the lab, less than $1 million, is due to its location in a building that already exists, the Engineering Building. It will be installed in space vacated by the school’s anatomy lab, which has moved to new quarters.

“It’s already set up as a laboratory,” Cullin said. “That’s saving us a ton of money.”

A statement from UAA said the lab will be the first of its kind in Alaska. It will train engineering students and make it possible for the university to do more corrosion research, testing and training.

Knowing more about corrosion and how to prevent it is highly important to Alaska, said Tom Barrett, the president of Alyeska Pipeline Service Company. Addressing a conference of corrosion engineers at the Hotel Captain Cook on Monday, where the gift was announced, Barrett said at the present time, “Keeping up with corrosion technology means getting on a plane and going down to Houston.”

Barrett, a retired Coast Guard admiral and deputy secretary of the Department of Transportation in the Bush and Obama administrations, called corrosion “a creeping disease” and a “constant threat” to the 35-year old-pipeline that carries the oil on which Alaska’s economy is largely dependent.

Keeping the aging pipeline incident-free is a major priority, Barrett said. “The public perception is that there is no room for failure,” he said. “The worst thing that can happen is for oil to spill into Prince William Sound. That makes the job of corrosion management critical.”

A “pinhole leak” due to corrosion in a difficult-to-inspect section of pipe shut down operations for four days in January of 2011. Each day cost the state $18.5 million, according to the state Department of Revenue.

Criminal convictions of BP have forced the company to adopt new environmental and anticorrosion policies for its aging North Slope infrastructure. Its failed corrosion efforts came in for harsh criticism by Congress in 2006.

Barrett expressed hope that the new lab would help catch leaks before they happen. “There are eight or 10 different ways corrosion operates,” he told the conventioneers. “Multiple mechanisms can cause it and they are not well understood.”

Cullin said the new lab would have the ability to experiment with corrosion caused by carbon dioxide, a particularly prominent problem on Alaska’s North Slope.

“We’ll be able to measure corrosion rates and test inhibitor effectiveness right here in Alaska,” he said.

Such tests are largely performed out of state now, Cullin said.

Work on the lab will begin this spring. UAA expects it to open in the fall.

Judge: 2009 BP oil spill in Alaska did not violate probation

A federal judge ruled in Anchorage that BP was not negligent in its handling of a 2009 oil spill and therefore did not violate the terms of its probation.

U.S. District Court Judge Ralph Beistline found that the spill was not caused by corrosion or improper maintenance, as federal prosecutors in Alaska alleged.

At issue was whether the company should continue to be on federal probation, which it had been on intermittently since 2001. The latest term was due to end in November 2010, but BP’s federal probation officer asked that it be revoked before then because of the 2009 spill that dumped 13,500 gallons of oil onto the tundra.

The line that ruptured at the company’s Lisburne field on Alaska’s North Slope near Prudhoe Bay had been completely or partially frozen as long as six months as the ice inside expanded. Assistant U.S. Attorney Aunnie Steward alleged the company should have known the pipe was frozen and that cost-cutting measures resulted in improper maintenance and monitoring.

The judge agreed with BP’s lawyer Jeff Feldman. Beistline found that the circumstances surrounding the spill were unique and that BP “was following accepted industry practices at all relevant times and could not have reasonably expected a blowout similar to the one that occurred.”

A majority of the crude ended up under and near the pipeline, with the consistency of a “semi-solid surface,” a “stiff Slurpee” or a “snow cone,” according to an EPA agent on the scene at the time. But at least some of the oil ended up spreading across the Arctic tundra, in what was consistently described during the hearing as a “plume.”

In addition to probation revocation, the government charged that BP violated the Clean Water Act because some oil found its way into U.S. waters. Beistline ruled that had the company acted negligently it would have violated the act, but he concluded that “BP’s conduct at the time of the 2009 incident was not negligent given the state of knowledge that existed” at the time of the spill.

BP spokesman Steve Rinehart said the company is “pleased with the decision and appreciate the court’s attention.” He said BP knows “that the privilege of working in Alaska comes with a responsibility to maintain high standards. We will continue our commitment to running safe and compliant operations.”

Beistline wrote that although the week-long hearing was “costly to all,” it was in the end “worthwhile if only to demonstrate the high regard society places on the environment as the nation’s natural resources are harvested.”

Had the judge ruled against BP, the company could have faced additional fines, and the government might have brought felony charges stemming from the spill.

SOURCE: http://www.alaskadispatch.com/article/judge-2009-bp-oil-spill-alaska-did-not-violate-probation

Alyeska agrees to $600,000 penalty to settle federal cases

The operator of the trans-Alaska pipeline has reached a settlement with federal regulators to resolve four enforcement cases dating back to 2006.

Under the deal, Alyeska Pipeline Service Co. will pay a civil penalty of $600,000, which represents a considerable savings over the sum of penalties the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration had originally proposed.

Michael Joynor, Alyeska’s senior vice president of operations, and Jeffrey Wiese, PHMSA’s associate administrator for pipeline safety, signed off on the “compromise agreement” on Nov. 15 and 16, respectively.

As part of the deal, Alyeska agreed to drop a federal lawsuit it had filed against the agency challenging a fine imposed in one of the enforcement cases.

Alyeska is the Anchorage-based consortium that runs the 800-mile trans-Alaska oil pipeline on behalf of owners BP, Conoco Phillips, Exxon Mobil, Chevron and Koch Industries.

The seven-page settlement notes that Alyeska and PHMSA agreed the settlement will avoid further administrative proceedings or litigation.

Aside from the $600,000 civil penalty, Alyeska also “must develop and implement a risk-based atmospheric corrosion control program for TAPS,” the trans-Alaska pipeline system, the settlement says. PHMSA, in 2008, said Alyeska had failed to produce records for required atmospheric corrosion inspections in locations such as vaults and below-ground piping corridors where regulators found water. The deal also calls for Alyeska to take other “corrective actions.”

The settlement resolves four enforcement cases that PHMSA had opened against Alyeska in 2006, 2007, 2008 and 2009.

All totaled, Alyeska was facing fines of $1,293,800 in the four cases, including $263,000 the company paid in 2010.

Alyeska was facing its largest fine, $817,000, under a case brought in 2007.

PHMSA, in that case, issued Alyeska a notice of probable violation for “at least three pipeline failures of TAPS.”

The alleged failures included a fire in the containment area of a crude oil storage tank at Pump Station 9 in which a portable heater ignited escaping oil vapors; a 900-gallon oil spill at a valve along the pipeline; and a failed operation involving a “scraper pig,” which is a device used to clean the inside of a pipe.

PHMSA said the failures raised “cause for concern regarding the operational integrity of TAPS.”

Among other criticisms, the agency said Alyeska failed to properly report the fire and failed to follow its corporate safety manual, which requires keeping portable industrial heaters at least 25 feet from any oil, gas or electric process facility.

In 2006, PHMSA issued Alyeska a notice of probable violation and, after a hearing held at the company’s request, issued a final order much later, in January 2010, assessing total penalties of $263,000.

PHMSA alleged Alyeska committed two violations of pipeline safety regulations. First, it was too slow to obtain a vendor’s full report on a 2004 pig run to test for corrosion or other hazards on the pipeline, the agency said. Second, Alyeska failed to promptly repair a damaged segment of buried pipe near Mile 546, PHMSA said.

In August 2010, after paying the $263,000, Alyeska sued PHMSA in Alaska federal court, arguing among other things that the fine was excessive.

As a result of the settlement with PHMSA, Alyeska’s lawyers on Nov. 17 filed papers to have the suit dismissed.

In 2008, PHMSA issued a notice of probable violation to Alyeska, proposing a civil penalty of $170,000.

The agency said inspections along the pipeline, including at road crossings, turned up deficiencies in the company’s efforts to prevent corrosion. The case questioned Alyeska’s vigilance in using a corrosion-fighting technique known as cathodic protection, and also faulted the company’s record-keeping.

The fourth case covered under the settlement was brought against Alyeska in April 2009, when PHMSA issued a notice of probable violation to the company with a proposed civil penalty of $43,800.

The notice said that during an inspection, a flange was found to be inadequate for handling surge pressure at Pump Station 3, allowing the release of oil onto the station floor.

Under the settlement, however, PHMSA withdrew the safety allegation regarding the flange.

The $600,000 civil penalty specified under the settlement stems from only two of the four cases involved: the 2007 case and the 2008 case.

“We worked with PHMSA for several months to reach agreement,” Alyeska spokeswoman Michelle Egan told Petroleum News. She said the deal closes “all open matters” with the agency.

Read more: http://www.adn.com/2011/11/26/2190471/alyeska-agrees-to-600000-fine.html#ixzz1eyMWK79T

Alyeska, federal regulators reach settlement on January oil leak

The operator of the trans-Alaska pipeline has reached a settlement with federal regulators, who raised major safety concerns following a January oil leak at Pump Station 1.

Alyeska Pipeline Service Co. signed the settlement, or “consent agreement,” with the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration.

The deal resolves the “notice of proposed safety order” PHMSA issued to Alyeska on Feb. 1, allowing the parties to “avoid further administrative proceedings or litigation,” the consent agreement says.

The consent agreement notes, however, that Alyeska continues to dispute some of the findings in the agency notice.

The seven-page document makes no mention of a fine for Alyeska, but does say the company is subject to daily civil penalties of up to $100,000 per violation if it fails to comply with the agreement, which includes extensive Alyeska work commitments.

The settlement took effect quietly on Aug. 17.

Multiple risk conditions cited
Alyeska is the Anchorage-based consortium that runs the 800-mile oil pipeline on behalf of owners BP, ConocoPhillips, ExxonMobil, Chevron and Koch Industries.

Alyeska’s president, Thomas Barrett, formerly was PHMSA administrator.

PHMSA issued its Feb. 1 notice following an oil leak at Pump Station 1 on Alaska’s North Slope. The leak, discovered Jan. 8 in the basement of a booster pump building, forced two shutdowns of the pipeline, the longest one lasting about 84 hours.

The spill, which resulted in no oil escaping the building, was attributed to internal corrosion in some station piping. The mainline, 48-inch pipe was not involved.

PHMSA said it conducted an investigation of the Pump Station 1 leak and, more broadly, of the “safe operation” of the pipeline system.

“As a result of the investigation, it appears that multiple conditions exist on your pipeline facility that pose a pipeline integrity risk to public safety, property or the environment,” the notice to Alyeska said.

The notice focused on the pipeline’s declining throughput — from a peak of more than 2 million barrels per day in 1988 to an average of about 609,000 barrels in September — and the implications low flow has for pipeline safety, particularly during a winter shutdown.

The agency raised concerns about crude oil cooling down and water freezing inside the pipeline, about potential corrosion in inaccessible piping, and about Alyeska’s “cold restart” procedures and equipment.

PHMSA proposed a laundry list of “corrective measures,” many of which are incorporated in the consent agreement.

Alyeska’s work commitments
Alyeska spokeswoman Katie Pesznecker provided Petroleum News this statement on the consent agreement:

“We are pleased we reached an agreement with PHMSA. We are committed to working with our regulatory agencies to continue to safely operate and maintain the Trans Alaska Pipeline System. Many of the projects in the Consent Agreement are projects that have been underway for some time, including efforts to mitigate the compounding technical challenges related to declining throughput and crude oil temperatures, ongoing modifications to our cold restart plan, and work to identify and isolate or replace certain piping on TAPS. These issues are complicated, and we are engaged in ongoing discussions with our regulators so we can determine the best path to continue to safely maintain and operate TAPS. We believe the simplest solution to mitigate issues related to steadily declining throughput is to get more oil in the pipeline.”

Under the agreement, signed by Mike Joynor, Alyeska’s senior vice president of operations, the company makes numerous work commitments. Among these:

• Alyeska will replace or remove oil piping that can’t be inspected with in-line tools, known as pigs, or some other PHMSA-approved method.

This was a concern in the Pump Station 1 incident, which involved “low-flow, dead-leg” piping installed in the 1970s and encased in concrete.

Alyeska has submitted an evaluation to PHMSA of which piping is to be replaced.

Alyeska will install an additional pig launcher and receiver on the pipeline between pump stations 5 and 10.

PHMSA had questioned Alyeska’s ability to remove inspection or cleaning pigs that might be inside the line at the time of a shutdown. A pig could “cause a plug in the pipeline” in a cold restart scenario, the agency said.

• Alyeska will study the need for increased tank capacity at pump stations as a way to “mitigate the consequences of a cold weather shutdown,” the consent agreement says.

PHMSA had raised concern about the lack of oil storage capacity particularly upstream of Pump Station 1.

Under the consent agreement, Alyeska must develop a plan for oil storage projects, if any, by Dec. 31. Possibilities include bringing existing tanks back into service, the agreement says.

• Alyeska agreed to submit a revised cold restart plan to PHMSA and pre-position certain equipment during winter. The consent agreement says an agency inspector would make a field visit to see that the necessary workers and equipment are ready.

PHMSA said Alyeska, during the January shutdown, had trouble implementing its cold restart procedures — an assertion Alyeska’s Barrett disputed.

Restarting the pipeline after an outage is always a high-stress event, even in the best of conditions.

Maintaining oil temperature

The consent agreement pays considerable attention to the problem of oil temperature.

“Alyeska has proposed several projects which are aimed at maintaining crude oil temperatures on the pipeline at a level that will allow safe cold-weather operations,” the agreement says. “Based on current operational conditions, including crude oil characteristics, Alyeska will develop a plan and timeline for implementation and completion of proposed projects designed to create sufficient time to allow for safe restart or implementation of the Revised Cold Restart Plan, and safe ongoing cold weather operations. The projects will be designed to maintain the crude oil temperatures at or above the minimum allowable temperature … in the event of a prolonged shutdown during cold weather conditions.”

Alyeska was to submit its initial plan and timeline to PHMSA by Oct. 1, the agreement says, adding that approved projects “may not be cancelled solely for financial reasons.”

In an Aug. 1 letter to PHMSA, Alyeska provided its evaluation of the minimum oil temperature needed for safe operation of the pipeline.

As part of a recent low flow study, Alyeska said it conducted modeling, simulation and “actual flow loop testing” to determine the effects of temperature on pipeline system crude.

The study determined that if the oil temperature goes below about 31 degrees Fahrenheit, water entrained in the oil can start to freeze.

“Therefore, Alyeska has accepted the temperature of 31°F as the minimum temperature under flowing conditions for safe operation of the pipeline,” the letter said.

However, the letter added: “Taking into consideration throughput and ambient condition variables, the low flow study recommends the minimum crude oil temperature be maintained at or above 36°F. Alyeska has initiated projects with the primary purpose of maintaining the crude oil temperature at or above 36°F.”

PHMSA, in its Feb. 1 notice, said the minimum pipeline oil temperature recorded at a pump station during the January shutdown, as reported by Alyeska, was 25.7 degrees.

Third North Slope oil spill in a week

Small oil spills on the North Slope are continuing to keep BP Alaska crews and state environmental officials busy this summer.

The company has had to deal with three small spills in just the last week, events that appear to be related to maintenance and testing activities.

BP Exploration Alaska spokesman Steve Rinehart said Monday all three are still under investigation by company experts so it’s not clear whether corrosion — a major issue for the aging oil field — is to blame.

But summer is typically the time oil field maintenance and associated testing of facilities is at its height. “It’s a big busy season and while we don’t know the exact mechanism or cause of these three events, they happened at a time when pressures are going up and coming down,” Rinehart said. “And we’re in the middle of maintenance.”

On July 16, an underground section of pipe ruptured at the Lisburne field, dumping as many as 100 barrels of fluid — mostly methanol and water and a small amount of crude — onto a gravel pad and into a nearly tundra pond. The leak occurred while work crews were testing newly installed valves in that area.

Then on Thursday, July 21, BP discovered a new spill, this one in a flare pit at Flow Station 2 in the Prudhoe Bay unit. BP and state Department of Environmental Conservation officials said about 200 gallons of fluid — a mix of briny water, gas and crude oil — spilled into the flare pit at the production facility, creating an oil ring around the pit.

Rinehart said the oil is being cleaned up. “It was a minor event and there will be virtually no environmental impact,” he said, noting that the flare pit is designed as a place to burn oil and gas mixtures.

Flow Station 2 has been shut down while BP technicians look into what caused the leak. Rinehart said the company doesn’t anticipate any major problems due to the shutdown of the facility, which is where oil is separated from gas and water before the crude is sent to another processing facility before shipment down the trans-Alaska pipeline.

Also on Saturday, BP workers found another leak, this one less than a barrel in size, coming from a flow line called N-74 next to the N Pad. Rinehart said the spill was discovered while crews were testing an emergency shutdown system at the pad. The line was not in service at the time.

Again, Rinehart said, the company still isn’t know what caused the leak.

But corrosion is a serious issue on the North Slope and BP as well as other oil field operators spend tens of millions of dollars a year on maintenance and repair programs aimed at fighting the problem in facilities that are more than 30 years old. There are hundreds of miles of pipeline on the North Slope and thousands of valves and other pieces of equipment subject to corrosion.

Last year, after a years-long examination of oil spill records and reports, DEC officials found that flow lines in particular are susceptible to corrosion because the material they carry — the mix of water, gas and oil — is especially corrosive.

BP, in part due to major corrosion-related leaks in 2006 at Prudhoe Bay, has substantially beefed up its corrosion detection, maintenance and repair program. The 200,000-gallon spill prompted criminal charges against the company and lawsuits by the state and federal governments. In May, BP and the federal government reached a settlement of that case in which BP, in addition to steps it had already taken, agreed to independent monitoring of its facilities and to research new leak detection systems.

SOURCE: http://www.alaskadispatch.com/article/third-north-slope-oil-spill-week

BP Ducks Investor Suit for Prudhoe Bay Spill

(CN) – The 9th Circuit on Wednesday dismissed a securities-fraud complaint against BP Exploration related to the oil company’s 2007 conviction for negligently discharging oil into Alaska’s Prudhoe Bay.

This decision from the federal appeals court in Seattle unanimously reverses a federal judge’s finding that BP’s contractual filings with the U.S. Securities and Exchange Commission laid adequate foundation for securities fraud.

BP Exploration pleaded guilty in 2007 to violating the Clean Water Act after some 200,000 gallons of oil befouled Prudhoe Bay on Alaska’s North Slope. The company admitted that the spill resulted from internal corrosion in its pipelines. In its plea agreement, BP said it knew about accumulated sediment had caused the corrosion, but it had neglected to fix the problem.

Claude Reese led a federal class action, claiming that BP’s negligence amounted to securities fraud, as the spill had caused the company to temporarily shut down its operations in the bay and costing investors billions of dollars.

Despite knowledge of the corrosion, BP failed to take action or notify investors, Reese argued. He also claimed that the oil company’s executives had made misleading statements about the operation, and that BP continued to mislead investors though its SEC filings.

U.S. District Judge Marsha Pechman in Seattle tossed most of Reese’s claims for failure to meet the heightened standards of the Private Securities Litigation Reform Act of 1995. But the judge said Reese could move ahead with the claim that accused BP of defrauding investors through SEC filings.

On appeal, a three-judge panel of the 9th Circuit reversed, finding that the filings were forward-looking contractual promises, the breaking of which did not amount to fraud.

“The breach of a contractual promise of future performance typically does not constitute a misrepresentation that will support an action for fraud,” Judge Ronald Gould wrote for the panel. “BPXA’s contractual promise to act as a prudent operator did not expressly or implicitly assert that BPXA was in full compliance with its obligations thereunder, and we do not view the public filing of the ORC Agreement as the sort of traditional fraudulent misrepresentation of fact that could induce investors mistakenly to buy securities. We hold that, in this case, the public filing of a contract containing a promise of future compliance did not, upon the contract’s breach at a time after execution, provide an actionable misrepresentation for the purposes of a private damages action for securities fraud.

SOURCE: http://www.courthousenews.com/2011/06/29/37791.htm