IDEAS home Printed from https://ideas.repec.org/a/bpj/jbvela/v4y2009i2n4.html
   My bibliography  Save this article

The Value of Lost Production from the 2004-2005 Hurricane Seasons in the Gulf of Mexico

Author

Listed:
  • Kaiser Mark J.

    (Louisiana State University)

  • Dismukes David E

    (Louisiana State University)

  • Yu Yunke

    (Louisiana State University)

Abstract

The oil and gas industry in the Gulf of Mexico has the greatest weather exposure in the world, and is vulnerable to a range of losses that include physical damage, destruction, business interruption, and pollution liability. During the 2004 and 2005 hurricane seasons, a number of offshore facilities, drilling rigs, and pipelines were destroyed and extensively damaged. In total, Hurricanes Ivan, Katrina, and Rita destroyed 122 structures and severely damaged 76 others. Most of the destroyed infrastructures were mature assets that are unlikely to meet the economic thresholds to support redevelopment, and in the majority of cases, the production and revenue from these structures will be "lost" and written off by operators. The purpose of this paper is to examine the destroyed infrastructure from the 2004 and 2005 hurricane seasons and the likely contribution this collection of assets would have made to future production in the Gulf. We estimate the amount and value of lost production under various model scenarios, present the results of sensitivity analysis, and discuss the limitations of the analysis. We estimate that between 60 and 65 million barrels of oil and 231 to 266 billion cubic feet of gas were permanently lost in the 2004-2005 hurricane seasons at an estimated value ranging between $1.3-4.5 billion, depending on the future price profiles of oil and gas.

Suggested Citation

  • Kaiser Mark J. & Dismukes David E & Yu Yunke, 2009. "The Value of Lost Production from the 2004-2005 Hurricane Seasons in the Gulf of Mexico," Journal of Business Valuation and Economic Loss Analysis, De Gruyter, vol. 4(2), pages 1-34, April.
    • Handle: RePEc:bpj:jbvela:v:4:y:2009:i:2:n:4
    DOI: 10.2202/1932-9156.1046
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1932-9156.1046
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1932-9156.1046?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Adelman, M.A. & Watkins, G.C., 2005. "U.S. oil and natural gas reserve prices, 1982-2003," Energy Economics, Elsevier, vol. 27(4), pages 553-571, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anita Schiller, 2011. "The impact of a storm surge on business establishments in the Houston MSA," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 56(1), pages 331-346, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jan M. Smolarski & Jose G. Vega, 2013. "Extreme events: a study of small oil and gas firms," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 53(3), pages 809-836, September.
    2. James L. Smith, 2015. "Valuing Barrels of Oil Equivalent," The Energy Journal, , vol. 36(1_suppl), pages 179-194, June.
    3. Pickering, Andrew, 2008. "The oil reserves production relationship," Energy Economics, Elsevier, vol. 30(2), pages 352-370, March.
    4. Mu, Xiaoyi, 2024. "Have the Chinese national oil companies paid too much in overseas asset acquisitions?," International Review of Financial Analysis, Elsevier, vol. 92(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:jbvela:v:4:y:2009:i:2:n:4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.