Risk and the Rate of Return on Arctic Natural Gas: An Illustrative Analysis

  • G. Campbell Watkins
  • R. G. Kirkby
  • Roger Lawrey


‘Megaprojects’, as the name implies, have a discernible impact on a national economy and an even greater impact on the economy of the region in which they are located. Once embarked upon, they are not easy to curtail or abandon, acquiring a momentum of their own and the support of what become vested interests. The potential for dislocation associated with megaprojects accentuates the need for careful evaluation of their sensitivity to changes in underlying circumstances. More specifically, evaluating downside risk is crucial, since any financing assumes special significance. Moreover, if such projects run into difficulties, their size will tend to attract government action, thereby translating what might have been solely private risk into social risk as well.


Capital Cost Exploration Cost Estimate Capital Cost Assumed Probability Distribution Shrinkage Cost 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Arctic Pilot Project (1981) Application to the National Energy Board, August.Google Scholar
  2. Belanger, G. and Mcllveen, N. (1980) ‘Rate of Return and Investment Profitability, Long Range and Structural Analysis Division, Department of Finance, April.Google Scholar
  3. Department of Energy, Mines and Resources (1980) National Energy Program, Ottawa.Google Scholar
  4. Hanssmann, F. (1968) Operations Research Techniques for Capital Investment, John Wiley, New York.Google Scholar
  5. Mead, J. (1982) The Economic Viability of the Alaska Natural Gas Transportation System’, paper presented at the Ninth International Energy Conference on Natural Gas: Policy Planning and Technical Issues, University of Colorado, 15 September.Google Scholar
  6. National Energy Board (1982) Staff Study of Pipeline Construction Costs 1975- 1985, Ottawa.Google Scholar
  7. Pearson, E. S. and Hartley, H. O. (1958) Biometrika Tables, University of Cambridge, Mass.Google Scholar
  8. Tarasofsky, A., Roseman, T. G. and Waslander, H. E. (1981) Ex Post Aggregate Real Rates of Return in Canada, Economic Council of Canada, Ottawa.Google Scholar

Copyright information

© David W. Pearce, Horst Siebert and Ingo Walter 1984

Authors and Affiliations

  • G. Campbell Watkins
  • R. G. Kirkby
  • Roger Lawrey

There are no affiliations available

Personalised recommendations