Cost overruns on the Norwegian continental shelf: The element of surprise

Sindre Lorentzen, Atle Oglend and Petter Osmundsen

Energy, 2017, vol. 133, issue C, 1094-1107

Abstract: We examine drivers of cost overruns in Norwegian development projects in the oil and gas sector. The multivariate longitudinal econometric analysis employs a unique and detailed dataset consisting of 79 different projects between 2000 and 2013. Among the significant results, we find that the unexpected change in economic activity has a positive effect on the overruns, there is a considerable positive momentum in the transitional cost overruns, more experienced operators tend to incur less overruns and finally that the size of the investment of the projects has a positive impact on the overruns. Furthermore, we find evidence that current economic activity matters to an extent, but that the pivotal factor is the unexpected change in activity.

Keywords: Project metrics; Project valuation; Oil projects (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:133:y:2017:i:c:p:1094-1107

DOI: 10.1016/j.energy.2017.05.106

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