- © 2002. AAPG/DEG
The transport of hazardous material can involve the occurrence of catastrophes, particularly when multiple transport trips are made. This article shows how a corporation can estimate the likelihood of being able to make a profit from a large number of such trips, with due allowance being included for the potential of a catastrophic event. The main emphasis is on estimating and updating probabilities of catastrophe based on information from prior trips. In addition, a quantitative procedure is developed to allow a corporation to decide whether it is better to buy out of a contract to transport hazardous material based on anticipated revenues, including the hazard potential for a catastrophe. Several numerical examples are provided to show how such estimating procedures operate in practice.
Ian Lerche is Professor of Geology at the University of South Carolina. His current major research interests are in the fields of basin analysis, salt, economic risk, and environmental problems. He has published several hundred papers, more than a dozen books. He is the recipient of numerous awards and honors, including the Levorsen Award of the AAPG. Currently, he sits on several editorial boards and is also technical editor of Energy Exploration & Exploitation.