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Spring 2016 Pipeline Project

The document presents a scenario where a gas company needs to build a pipeline from a new well to their refinery. They provide 5 proposals for routing the pipeline, with different routes going through private land requiring right of way fees or tunneling through a mountain which would require an environmental impact study. They calculate the total costs for each proposal, finding that the minimum cost route would be to route the pipeline at an angle to intersect both private land and BLM land, with 19.5 miles on private land and 20.859 miles on BLM land, for a total cost of $26,392,320.

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51 views

Spring 2016 Pipeline Project

The document presents a scenario where a gas company needs to build a pipeline from a new well to their refinery. They provide 5 proposals for routing the pipeline, with different routes going through private land requiring right of way fees or tunneling through a mountain which would require an environmental impact study. They calculate the total costs for each proposal, finding that the minimum cost route would be to route the pipeline at an angle to intersect both private land and BLM land, with 19.5 miles on private land and 20.859 miles on BLM land, for a total cost of $26,392,320.

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© © All Rights Reserved
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Joshua DiCamillo

Math 1210
Pipeline Project ePortfolio

Salt Lake CC, Math 1210


Pipeline Project

The U.S. Interior Secretary recently approved drilling of natural gas wells near Vernal, Utah.
Your company has begun drilling and established a high-producing well on BLM ground. They
now need to build a pipeline to get the natural gas to their refinery.
While running the line directly to the refinery will be the least amount of pipe and shortest
distance, it would require running the line across private ground and paying a right-of-way fee.
There is a mountain directly east of the well that must be drilled through in order to run the
pipeline due east. Your company can build the pipeline around the private ground by going 8
miles directly west and then 16 miles south and finally 40 miles east to the refinery (see figure
below). Cost for materials, labor and fees to run the pipeline across BLM ground is $480,000
per mile.
Cost of drilling through the existing mountain would be a one-time cost of $4,500,000 on top of
the normal costs ($480,000 per mile) of the pipeline itself. Also the BLM will require an
environmental impact study before allowing you to drill through the mountain. Cost for the study
is estimated to be $600,000 and will delay the project by 8 months costing the company another
$100,000 per month.
For any pipeline run across private ground, your company incurs an additional $360,000 per
mile cost for right-of-way fees.
Summary of Fees
Mile of pipeline: $480,000/mile
Mountain Tunnel: $5,900,000 + #miles of pipeline
$4,500,000 one-time fee
$600,000 environmental study
$800,000 delay costs (8 months @ $100,000/month)
$480,000 pipeline/mile
Mile of Private Land Pipeline: $840,000/mile
Pipeline: $480,000/mile
Right of Way Fees: $360,000/mile
We have provided 4 scenarios regarding the effective use of funds showing financial breakdown
of costs for each proposed plan
Proposal #1: Cost to run the pipeline strictly on BLM ground with two different cases
i)

One running west, south and then east to the refinery.

Joshua DiCamillo
Math 1210
Pipeline Project ePortfolio

C(x) = $480,000.00(x)

x=64 Miles

C(x) = $480,000.00 ( 64) = $30,720,000.00

Proposal #2: Pipeline heading east through the mountain and then south to the
refinery

Joshua DiCamillo
Math 1210
Pipeline Project ePortfolio

C(x) = $5,900,000.00 + $48,000.00 (x)

x=48 Miles

C(x) = $28,940,000.00

Proposal #3: The cost of running the pipeline the shortest distance across the private
ground to the refinery .

C(x) = $480,000.00(x) + $360,000.00(x)

x=36 Miles

C(x) = $30,240,000

Proposal #4: The cost of running the pipeline straight south across the private ground,
then straight east to the refinery.

Joshua DiCamillo
Math 1210
Pipeline Project ePortfolio

C(x) = x($480,000.00) +2 x($480,000.00+$360,000.00)

x=16

C(x) = $28,800,000.00
Proposal #5: The cost for the pipeline running from the well across the private
ground at the most cost effective angle and intersecting the BLM ground to the south
and then running east to the refinery.

Joshua DiCamillo
Math 1210
Pipeline Project ePortfolio

$ 480,000
( y ) +(32x )(
)
( $ 840,000
)
miles
mile

C(x)=

y=

x2 +16

C(x)=

( x +256 ) +( $ 15,360,000 $ 480000 x)


( $ 840,000
)
miles
miles
miles

C(x) =

$ 840,000 2
( x +256 ) 2 + $ 15,360,000 $ 480,000 x
miles
mile
mile

$ 840,000 2
( x +256 ) 2 (2 x)+ $ 480,000 + 0
2 miles
miles

C(x) =

(x

+256 ) miles

$ 840,000 x

( x 2 +256 ) miles
$ 840,000 x

(x

+256 ) miles

$ 840,000 x

C(x)=

$ 480,000
mile

$ 480,000
=0
mile

$ 480,000
mile

$ 840,000 x ( x +256 ) miles


=
$ 480,000
mile
2

7x
=x2 +256
4

( )

49 x2
=x 2 +256
16
49 x 216 x 2+ 4096
49 x 216 x 2=4096

Joshua DiCamillo
Math 1210
Pipeline Project ePortfolio

33 x2 =4096

x=

4096
33

So the minimum cost will happen when x 11.14096998


Once we found out what our x value equaled we can insert our answer into the equation to find
the distance the pipeline must travel on private ground:

y= 11.140969982 +16 2

19.49669747

Therefore, the remaining distance on BLM ground was 32 -

64
20.859
33

Taking these final numbers we can determine the final cost to build the pipe line.
C ( x )=$ 840,000.00 ( 19.5 miles )+ $ 480,000.00 ( 20.859 miles )
Cost =$ 26,392,320.00

Joshua DiCamillo
Math 1210
Pipeline Project ePortfolio

C ( x )=$ 480,000.00 ( 32x ) + $ 840,000.00 ( x2 +256 ) 2

Also, in your report, include a reflection of the things you have learned in your calculus class
and how they may apply to the real world. Can you make the argument that calculus is a useful
tool? What kinds of things have you learned that can be useful in your areas of interest?
Please be specific and give some examples to back up your statements. Your reflection
needs to be typed-not hand written and included with the report.
Math 1210 is a Quantitative Studies General Education course. Scan or save a copy of your
finished report to upload to your SLCC e-Portfolio so that it can be found under this category.
You will NOT receive a grade for the assignment if it is not uploaded to your e-Portfolio.
Instructions for the e-Portfolio are posted on the Canvas site for this course.

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