The U.S. Interior Secretary recently approved drilling of natural gas wells near
ID: 3122595 • Letter: T
Question
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.
Your company has asked you to do the following:
a) Determine the cost of running the pipeline strictly on BLM ground with two different cases:
i) One running west, south and then east to the refinery.
ii) One heading east through the mountain and then south to the refinery
but please do questions A dont do D please
Acrobat Reader File Edit View Window Help 2 Pipeline Project-Spring 2017.pdf Home Tools Pipeline Project-S... x 77.286 d) Include a computer generated graph of the optimal cost function, C(x) for this pipeline for any configuration involving crossing some private ground as well as some BLM ground. Make sure to use the correct domain of the function to scale your axes appropriately and to label the minimum point. BLM Ground 8 mile E CD co Private Ground 40 miles BLM Ground Write up a report of your finding to submit to your companys CEO. This report should include all steps for any math used to make determinations asked for above as well as statements as to the costs to be incurred by each scenario. Include any appropriate figures to make each scenario clear. Label the scenarios as they are labeled above. nectation 17% SE Sun 8:31 PM Saud Export PDF Adobe Export PDF Convert PDF Files to Word or Excel Online Select PDF File Pipeline Pro...ring 2017.pdX Convert to Microsoft Word (.docxp Document Language: English (U.S) Change Convert View Converted Files Your current plan is Adobe Export PDF Learn MoreExplanation / Answer
i) West - South - East path
Total length of the pipeline = 8 + 16 + 40 = 64 miles
Total cost for materials, labor and fees to run the pipeline across BLM ground = 64 * 480000 = $30,720,000
ii) East through the mountain and then south to the refinery
one-time cost = $4,500,000
cost for materials, labor and fees to run the pipeline = [(40-8)+16] miles * 480000 = $23,040,000
Cost of Study = $600,000
Delay cost = 8 months * $100,000 = $800,000
Total Cost is = 4500000 + 23040000 + 600000 + 800000 = $28,940,000
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