Cost report for the new natural gas pipeline project

Here is a full rundown of the current situation and involved costs:

The U.S. Interior Secretary recently approved drilling of natural gas wells near Vernal, Utah. We
have begun drilling and established a high-producing well on BLM ground. We now need to
build a pipeline to get the natural gas to the 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

Here is a rough depiction of the situation

Included in the next several pages is a breakdown of all available options, their related cost
estimates and fees. All math used to derive these figures is included to help you make an
informed decision Mr. CEO.

Page 1 of 5

Option 1: (shown in red) Run the pipeline around the private land
Pipeline cost:
$500,000 per mile on BLM ground
5 miles west, 15 miles south, and then 45 miles east
For a total of 65 miles at a cost of $32,500,000

Option 2: (shown in blue) through the mountain then south

Pipeline cost:
$500,000 per mile
40 miles east, then 15 miles south
For a total of 55 miles at a cost of $27,500,000
Plus:
Drilling through the mountain would be a $3,000,000 onetime cost
BLM requires an environmental impact survey costing $420,000 and six months of down time
That down time will cost us around $120,000 per month
Final cost:

Pipeline costs: $27,500,000

Drilling: $3,000,000
Survey: $420,000
6 Months of down time $720,000
For a total of $31,640,000
Page 2 of 5

Option 3: (shown in green) Runs the pipeline the shortest possible route through the private
land.
Pipeline cost:
$850,000 per mile across private land
Using the Pythagorean Theorem
a = 15 miles
b = 40 miles
+

= 42.72 miles at a cost of $36,312,000

Option 4: (shown in black) Run the pipeline due south through the private land then east to the
refinery
Pipeline cost:
$500,000 per mile on BLM ground
$850,000 per mile across private land
15 miles south (private) then 40 miles east (BLM)
For a total of 55 miles at a cost of $32,750,000
And last but not least is the lowest cost option

Page 3 of 5

Option 5: (shown in orange) Run through private land at a 51.01 degree angle exiting private
land 29.0891 miles west of the refinery.
Pipeline cost:
$500,000 per mile on BLM ground
$850,000 per mile across private land
18.5485 miles south east at a 51.01 degree angle (private land) then 29.0891
miles east (BLM land)
For a total of 47.6376 miles at a cost of $30,310,795

The involved calculus and a graph for option fives result are on the following page

Option 5 has the lowest cost by quite a reasonable margin so it is my recommendation that we
peruse that course of action.

Page 4 of 5

)
( )

Miles

The angle to start through the private property is tan (10.9109/15) = 51.01 degrees

Here is a graph of the cost in dollars (C(x)) with respect to the distance away from due south we
exit the private property in miles (x)

Page 5 of 5