Pipeline Project

Peter Kingston

Here is our situation:

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 6 miles directly west and then 15 miles south and
finally 28 miles east to the refinery (see figure below). Cost for materials, labor and fees
to run the pipeline across BLM ground is $320,000 per mile.

Cost of drilling through the existing mountain would be a one-time cost of $4,400,000 on
top of the normal costs ($320,000 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 $200,000 and will delay the project by 8 months
costing the company another $85,000 per month.

6 miles BLM Ground

BLM Ground
15 miles

Private Ground

28 miles, BLM Ground

We have 5 ways of doing this. Below are the options:

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

ii) One heading east through the mountain and then south to the refinery.
iii) The shortest distance across the private ground to the refinery.
iv) Straight south across the private ground, then straight east to the refinery.
v) Running from the well across the private ground at some angle and
intersecting the BLM ground to the south and then running east to the
refinery.
 Pipeline Project
Peter Kingston

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

6 miles BLM Ground

BLM Ground
15 miles

Private Ground

28 miles, BLM Ground

BLM Ground = $320,000/mi

$320,000/(6) + $320,000/(15) + $320,000/(28) = $15,680,000

 Pipeline Project
Peter Kingston

ii.) One heading east through the mountain and then south to the refinery.

6 miles BLM Ground

BLM Ground
15 miles

28 miles 6miles = 22 miles

Private Ground

28 miles, BLM Ground

BLM Ground = $320,000/mi
One-Time Mountain Drilling Fee = $4,400,000
Environmental Study = $200,000
Waiting Fee = $85,000/month
$320,000 $320,000 $85,000
( ) (22) + ( ) (15) + $4,400,000 + 8 ( ) + $200,000 =

$17,120,000

= $17,120,000
 Pipeline Project
Peter Kingston

iii.) The shortest distance across the private ground to the refinery.

6 miles BLM Ground

BLM Ground
15 miles

(152 + 222 )~26. 627

Private Ground

28 miles 6miles = 22 miles

28 miles, BLM Ground

Private Ground = $410,000/mi

$410,000
26.627 ~$10,917,092.10

Approximately: $10,917,092.10
 Pipeline Project
Peter Kingston

iv.) Straight south across the private ground, then straight east to the refinery.

6 miles
BLM Ground

Private Ground
15 miles

BLM Ground 22 miles

Private Ground = $410,000/mi

BLM Ground = $320,000/mi

$410,000 $320,000
15 + 22 = $13,190,000

= $13,190,000
 Pipeline Project
Peter Kingston

v.) Determine the length of pipe that runs across private land and how far
from the refinery it starts running on BLM land. Determine the angle at
which your optimal path leaves the well. Make it very clear how you use
your knowledge of calculus to determine the optimal placement of the
pipeline.

6 miles BLM Ground

BLM Ground

Private Ground
15 miles

152 + 2

X 22 miles - X

Private Ground = $410,000/mi

BLM Ground = $320,000/mi

$410,000 $320,000
() = [(15 2 + 2 ) ] + [(22 ) ]

$410,000
() = $320,000
225 + 2

$410,000
0= $320,000
225 + 2

$410,000
$320,000 =
225 + 2

1 $320,000
=
225 + 2 $410,000
 Pipeline Project
Peter Kingston

$410,000
225 + 2 =
$320,000

2
2
$410,000
225 + = ( )
320,000

225 + 2 = 1.641 2

225
= 2
. 641601563

= 18.72658354 Mi

X=18.72658354 is within the domain [0,22] so our x-value is valid.

18.72658354
=
15

18.72658354
= tan1 ( )
15

= 51.3

152 + 18.726583542 = 23.99 @ 51.3

Smallest Optimal Cost is $10884801.6854

 Pipeline Project
Peter Kingston

vi.) 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.