Pipeline Proposal Project

The project is to determine the most cost effective path to run a pipeline from a natural gas well
near Vernal, Utah to a refinery. There are several paths to run the pipe with different costs
associated with each path. We will explore the different path and the costs associated with
each path.

a) Determine the cost of running the pipeline strictly on BLM ground with the following two
different cases.
i.

Running west, south, and then east to the refinery.

This is a longer route, strictly on BLM land, and cost $500,000.00 per mile with a
total of 65 miles.
C(x)= $500,000.00(x)
$500,000.00 x 65 = $32,500,000.00
TOTAL COST

$32,500,000.00

ii. Heading east through the mountain and then south to the refinery.
This course runs over 55 miles of BLM land but runs through a mountain. The
cost of drilling through the mountain will be a one-time cost of $3,000,000.00 on
top of the cost of running the pipeline. Additionally, the BLM will require an
environmental impact study costing $420,000.00 which will delay the project 6
months costing another $720,000.00.
C(x)= $500,000.00(x) + $4,140,000.00

$500,000.00(55) + $4,140,000.00 = $31,640,000.00

Cost to run pipe
Cost of drilling
Cost of study
Cost of delay
TOTAL COST

$27,500,000.00
$3,000,000.00
$420,000.00
$720,000.00
$31,640,000.00

b) Determine the cost of running the pipeline partially over private property. The cost of
running the pipeline over private ground is an additional $350,000.00 per mile for rightof-way fees. For the following routes we will use the formula
C(x) = $500,000.00(40-x) + 850,000.00(
i.

Running the pipe the shortest distance across private ground to the refinery.
C(40) = $500,000.00(40-40) + 850,000.00(
C(40) = $36,312,000.00
Cost for 42.72 miles of pipeline
Cost for 42.72 miles right-of-way
TOTAL COST

$21,360.000.00
$14,952,000.00
$36,312,000.00

ii. Running the pipe across the private ground, then straight to the refinery.
C(0) = $500,000.00(40-0) + 850,000.00(
C(0) = $32,750,000
Cost for 55 miles of pipeline
Cost for 15 miles of right-of-way
TOTAL COST

$27,500,000.00
$5,250,000.00
$32,750,000.00

c) Determine the optimal way to run the pipeline to minimize cost.

The route that will minimize cost is to go directly from the natural gas well, diagonally
across the private property and reach the BLM land 29.00 miles from the refinery. (See
illustration).

The cost of this function is expressed as follows:

C(11) = $500,000.00(40-11) + 850,000.00
C(11) = $30,310,000.00
Cost for 47.6 miles of pipeline
Cost for 18.6 miles of right-of-way
TOTAL COST

$23,800,000.00
$6,510,000.00
$30,310,000.00

The optimal cost is determined by optimizing the equation C(x) = $500,000.00(40-x) +

850,000.00(
We find this equation by setting a length of the south end of
the private property equal to x miles, the remaining portion of land, where the pipe will
run, is 40-x miles. The cost function of this piece is c(x) = $500,000.00(40-x). We
construct a right triangle, with the distance x as the base, the height of 15 miles and a
hypotenuse of
. This hypotenuse is the distance the pipeline will run over
private property. The cost function for this section of pipe is c(x) =
$850,000.00

. We add these two cost functions together to get the total

cost function C(x) = $500,000.00(40-x) + 850,000.00(

function we take the derivative which is

. To optimize this
. We equate this

equation to zero to find the critical point and solve the following way.

Because we know that the distance cannot be a negative number and the domaine of
our function is [0, 40] we know that x cannot equal -11.
Now we must prove that our absolute minimum value is at x=11. We do this by using
the first derivative test and testing the endpoints (x=0, x=40) and the intervals between
the endpoints and our critical point x=11. When we do this we get the following results:
C(0)=32,750,000.00
C(40)=36,312,000.00
C(11)=30,310,000.00
0<x<11 the derivative is negative so the slope of the function is negative.
11<x<40 the derivative is positive so the slope of the function is positive.
This means that x=11 is the minimum value. Therefore our cost function is the lowest
when x=11. The distance from the refinery is 40-x, or 29 miles.
The cost function is represented in the following graph

This calculus class has been helpful in showing me how to apply calculus to the real
world. I have particularly enjoyed optimization and the practical application for business

and engineering. It would be very valuable for businesses to see how to minimize costs
or maximize the amount a product you can produce from a given amount of supplies.
This project is a great example of the specific value of optimization. Another subject that
I found useful is the rate of change function. It can also be applied to many different
situations in life, business and science. My own particular field of interest is Math
Education. Any opportunity I have to see the practical application of math is valuable,
especially when I will be faced with the question, How will I ever use this?. I appreciate
that I will be able to respond to that question with real world answers.