Jose Vera

Calculus 1210
To the CEO,

The report concerning the natural gas wells Vernal, Utah is now finished.
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. The
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. 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 us 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. In addition, for any pipeline run across private
ground, the company incurs an additional $360,000 per mile cost for right-ofway fees.

To minimize the cost of the project, the different possibilities for the pipeline
have been taken into account and I have been able to create a description of
each one of the routes:
a) Cost of running the pipeline strictly on BLM ground with two
different cases:
i.
One running west, south, and then east to the refinery.

Jose Vera
Calculus 1210

The 64
represents the
total amount of miles that the pipeline
has to be in length, and the 480,000
represents the amount of dollars that
each mile of pipeline costs. The multiplication of these both quantities come
up with the cost of the pipeline, $30,720,000.
ii.

One running east through the mountain and then south to

the refinery.

The 48 miles of pipeline are multiplied by the cost of each mile, $480,000.
The $100,000 dollars for each month of delay are multiplied by the 8 months
of estimated delay. The $600,000 for the environmental study and the
$4,500,000 for going through the mountain are added as well. The addition
of everything yields a final cost of $28,940,000 for the route.
b) Cost of running the pipeline through two other different
scenarios
i.
The shortest distance across the private ground to the
refinery.
We used Pythagorean Theorem to find the shortest distance between the
wells and the refinery.

Jose Vera
Calculus 1210

C=
35.78mi

The

16
mi

shortest

32mi

distance from the wells to the refinery was calculated to be 35.78 miles.
The length of the shortest route was then multiplied by the amount of money
each mile cost which, in this case, is the sum of the usual cost and the
$360,000 right-of-way fee for going through private land. The total cost of
this route turns out to be $30,052.753.62
ii.

Straight south across the private ground, then straight

east to the refinery.

Jose Vera
Calculus 1210

For this route, the pipeline has to go 16 miles south from the wells through
the private land and 32 miles east through BLM ground to get to the refinery.
For the cost, the 16 miles were multiplied by the cost of each mile of pipeline
in addition to the right-of-way fee for each mile that the pipeline goes
through the private land. The cost of each mile on BLM ground, which is the
32 miles multiplied by the cost of $480,000, is then added to reach the total
cost of $28,800,000. This is the cheapest option so far.
c) Minimization of the cost of the pipeline project by finding a
configuration that involves running from the wells across the
private ground at a specific angle, intersecting BLM ground to
the south, and then running east to the refinery.
The function that describes every single possible result for the configuration
is
where y is the pipe length that goes through
private land and intersects BLM ground, and x is
the pipe length from the intersection to the refinery.
To minimize the cost, the function needed to be differentiated. To do this, the
function first needed to be in term of a single variable so Pythagorean
theorem was used to define y in terms of x.

So then, the cost function, after defining y in term of x, can be differentiated

and set to 0 to find critical points and, in turn, the minimized cost for the
pipeline project.

Jose Vera
Calculus 1210

After a few mathematical manipulations, the minimized cost came out to be

$26,389,560.28. The length x of the pipeline from the intersection to the
refinery is 20.86 miles. This length is used to replace back into the equation
for y.
The length y of the pipeline from the wells to the BLM ground intersection is
19.49 miles. Lastly, to find the angle, relative to the east of the wells, the
tangent function was used, which gave a result of 46.94 degrees. By doing
all of these calculations, we have minimized the cost of the pipeline project
Mr. CEO.