Question

Imagine you are a pipeline company trying to sell a new project to a shipper of oil for a new refinery in Grand Forks. In order to prepare for selling this idea to shippers and hopefully win the contract, you need to calculate the average cost per unit ($/barrel) of oil to ship over this line in the first year; taking into account Capital, Operating and Energy Cost. This is a competitive proposal, so you will want to make sure your price is as low as you can make it!! The refinery is scheduled to take 300,000 barrels per day of Bakken Crude at typical temperures. Pipeline construction costs average $100,000/foot mile. A foot mile is 1 mile of 12 inch pipe. 2 miles of 16” pipe would be 2.6667 foot mile, and so on. The price includes all pipe and installation and is based on using X-42 and schedule 20 pipe. You have the option of increasing the pipe wall thickness to schedule 40 for an additional 10% and schedule 80 for 20% more than schedule 20. You also have the option of increasing the pipe strength to X60 for an additional 10% or X-72 for 20% above X-42. Each pump station will cost $2,000,000 +$2000/hp of pump. The inlet pressure of pumping stations should not fall below 400 psi. Pipeline flows entirely through class I locations except for 10 miles located in a class IV location. You have the option of bypassing the class IV location by running the pipeline an additional 50 miles. Cost of electricity to drive pumps is $.08 per kWh. (1 kW for 1 hour) Annualized Capital costs can be assumed to be an estimated by a fixed charge rate of .15 (meaning it costs 15% of the total project cost each year to cover debt and equity used to finance the construction) The fixed O&M is $0.10 per inch mile The variable O&M is $0.25 per barrel Hint: Partial credit will be awarded based on the following scale: Please note

Answer 1