BLM Ground

Dear CEO,
1 Mile
I was briefed
about the situation in Vernal and commissioned to analyze each route and come up
with the optimum route to take. The situation is explained in the picture below.

BLM Ground
5 Miles

Well

21 Miles- BLM Ground

Refinery

Private Ground

a. The cost of running the pipeline strictly on BLM ground with two different cases, one
heading west through the mountain and then south to the refinery and the other running
west, south, and then east to the refinery:
East Case: Running the Pipeline east through the mountain would require a fee of
$500,000 to drill through, as well as a study of the environmental impact of the pipeline,
estimated at $100,000. Both of these costs are added on top of the regular cost per mile of
laying the pipe, $300,000. The cost function is:
C(d)=$300,000(d) + $500,000 (Drilling through the mountain) + $100,000
(Environmental survey). For this particular case, the distance is twenty five miles, so the
cost would be:
C(25)= $8,100,000.
West Case: Running the line West 1 mile, then south five miles, then east 21 miles. The
cost function is:
C(d)= $300,000(d), and the total distance is 27 miles, resulting in:
C(27) =$300,000(27)= $8,100,000

b. Running the pipeline the shortest distance would require running across private property,
incurring a $200,000 dollar fee on top of the regular cost of running the pipe.
C(d)= $300,000(d) + $200,000(d)= $500,000(d)
A2 +B2 =C2 , A=20, B= 5, C= the square root of 400+25 = the square root of 425, which
equals 20.62; C= 20.62 miles.
C(20.62)= $500,000(20.62) = $10,307,764.06.
c. To determine the optimal place to run the pipeline to minimize cost, one must find the
optimal cost function, find its derivative, and find where the derivative is equal to zero.
Through the use of logic, we find that the optimum route would be to place some length
of pipe through private ground to a point on the south side, and continue from there to the
refinery. The distance to the other side is 5 Miles, so we can draw a triangle like so.

5
Miles

20 Miles
Thus, Tan =x/5. The distance y2 equals 52 +x2 according to the Pythagorean Theorem, or
y= (25+x2)1/2
The cost function is C(x)=$500,000(25+x2)1/2+ $300,000(20-x). The derivative of this
function, C`(x), equals 250,000(25+x2)-1/2(2x)+ 300,000(-1), or 500,000x(25+x2)-1/2300,000. Thus, when the derivative is zero, or when the function has reached its
minimum cost per mile, C`(x)=0, or 500,000x(25+x2)-1/2-300,000. Then,
300,000=500,000x/(25+x2)1/2, 500,000x/300,000=(25+x2)1/2, 5x/3=(25+x2)1/2 ,
25x2=9(25+x2) , x=3.75. Going back to x2+25=y2, y=6.25. When plugged into the original
cost function, C(3.75)=500,000(6.25)+300,000(16.25). =arctan1.25= 51.34 degrees.
So the optimal route would be to go at an angle of 51.34 degrees for 6.25 miles
across private property, then going 16.25 across BLM ground to the refinery.
So the optimal route, running the pipeline through miles of private property
before intersecting with a point on the south side of the private property and running east
16.25 miles to the refinery, would cost eight million dollars.

Cost in $

Values of x

In conclusion, Mr. CEO, I recommend the placing of a pipeline at an angle of 51.34

degrees, going for 6.25 miles across the private property, and then going east 16.25 miles to the
refinery. This will bring us the cheapest cost per mile, and is essential for the production and
refinement of the natural gas.