Comprehensive Investigation Into Historical Pipeline Construction Costs And Engineering Economic Analysis Of Alaska In-State Gas Pipeline

Abstract

This study analyzes historical cost data of 412 pipelines and 220 compressor stations. On the basis of this analysis, the study also evaluates the feasibility of an Alaska in-state gas pipeline using Monte Carlo simulation techniques. Analysis of pipeline construction costs shows that component costs, shares of cost components, and learning rates for material and labor costs vary by diameter, length, volume, year, and location. Overall average learning rates for pipeline material and labor costs are 6.1% and 12.4%, respectively. Overall average cost shares for pipeline material, labor, miscellaneous, and right of way (ROW) are 31%, 40%, 23%, and 7%, respectively. Regression models are developed to estimate pipeline component costs for different lengths, cross-sectional areas, and locations. An analysis of inaccuracy in pipeline cost estimation demonstrates that the cost estimation of pipeline cost components is biased except for in the case of total costs. Overall overrun rates for pipeline material, labor, miscellaneous, ROW, and total costs are 4.9%, 22.4%, -0.9%, 9.1%, and 6.5%, respectively, and project size, capacity, diameter, location, and year of completion have different degrees of impacts on cost overruns of pipeline cost components. Analysis of compressor station costs shows that component costs, shares of cost components, and learning rates for material and labor costs vary in terms of capacity, year, and location. Average learning rates for compressor station material and labor costs are 12.1% and 7.48%, respectively. Overall average cost shares of material, labor, miscellaneous, and ROW are 50.6%, 27.2%, 21.5%, and 0.8%, respectively. Regression models are developed to estimate compressor station component costs in different capacities and locations. An investigation into inaccuracies in compressor station cost estimation demonstrates that the cost estimation for compressor stations is biased except for in the case of material costs. Overall average overrun rates for compressor station material, labor, miscellaneous, land, and total costs are 3%, 60%, 2%, -14%, and 11%, respectively, and cost overruns for cost components are influenced by location and year of completion to different degrees. Monte Carlo models are developed and simulated to evaluate the feasibility of an Alaska in-state gas pipeline by assigning triangular distribution of the values of economic parameters. Simulated results show that the construction of an Alaska in-state natural gas pipeline is feasible at three scenarios: 500 million cubic feet per day (mmcfd), 750 mmcfd, and 1000 mmcfd.