No Slide Title

( Cost Analysis)
Khalid Ahmed Al-Naimi
Problem Definition and Objectives
This problem analyze different aspects of financial costing of a gas
pipeline at a near sea shore location. A simplified method of cost
estimation is also presented with assumed values to simulate working
environment. Data and graphs are presented to highlight the method
and its usefulness. If actual data is inputted, the results are expected to
generate reasonable agreement with the established statistics.
Design Methodology
The economic analysis of the offshore pipeline is based on following
important points:
Direct cost of installation.
Pipe/casing material requirement/available.
Design cost and geotechnical investigations cost.
Construction inspection cost.
Site work access cost.
Legal and permit cost.
Maintenance and overheads.
A realistic cost analysis should take all these points in to consideration
before the start of project. Cost benefit analysis and cost effective
analysis are the preeminent methods for the economic analysis for
decision making
The capital cost of the pipe line depends on four factors namely:
Right of way (ROW) and damages cost.
Miscellaneous charges.
College of Engineering
DNV OS-F101, Submarine Pipeline Systems, 2000.
Web Sites:, and
At the start of this project we had little knowledge of pipelines and
assumed they were relatively simple and did not vary much from
pipeline to pipeline. This assumption was incorrect. When designing this
project we realized that it
would be near impossible to take into account every scenario for a
pipeline. Another hindrance was the lack of support from the suppliers
and experts to provide genuine information about the work due to legal
issues. It was thought to limit the scope of the paper to a simple pipeline.
In our example we ran the
program with a design limitation to install 8in. diameter steel pipe for 10
There are a number of factors which can seriously effect the cost of the
project other than simply the material. The availability of material,
transportation, environmental issues, legal and land acquisition issues,
labour and taxes can severely effect the whole financial statement of the
project. The material selection with accessories and insulation design is
pretty much limited to the design requirements for safe and long term
operations. As stated earlier, material cost only make up 20% of the total
cost . Thus other factors are most decisive factors in the designing and
costing of pipeline projects.
With this exercise, we have figured out the way to compute the
contributions of different variables on the costing and the way the total
cost of project is recovered. Provided the correct data, we can generate
results which will be of practical importance and comparable with the
established facts and figures.
Department of Mechanical & Industrial Engineering
Design of High Strength
Low Alloy Steel Natural Gas
Transportation Pipeline

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