FIG. 7
1,400
1,300
1,200
1, 100
1,000
900
800
700
600
500
400
300
200
100
0 Materials Labor Misc. 2 ROW Materials Labor Misc. 2 Land
1Onshore only. For construction cost flings made before July 1, 2015. 2Generally includes surveying, engineering, supervision, administration and
overhead, interest, contingencies and allowances for funds used during construction (AFUDC), and regulatory fling fees.
Source: US FERC
Pipelines Compressors
COMPONENT COSTS: ESTIMATED VS. ACTUAL1
C
o
s
t
s
,
$
1
,
0
0
0/mil
e
C
o
s
t
s,
$/
hp
Estimated Actual
784
664
1,428
1,597 1,599
1, 135
217 235
1,304
1,218
780
977
845
582
21 20
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
•ROW and damages—$378,255/mile, up from
$343,850/mile for 2013-14.
Table 4 lists proposed pipelines in order of increasing size
(OD) and increasing lengths within each size.
The average cost-per-mile for the projects rarely shows
clear-cut trends related to either length or geographic area.
In general, however, the cost-per-mile within a given diameter decreases as the number of miles rises. Lines built nearer
populated areas also tend to have higher unit costs.
Additionally, road, highway, river, or channel crossings
and marshy or rocky terrain strongly affect pipeline construction costs.
Fig. 3, derived from Table 4, shows the major cost-com-ponent splits for pipeline construction costs.
Labor costs fell as a portion of land construction costs,
but remained the single most expensive category. Labor’s
portion of estimated costs for land pipelines slipped to
37.77% from 42.36% in 2014, 38.84% in 2013, 44.61% in
2012, 44.27% in 2011, 44.61% in 2010, and 37.95% in 2009.
Material costs for land pipelines, meanwhile, rebounded
to 19.34% from 13.6% in 2014, 23.2% in 2013, 15.99% in
2012, and 14.54% in 2011.
Fig. 4 plots a 10-year comparison of land-construction
unit costs for the two major components, material and labor.
Fig. 5 shows the cost split for land compressor stations
based on data in Table 5.
Table 6 lists 10 years of unit land-construction costs for
natural gas pipeline with diameters ranging from 8 to 36
in. The table’s data consist of estimated costs filed under CP
dockets with FERC, the same data shown in Tables 4 and 5.
• More than $3 billion/year for
new oil and gas gathering lines.
• More than $2 billion/year for
new laterals.
• Roughly $2 billion/year for new
LNG export plants.
The report also forecasted the need
for about 850 miles/year of new gas
transmission mainline, more than 800
miles/year in new natural gas laterals to-from power plants, processing
plants, and storage fields, almost 700
miles/year of new NGL transmission
line, and more than 730 miles/year in
new oil transmission line. 1
Against this backdrop, estimated
$/mile costs for new projects as filed
by operators with FERC remained historically high. For proposed onshore
US gas pipeline projects in 2014-15
the average cost was $5.2 million/mile,
down from the 2013-14 average cost of
$6.6 million/mile, but still well above
most recent pricing. In 2012-13 the
average cost was $4.1 million/mile as compared with $3.1
million/mile in 2011-12; $4.4 million/mile in 2010-11; $5.1
million/mile in 2009-10; $3.7 million/mile in 2008-09; and
$3.4 million/mile in 2007-08.
Cost components
Variations over time in the four major categories of pipeline construction costs—material, labor, miscellaneous, and
right-of-way (ROW)—can also suggest trends within each
group.
Materials can include line pipe, pipe coating, and cathodic protection.
“Miscellaneous” costs generally cover surveying, engineering, supervision, contingencies, telecommunications
equipment, freight, taxes, allowances for funds used during
construction (AFUDC), administration and overheads, and
regulatory filing fees.
ROW costs include obtaining rights-of-way and allowing
for damages.
For the 46 land spreads filed for in 2014-15, cost-per-mile
projections rose in material and ROW and fell in labor and
miscellaneous. In 2011 miscellaneous charges passed mate-
rial to become the second most expensive cost category and
they retained this position through 2015:
• Material—$1,012,698/mile, up form $894,139/mile
2013-14.
• Labor—$1,977,938/mile, down from $2,781,619/mile
for 2013-14.
•Miscellaneous—$1,867,393/mile, down from
$2,547,600/mile for 2013-14.
