Oil & Gas Journal - September 7, 2015

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Table 6 shows that the average cost per mile for any given diameter may fluctuate year to year as projects’ costs are affected by location, terrain, population density, or other factors.

Completed projects’ costs

In most instances, a natural gas pipeline company must file with FERC what it has actually spent on an approved and built project. This filing must occur within 6 months after the pipeline’s successful hydrostatic testing or the compressor’s being put in service.

Fig. 6 shows 10 years of estimated vs. actual costs on cost-per-mile bases for project totals.

Tables 7 and 8 show actual costs for pipeline and compressor projects reported to FERC during the 12 months ending June 30, 2015. Fig. 7 depicts how total actual costs ($/mile) for each category compare with estimated costs. The spike in both categories for 2014 stems from a larger than usual proportion of the pipeline mileage completed that year being in high-cost urban northeast US settings.

Actual labor costs for pipeline construction were nearly

$400,000/mile lower than estimated costs for the same proj-
ects. Overall actual costs were nearly 10% lower than pro-
jected costs for the 12 months ending June 30, 2015, despite
higher labor and ROW costs.

Some of these projects may have been proposed and approved much earlier than the 1-year survey period. Others may have been filed for, approved, and built during the survey period.

If a project was reported in construction spreads in its initial filing, that’s how projects are broken out in Table 4. Completed projects’ cost data, however, are typically reported to FERC for an entire filing, usually but not always separating pipeline from compressor-station (or metering site) costs and lumping various diameters together.

The 12 months ending June 30, 2015, saw nearly 222,000 hp completed, up from recent levels. Actual compression costs were 116/hp ( 3.9%) lower than estimates (Table 8).