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Costs associated with pipeline construction depend on many factors. – the cost per mile increases with the pipe size. construction on land using a 12-inch pipeline costs about $300,000 per mile while using a 42-inch pipeline costs almost $1.5 million per mile.
Cost of Gas Pipeline per km
The average cost of these pipelines would be about $1 million/km or $300,000 per diameter inch per kilometre ($/dia. in./km).
Thanks Pete
Your example much better than mine, $1.5m sounds reasonable to me per km pipeline cost
That would leave around $14m for TLP-104 and any other dev costs
As a comparator Aminex have estimated a cost for a 24 km onshore pipeline at $30m which indicates a cost of circa $1.25 million per kilometer. It may be that some costs are fixed and as a result the marginal cost per kilometer reduces as the length of pipeline increases and of course some costs may be higher in Congo than in Tanzania. But nevertheless I would be happy to take a rate of $1.5 million per kilometer as a reliable guide.
I have looked for a source for an Onshore Pipeline cost but cant find a good example to compare for the 7km for Tilapia.
This dated article, slide 4, is for gas pipeline construction average costs in 2001 = $1.3m per mile
https://sari-energy.org/oldsite/PageFiles/What_We_Do/activities/GEMTP/CEE_NATURAL_GAS_VALUE_CHAIN.pdf
So assume this is broadly accurate for oil onshore and allowing for inflation, labour differences etc = $2m per km
Therefore a pipeline connection of 7km could equate to circa $14m cost of construction.
Leaving $11m for the TLP-104 drill, using the RBL facility, plus booked revenue once sidetrack is successful.
The RBL offtaker would needs to see that oil flow is stable and bopd upto 5000 expectations is possible.
Once all their DD complete post drill and all signed, the funds should be available to JB to prosecute the pipeline build and then drill 104 rapidly, there would be benefit in keeping the sidetrack drill on site to avoid demob costs and drill back to back, logistics permitting.
This example shows the $25m RBL value to have some basis in requirements, it would be enough for JB to complete both the pipeline and second drill to fastrack the company growth.