Cost-benefit analysis of a natural gas lateral pipeline to the Annapolis Valley
LE3 .A278 2011
2011
Kayahan, Burc
Acadia University
Bachelor of Arts
Honours
Economics
This a study of the economic benefit of bringing natural gas to the Annapolis Valley, Nova Scotia. Large volume potential customers are profiled and found to be primarily using Bunker C residual fuel oil, which then is contrasted with natural gas in terms of use, efficiency, price and environmental effects. Based on the customers‟ energy needs, the construction cost of a 105km 6 inch lateral pipeline connecting to the provincial pipeline network north of Halifax is calculated. With 2010 average prices for Bunker C and natural gas a Net Present Value of $51.8 million is established for the project with a 31% Internal Rate of return and break even of four years. As the economic value of this project depends greatly on the price differential between the fuels a sensitivity analysis is conducted. The environmental costs of emissions are quantified to incorporate externalities into the analysis. Limitations of the study examine why a favourable economic analysis does not necessarily mean a viable project. Based on the IRR the project does appear financially viable from a commercial standpoint.
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https://scholar.acadiau.ca/islandora/object/theses:841