Setting the natural gas selling price through pipeline network optimization and project feasibility study

Abstract

Natural gas will play an important role in the energy revolution, but its construction is still costly. Natural gas transport pipeline network shoulders the task of gas supply, which plays a significant role in improving the overall socio-economic benefits for the region. Pipeline network optimization design is a complex problem, involving many variables. In this study, the location of the Distribution Center is considered and was obtained from the previous study. This study also considers the distance between locations of households. The Minimum Spanning Tree (MST) is applied to obtain the pipeline network length. Then, the calculation is proceeded through the Benefit-cost Ratio in determining whether this project is feasible or not. Although the MST result shows the pipeline is longer than the previous work, studies have shown that the project is still feasible to run. The study also explains that the government can still sell gas at a lower price in the break-even condition.