CNG Pipeline Company At the weekly brainstorming session, John Spychalski, president of CNG Pipeline Company (CNG), suggested that they build a new pipeline from Elizabeth, New Jersey, to the Midwest to move refined petroleum products, gasoline, and diesel fuel. Following some discussion, he asked the strategic planning group to consider the idea before the next brown-bag session. Skip Grenoble, vice president for strategic planning, thought that John was not con- sidering the cost and impact of this idea. How could CNG obtain land to build the pipe- line, let alone obtain the necessary capital to finance the project? Then there was the question of the existing refineries located in Ohio, Indiana, and Illinois. Skip knew refined petroleum products were being transported from the Gulf of Mexico refineries via barge and pipeline to the Midwest market areas currently. Skip turned over the project to Evelyn Thomchick, chief strategy analyst, to develop a preliminary analysis of the viability of building a new pipeline. In the span of six days Evelyn found the following strategic issues for the project: • At least four Midwest refineries were being planned for closure within the next five years because of environmental and cost considerations. • A number of major refineries were considering building new refineries offshore, closer to the sources of foreign oil. Both cost and environmental considerations suggested this consideration. • The New Jersey-Midwest corridor was one of the most-developed land regions in the United States with the highest land values. • The demand for refined petroleum products was expected to increase, but the keen interest in alternative sources of energy, new oil fields in several states, more fuel-efficient cars, and sustainability issues were matters of some concern. • The project would require approximately 10 years to complete, including the time to obtain land via the eminent domain process. • The capital requirements for the project were estimated at $800 billion. 1- What is this case study talking about? Summary?

CNG Pipeline Company At the weekly brainstorming session, John Spychalski, president of CNG Pipeline Company (CNG), suggested that they build a new pipeline from Elizabeth, New Jersey, to the Midwest to move refined petroleum products, gasoline, and diesel fuel. Following some discussion, he asked the strategic planning group to consider the idea before the next brown-bag session. Skip Grenoble, vice president for strategic planning, thought that John was not con- sidering the cost and impact of this idea. How could CNG obtain land to build the pipe- line, let alone obtain the necessary capital to finance the project? Then there was the question of the existing refineries located in Ohio, Indiana, and Illinois. Skip knew refined petroleum products were being transported from the Gulf of Mexico refineries via barge and pipeline to the Midwest market areas currently. Skip turned over the project to Evelyn Thomchick, chief strategy analyst, to develop a preliminary analysis of the viability of building a new pipeline. In the span of six days Evelyn found the following strategic issues for the project: • At least four Midwest refineries were being planned for closure within the next five years because of environmental and cost considerations. • A number of major refineries were considering building new refineries offshore, closer to the sources of foreign oil. Both cost and environmental considerations suggested this consideration. • The New Jersey-Midwest corridor was one of the most-developed land regions in the United States with the highest land values. • The demand for refined petroleum products was expected to increase, but the keen interest in alternative sources of energy, new oil fields in several states, more fuel-efficient cars, and sustainability issues were matters of some concern. • The project would require approximately 10 years to complete, including the time to obtain land via the eminent domain process. • The capital requirements for the project were estimated at $800 billion. 1- What is this case study talking about? Summary?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter22: Getting Divisions To Work In The Firm’s Best Interests

Section: Chapter Questions

Problem 22.6IP

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