This is a sophisticated technology valuation case requiring candidates to quantify pricing through multiple benefit streams: transportation cost savings, pipeline lifetime extension, and implementation costs. The case tests both financial modeling skills and strategic negotiation thinking, as candidates must benchmark the technology price against alternatives (NOC's own expansion pipeline investment) to establish a realistic valuation range.
Minerva’s University Fluids Research Lab has discovered a more efficient way to transport crude petroleum oil inside pipelines. This new technology can be used in midstream applications where the oil is acquired from the extraction plant and delivered to the refinery plant. The university invested $1,200M in this project during the last 12 years.
The new technology mixes water and oil under certain conditions to reduce the loss of energy, caused by the friction between the oil and the pipeline surface while being transported. As a result, the transport between two given points gets 15% faster and the useful lifetime of the pipelines increases by 20%.
Minerva’s University asked our help to determine the value at which they should sell the technology.