A Model for the Short Term Upstream Supply Chain Management of an LNG Production System
Authors: Ajay Selot , Loi Kwong Kuok , Robinson Mark , Mason Thomas L. , Barton Paul 
Published: March 2015

Optimization of natural gas production systems is a challenging problem because of nonlinear pressure-flowrate relationships in wells, facilities and trunklines, a multicommodity network and complex production-sharing contracts. A short-term production-planning model can aid in formulating an operational policy that satisfies contractual rules and customer requirements while simultaneously meeting specified production levels. Such an operational planning model with two components, an infrastructure model and a contractual model, is presented in this work. The infrastructure model is a representation of the physical system that incorporates nonlinear pressure-flowrate relationships for wells and pipelines, multiple qualities of gas in the trunkline network and models of facilities. The contractual model is a mathematical representation of the complex production-sharing contracts, associated operational rules and customer requirements. The model features and requirements are inspired by the Sarawak Gas Production System (SGPS) in East Malaysia. The final formulation is a nonconvex mixed-integer nonlinear program and is solved with GAMS/BARON to global optimality. A hierarchical multi-objective case study is also presented.

Introduction

Natural gas demand has been rising rapidly in recent years with the increasing energy needs of an expanding global economy, especially in emerging markets. The primary drivers for this growth are industrial use and electricity generation. Also, high oil prices have made Gas-to-Liquids (GTL) an attractive option for exploiting remote fields.

Natural gas production forecasting tools tend to be concerned with quite different issues than oil production. Natural gas is inherently difficult to store and transport, requiring extensive pipeline networks for transport and natural geological formations to store or, alternatively, massive capital investment in the form of LNG facilities for liquefaction, transport, storage and regasification. This has led to the practice of extensive contractual arrangements between producers and consumers to reduce risk. However, this has been achieved at the expense of increased complexity in production system operations. The involvement of multiple parties in ownership of fields and facilities further complicates operations because, in such a situation, several parties have a share in the products. This coupled with the fact that natural gas networks directly handle products that are to be shared (as opposed to oil production systems) imply that any production-sharing scheme explicitly affects network operations.

In this work, we use the Sarawak Gas Production System in East Malaysia to demonstrate the operational issues associated with natural gas production systems. The paper is organized as follows. A brief introduction to the SGPS is presented. The nature of the mathematical programming problems that arise from natural gas production-planning models is then briefly discussed, followed by the salient model requirements. The production-forecasting model is then summarized. Finally, numerical solution of the model and an application to a hierarchical multi-objective situation that frequently arises in such systems are discussed.

Previous Works

The oil and natural gas industry has been one of the pioneers in the use of mathematical programming for planning and forecasting applications. Previous works relevant to natural gas industry have focused on the following:Infrastructure development planning, both in oil and natural gas fields.Decision support models for local distribution companies (LDC) and utility companies for planning purchase, storage and transportation of natural gas.Short-term natural gas transmission system modeling, simulation and optimization.