Combining Linear Programming and Reservoir Simulation to Optimize Asset Value
Authors: Eeg O.S. , Herring T. 
Published: December 2007

Abstract
Recent years have seen a growing trend towards "right sizing" in the oil business. This has lead to improved efficiency and greater technical challenges. One of the off spins of this process is the current trend to limit up front investments in processing capacity, by designing it to the minimum production stream that will yield the maximum profit.
This paper addresses these challenges and describes a process of combining 3D simulation results and Linear Programming (LP) to optimise asset value under numerous production and drilling constraints. The subsequent application maximises post tax NPV, and can be used for optimising drilling schedules, IOR projects, and process upgrades simultaneously. A newly developed well production rate formulation, including influence functions, allows for large time savings and a robust solution. This formulation also allows choking of wells without loss of reserves.
This work differs from preceding studies by allowing significant reduction in data requirements, and incorporating an iterative solution between LP and reservoir simulation. This also opens the possibility to verify the accuracy of the optimal solution. The number of simulation runs required is reduced by a factor 40 compared to conventional LP formulations. The Ekofisk area in the North Sea is used as an example of the application. This area comprises several fields and platforms and is currently facing huge redevelopment challenges with new platforms and decommissioning of existing platforms. Furthermore infill drilling of more than 50 wells is premised and there exists IOR opportunities. All the redevelopment has to respect the constraints for oil and gas production and the rig availability.
Results from the application is an optimised production strategy/drilling schedule for all fields in the area, leading to a significant increase in project value. The solution also resulted in a longer plateau production and higher ultimate reserves, through the drilling schedule optimisation.
The proposed method offers a new method of LP formulation incorporating both influence functions, well scheduling effects and choking of wells, which allow iterative solutions.

Introduction
The most common method of field development evaluation is to investigate several basic plans which are based on experience and judgement. Based on development screening one concept is chosen for detailed study.
In instances of combined redevelopment with a large number of drilling opportunities, multiple reservoir tie-in decisions, IOR evaluations, and processing/transportation limitations, a complete optimisation study is required. Initially the scope of such a study may appear prohibitive. This paper provides a formulation of optimisation and reservoir simulation which is manageable with a minimum use of time and resources. Linear Programming (LP) has previously been used to address situations as described above. Linear Programming is a term related to the systematic solution of a set of linear equations in order to optimise a given objective function. The formulation of a field development study into a LP problem presents many challenges, both with respect to linearisation of the problem and the size of the problem. In addition most real development cases will have to solved by Mixed Integer Programming (MIP), in order to allow predefined variables to assume the value of 0 or 1. These types of variables can be viewed as yes/no flags and are a key component of forming a development strategy.
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