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1. Introduction
Economic development mainly relies on non-renewable resources [1]. The rapid
growth of demand in developing countries has given rise to a constant increase
in consumption of most non-renewable resources, including oil and gas [2]. Liquid
fuels are expected to remain the major source of energy and their total consumption
continues to increase despite rising prices [3]. Similarly, worlds total natural gas
consumption is expected to increase by 1.6 percent per year on average. Figure 1
shows the upward trend in consumption of all energy sources.
A typical optimization problem consists of maximizing or minimizing
one/several objective function(s) by systematically choosing input values from
within allowed sets. The allowed sets of input variables are dened in forms of
several constraints. Figure 2 represents a general form of mathematical optimization problems. As oil and gas resources have a limited availability, the importance
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Resource constraint(s)
Structural constraint(s)
Other constraint(s)
of planning activities rises. Optimization techniques are important tools that help
upstream and midstream managers to decide optimally.
As an example, a basic form of exploration project selection problem can be
formulated via the following equations:
Max z =
n
fi xi
(1)
i=1
Subject to:
n
ci xi budget
(2)
i=1
x3 + x4 1,
(3)
x2 x1 1,
(4)
xi {0, 1},
(5)
where, xi is the binary variable that denotes the selection (xi = 1) or not (xi = 0)
of the i-th project, n is the number of projects, and fi is the utility of the i-th
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project, e.g. net present value of the i-th project. Equation (1) maximizes the total
utility achieved by selected projects.
Equation (2) applies the budget constraint where parameter budger represents the available budget. Equation (3) is an example of logical constraint where
projects 3 and 4 are mutually exclusive. Equation (4) is another example of logical constraint denoting if project 2 is elected then project 1 must be also selected.
Finally, equation 5 declares the binary nature of variables x. Many researchers have
added dierent considerations to this basic problem to meet real-world needs, e.g.
considering interaction between projects, uncertainty, budget segmentation, policies, and so on.
The purpose of this paper is to provide a summary of the scientic literature
on optimization applications in oil-and-gas upstream and midstream management.
The rest of the paper is organized as follows. Upstream and midstream optimization
problems have been categorized in Sec. 2. The literature on strategic optimization
problems is reviewed in Sec. 3. Sections 4 and 5 review the literature on tactical
and operational optimization problems, respectively. Finally, Sec. 6 concludes this
paper.
Fig. 3. Time scale for exploration and production decisions (reproduced from [6]).
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Timeframe of
decisions
Exploration & Development
Production
Transportation
Strategic
Tactical
Staffing
Drilling optimization
Production planning
Cargo planning
Job assignment
Production optimization
and scheduling
Well optimization
Transport scheduling
Vehicle routing
Operational
Ulstein et al. [8] divided the related planning tools into operational, tactical, and
strategic tools. This classication seems compatible with that of Wang [7].
Herein, by adding production and planning scopes, we propose a mixed taxonomy for upstream and midstream optimization problems based on their timeframe
and scope of planning, as shown in Table 1.
3. Strategic Optimization Problems
Walls [9] and Orman et al. [10] endeavoured to implement Markowitz optimization
method to exploration and production portfolio project selection, providing ecient
set of portfolios via minimizing risk subject to a particular level of return. Some
researchers have added some considerations to this problem, e.g. interdependencies
among projects [11] or scheduling of the selected projects, as an integral part of
project selection model.
Bohannon [12] proposed a linear programming model for optimum drilling and
facility expansion schedules for multi-reservoir pipeline systems.
McFarland et al. [13] applied generalized-reduced gradient nonlinear programming methods to solve optimal control models for petroleum reservoir development
planning and management. The decision variables include how many wells to drill
in each time period, the production rates, abandonment time, and platform size
while the objective function of their model is to maximize present value of prots.
Aboudi et al. [14] proposed an integrated mathematical programming model for
the development of petroleum elds and transport systems. Their work was the
earliest integrated work which considers all of development, production, and transportation planning scopes at a strategic level. They considered only one product and
xed-production proles for potential elds while later works have developed these
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Author(s)
Scope(s)
Exploration &
Development
Production
Transportation
Walls [9]
Orman et al. [10]
Brashear et al. [11]
Bohannon [12]
McFarland et al. [13]
Aboudi et al. [14]
Jrnsten [15]
Haugen [16]
Haugen [17]
Johansen [18]
Remarkable
consideration(s)
Interdependencies
among projects
One reservoir
Fixed production
proles, single
product system
Uncertainty
in price
Uncertainty in
price and
demand
Uncertainty
in resource
(eld size)
One oshore
natural-gas eld
Variable
production
Pressure in each
reservoir
Surface facilities
well production plan. Carroll and Horne [27], and Ravindran [28] used multivariate
optimization to determine optimal recovery over a period of time while Fujii and
Horne [29] also considered network parameters in determining optimum production
rates, i.e. separator pressure, the diameters of tubing, pipeline, or surface choke, and
the length of pipeline. Owing to the nonlinearity of the model, they used Newton
derivative-based methods, the polytope function-value-based method, and a genetic
algorithm. Considering several test calculations, they suggested polytope method
for low dimension problems and genetic algorithm for large systems with many
variables. Zhang and Zhu [30] formulated a bi-level programming method for pipe
network optimization. Their problem consists of a given pipe network where several
available diameters can be selected for each pipe. Palke [31] proposed an integrated
nonlinear model to optimize the gas-lift conguration. The numerical methods can
nd the combination of production parameters that maximizes the net present
value. The control parameters include tubing diameter, separator pressures, depth
of gas injection, and volume of gas injected. Polytope and genetic algorithm optimization techniques have been used which are shown to be both stable and ecient.
Barua et al. [32] used a non-linear sequential-quadratic-based network optimizer to
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Exploration &
Development
Production
Hagem and
Torgnes [5]
Atkinson and
Isangulov [34]
Remarkable
consideration(s)
Single-well system
Bittencourt and
Horne [33]
Ulstein et al. [8]
Transportation
Compressor installation
cost and operating
strategy
Disruptions, ow
components, chemical
processing, markets
Failure of a component
solve some of the typical problems in the oil and gas production including tactical
operation problems. Bittencourt and Horne [33] used a hybrid genetic algorithm for
reservoir development decisions including reservoir properties, well locations, and
production scheduling parameters. They applied their model on a real oil eld development project with 33 new wells. The wells were allowed to be placed anywhere in
the reservoir and could be vertical or horizontal. They reported a reduction of the
total number of new wells as a result. Ulstein et al. [8] proposed a mathematical
model to optimize a group of tactical decisions, i.e. Regulation of production levels
from wells, splitting of production ows into oil and gas products, and further processing of gas and transportation in a pipeline network. They implemented their
model in Norwegian production network and also analyzed possible shut-downs in
one of its production elds. Hagem and Torgnes [5] proposed and evaluated dierent
mathematical models for a petroleum production allocation problem and investigated the computational performance of a parallel Dantzig-Wolfe algorithm and
Branch & Price applied to these problems. Atkinson and Isangulov [34] formulated
a mathematical model for development of an oil and gas eld. They considered
completion of wells and production amounts as random processes.
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Exploration &
Development
Dutta-Roy and
Kattapuram [40]
Heiba et al. [41]
Vazquez et al. [42]
Yeten et al. [43]
Wang et al. [44]
Neiro and
Pinto [45]
Huseby and
Haavardsson [46]
Gunnerud and
Foss [47]
Herr
an et al. [48]
Transportation
Production
Multiple reservoirs
Multiple ow rate
constraints
Remarkable
consideration(s)
Multiple petroleum
products in a
multi-pipeline system
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