A Commodity Production Model with Operational Flexibility of Investing Optional Capacity on Offshore Platforms

We study the problem of operational flexibility on capacity investment of an oil producer. Our decision-maker operates only on land fields and has option to extend operations to offshore oil platforms. The operational flexibility arises from the ability to invest on offshore fields. Our main goal is to integrate offshore platforms from the chemical and petroleum engineering literature, and capacity investment from operations management literature. We use a mixed integer programming solution approach and set a basic model to analyse the value of operational flexibility. Our main contribution is to provide an operational flexibility option to the problem of oil drilling

Gas field scheduling

Woodside Offshore Petroleum is the operator in the development of new gas fields in Australia's North West Shelf project. Sequencing the development of new gas fields in this project is a key determinant of its return on investment. This development sequence has constraints imposed by infrastructure and contractual obligations as well as natural features. The determination of an optimal or very good solution may involve a number of techniques from operations research. The study group attempted several approaches to the problem, principal amongst them being mathematical programming and dynamic programming. A few other heuristic approaches were also considered. The mathematical programming approach was able to yield solutions to small instances of the problem. The group was able to identify several avenues for further research and work on the problem is ongoing

Strategic and Tactical Crude Oil Supply Chain: Mathematical Programming Models

Crude oil industry very fast became a strategic industry. Then, optimization of the Crude Oil Supply Chain (COSC) models has created new challenges. This fact motivated me to study the COSC mathematical programming models. We start with a systematic literature review to identify promising avenues. Afterwards, we elaborate three concert models to fill identified gaps in the COSC context, which are (i) joint venture formation, (ii) integrated upstream, and (iii) environmentally conscious design

Decarbonizing the European energy system in the absence of Russian gas: Hydrogen uptake and carbon capture developments in the power, heat and industry sectors

Hydrogen and carbon capture and storage are pivotal to decarbonize the European energy system in a broad range of pathway scenarios. Yet, their timely uptake in different sectors and distribution across countries are affected by supply options of renewable and fossil energy sources. Here, we analyze the decarbonization of the European energy system towards 2060, covering the power, heat, and industry sectors, and the change in use of hydrogen and carbon capture and storage in these sectors upon Europe's decoupling from Russian gas. The results indicate that the use of gas is significantly reduced in the power sector, instead being replaced by coal with carbon capture and storage, and with a further expansion of renewable generators. Coal coupled with carbon capture and storage is also used in the steel sector as an intermediary step when Russian gas is neglected, before being fully decarbonized with hydrogen. Hydrogen production mostly relies on natural gas with carbon capture and storage until natural gas is scarce and costly at which time green hydrogen production increases sharply. The disruption of Russian gas imports has significant consequences on the decarbonization pathways for Europe, with local energy sources and carbon capture and storage becoming even more important.Comment: 39 pages, 7 figures, submitted to the Journal of Cleaner Productio

Exploring flexible strategies in engineering systems using screening models : applications to offshore petroleum projects

Thesis (Ph. D.)--Massachusetts Institute of Technology, Engineering Systems Division, February 2009."December 2008." Cataloged from PDF version of thesis.Includes bibliographical references (p. 290-297).Engineering Systems, such as offshore petroleum exploration and production systems, generally require a significant amount of capital investment under various technical and market uncertainties. Choosing appropriate designs and field development strategies is a very challenging task for decision makers because they need to integrate information from multiple disciplines to make decisions while the various uncertainties are still evolving. Traditional engineering practice often focuses on finding "the optimal" solution under deterministic assumptions very early in the conceptual study phase, which leaves a large amount of opportunity unexploited, particularly the value of flexible strategies. This thesis proposes a new approach to tackle this issue - exploring flexible strategies using midfidelity screening models. The screening models interconnect and model physical systems, project development, and economics quantitatively at the mid-fidelity level, which allows decision-makers to explore different strategies with significantly less computational effort compared to high fidelity models. The screening models are at a level of detail that gives reliable rank orders of different strategies under realistic assumptions. Flexibilities are identified and classified at strategic, tactical, and operational levels over a system's lifecycle. Intelligent decision rules will then exercise flexible strategies as uncertainties unfold. This approach can be applied as a "front-end" strategic tool to conduct virtual experiments. This helps identify good strategies from a large number of possibilities and then discipline-based tools can be used for detailed engineering design and economics evaluation.(cont.) The present study implemented the use of such screening models for petroleum exploration and production projects. Through two simulation case studies, this thesis illustrates that flexible strategies can significantly improve a project's Expected Net Present Value (ENPV), mitigate downside risks, and capture upside opportunities. As shown in the flexible tieback oilfield development case study, the simulations predicted a 82% improvement of ENPV by enabling architectural and operational flexibility. The distributions of outcomes for different strategies are shown in terms of Value-at-Risk-Gain curves. This thesis develops and demonstrates a generic four-step process and a simulation framework for screening flexible strategies with multi-domain uncertainty for capital-intensive engineering systems.by Jijun Lin.Ph.D

Benefits and Costs of Diversification in the European Natural Gas Market

Die Dissertationsschrift thematisiert die Frage nach den Kosten und Nutzen einer Diversifikationsstrategie im europäischen Erdgasmarkt und gliedert sich in neun Kapitel. In einer Vorbetrachtung beschreiben die Kapitel eins bis vier die Ausganglage mit Blick auf Angebots- und Nachfragestrukturen sowie der Gasinfrastruktur. Unsicherheiten in Bezug auf die Entwicklung der Nachfrage, Importverfügbarkeit und Preisniveaus werden diskutiert. In einem analytischen Rahmen wird das Thema Diversifikation in den Kontext der Energiesicherheit eingeordnet. Die Kapitel fünf bis sieben befassen sich mit der Beschreibung und der Analyse des europäischen Gasmarkts. Dafür wird ein lineares Modell, GAMAMOD-EU, entwickelt, welches als stochastische Optimierung den Ausbau der Erdgasinfrastruktur unter Einbezug von drei Unsicherheitsdimensionen in den Jahren 2030 und 2045 abbildet. Zusätzlich werden drei Diversifikationsstrategien in Hinblick auf Infrastrukturentwicklung und Versorgungssicherheit analysiert. In einer Erweiterung wird der Import Grüner Gase in die Betrachtung einbezogen. Kapitel acht stellt das deutsche Gasnetzmodell GAMAMOD-DE mit einer Fallstudie vor, die die Versorgungslage im kalten Winter 2012 nachmodelliert. Im abschließenden Kapitel neun werden die zu Beginn aufgeworfenen Forschungsfragen beantwortet, politische Handlungsempfehlungen gegeben und der weitere Forschungsbedarf skizziert.:Table of Contents List of Figures List of Tables Abbreviations Country Codes Nomenclature: GAMAMOD-EU Nomenclature: GAMAMOD-DE 1 Introduction 2 Uncertainties in Gas Markets 3 Diversification in Gas Markets to Ensure Security of Supply 4 Natural Gas Infrastructure 5 The European Natural Gas Market Model (GAMAMOD-EU) 6 Results on Security of Supply in the European Gas Market 7 Impact of Green Gas Imports on Infrastructure Investments 8 The German Natural Gas Market Model (GAMAMOD-DE) 9 Conclusion and Outlook Laws and Communication Papers References AppendixThe dissertation addresses the question of the costs and benefits of a diversification strategy in the European natural gas market and is divided into nine chapters. In a preliminary analysis, chapters one to four describe the initial situation with regard to supply and demand structures as well as the gas infrastructure. Uncertainties regarding the development of demand, import availability and price levels are discussed. In an analytical framework, the topic of diversification is placed in the context of energy security. Chapters five to seven deal with the description and analysis of the European gas market. For this purpose, a linear model, GAMAMOD-EU, is developed, which maps the expansion of the natural gas infrastructure as a stochastic optimisation, taking into account three uncertainty dimensions in the years 2030 and 2045. In addition, three diversification strategies are analysed with regard to infrastructure development and security of supply. In an extension, the import of green gases is included in the analysis. Chapter eight presents the German gas grid model GAMAMOD-DE with a case study, which models the supply situation in the cold winter of 2012. In the concluding chapter nine, the research questions raised at the beginning are answered, political recommendations for action are given and the need for further research is outlined.:Table of Contents List of Figures List of Tables Abbreviations Country Codes Nomenclature: GAMAMOD-EU Nomenclature: GAMAMOD-DE 1 Introduction 2 Uncertainties in Gas Markets 3 Diversification in Gas Markets to Ensure Security of Supply 4 Natural Gas Infrastructure 5 The European Natural Gas Market Model (GAMAMOD-EU) 6 Results on Security of Supply in the European Gas Market 7 Impact of Green Gas Imports on Infrastructure Investments 8 The German Natural Gas Market Model (GAMAMOD-DE) 9 Conclusion and Outlook Laws and Communication Papers References Appendi