APPLICATION OF LINEAR PROGRAMMING

IN OIL AND GAS INDUSTRY

Presented by:
Saurabh Jain (R020208031
Shankar Deo Rajpal (R020208032)
ABSTRACT OF PAPERS
INTRODUCTION


Linear programming uses a mathematical model to
describe the problem of concern. The adjective
term linear means that all the mathematical
functions in this model are required to be linear.

The word programming has nothing to do with
computer programming; rather it is essentially a
synonym for planning (as called in management
science or industrial engineering) or optimization
(as called in mechanical engineering or other
engineering disciplines).


LP MODEL : TERMS INVOLVED
Decision Variable: Various Alternatives or Course
of Action to look upon
Objective Function: A function associated with an
optimization problem which determines how good a
solution is,
Constraints: They exist because certain limitations
restrict the range of a variable's possible values.

LP MODEL
Objective Function : Max or Min



Subject to Constraints.



n nx a x a x a z .......... 2 2 1 1 + =
1 3 13 2 12 1 11 c x b x b x b s + +
2 3 33 2 22 1 21 c x b x b x b s + +
PROBLEM FORMULATION
Identify the objective of the problem; that is, which
quantity is to be optimized. For example, one may
seek to maximize profit.
Identify the decision variables and the constraints
on them. For example, production quantities and
production limits may serve as decision variables
and constraints.
Write the objective function and constraints in terms
of the decision variables, using information from the
problem statement to determine the proper
coefficient for each term. Discard any unnecessary
information


PROBLEM FORMULATION. (CONT.)
Add any implicit constraints, such as non-negative
restrictions.
Arrange the system of equations in a consistent
form suitable for solving by computer. For example,
place all variables on the left side of their equations
and list them in the order of their subscripts.
LINEAR PROGRAMMING ASSUMPTIONS
Certainty
Divisibility or Continuity
Additivity
Linearity or proportionality

APPLICATION OF LINEAR PROGRAMMING
LP is one of the most powerful and widespread business
optimization tools. And may be hard to believe but the
tool, can be used in a very large variety of business
problems. They include:

Product Mix Planning
Transportation
Distribution networks
Human Resource Planning
Financial and Tax Planning
Corporate Restructuring
Facility Planning
Fleet Scheduling


USING SOFTWARE FOR LINEAR
PROGRAMMING
Modern optimization techniques have challenged
organizations to rethink the way they conduct
business both internally and externally, i.e. how
efficiently and effectively their entire business is
managed. Some of the softwares are
Lindo
Lingo
Solver
Dataforms
GAMS


APPLICATION IN OIL AND GAS INDUSTRY
Grassroots refinery design/configuration
Selection and evaluation of crude oils and raw materials
Long-range and short-term operations planning
Capital investments evaluation for process equipment
Analysis of the profitability of merging and acquisition plans
and the creation of ad-hoc models for joint venture refineries
Evaluation of processing agreements and product exchange
contracts
Evaluation of new process technologies
Control of the refinery performance
Product blending control
Down-time planning
Inventory management

SPECIAL SOFTWARE USED IN O&G INDUSTRY

PAPER 1
The Use of LP & mathematical model in
underground oil production
J.S.Aronofsky & A.C. Williams
Socony Mobil Oil company Inc. New York City
This paper describes how linear programming can
be used to solve crude oil production problem for
the purpose of economic planning of coordinated
operations.
Started with Single well system and then integrated
the to multi well system

MULTI RESERVOIR SINGLE WELL
TERM & SUBSCRIPTS USED
Reservoir : is a subsurface pool of hydrocarbons
contained in porous rock formations. The naturally
occurring hydrocarbons are trapped by overlying
rock formations with lower permeability.
J1, J2.Jj Used for 1 to J Reservoirs
Time period denoted I = 1 to I
Reserve capacity Bj denotes removable oil in Jth
Reservoir.
Pipeline Capacity Ri at time period i
Flow rate qj and Pressure denoted pi
PROBLEM
It is required to compute that production schedule
for many sources and over a series of time periods
for which resulting profit is a maximum, and for
which all assumptions as to
1. behaviour of underground reservoirs,
2. restrictions on surface facilities, and
3. economies requisite to preparing a "profit and
loss" statement, are satisfied.
Assumptions from all three categories are required
in order to present a linear program model that is of
interest.

BEHAVIOR OF UNDERGROUND RESERVOIR
For each reservoir, there must be an expression that
represents the technology of flow through porous
mediathe behaviour of underground reservoirs. Such
a relationship between the well pressure and the
production flow rate is given in equation (1).


The function f(T) deserves some special consideration.
It describes how the well pressure, pw, changes with
time when the flow rate changes abruptly from zero to a
constant rate, q. It is sometimes referred to as an
influence function. It is dependent upon properties, such
as: reservoir rock, fluid characteristics, and reservoir
geometry


) ( . ) ( 0 t t f q p p w =
BEHAVIOR OF UNDERGROUND RESERVOIR
CONT
The same equation is superimposed for series of time period for variation
of q in different wells. The equation will be as



q denotes production rate of jth reservoir for ith period

Well pressure can take any value provided it does not go below some
specified value Dj.

=
=
=
toJ j
toI k
k i j k j k j wj f q q p p
1
1
1 , 1 , 0 ) ( ). ( ) ( t t t
j wj D p > ) (t
PRODUCTION CONSTRAINTS 1
Cumulative production cannot be greater then
reserve




=
i

i-1
The constant Bj in this inequality represents the
removable oil in place for Jth Reservoir
Hence there will be J equations for J reservoirs.

=
s
I
i
j i j i B q
1
, .ot
TRUNK PIPE LINE CONSTRAINT
The production rate at any time period should not
exceed the pipeline capacity R
i








Thus Ri represents the flow of oil through the ith
time period.

=
s
J
j
i i j i R q
1
, .ot
THE OBJECTIVE FUNCTION
To find all sets of qij which satisfy all constraints and the
profit is largest , We wish to maximize.




The term profit is defined to include all economic factor
that are involved in producing and selling crude oil to
pipeline facility.
All the economic factors pertaining to revenue and
expenses are contained in the profitability index, d
i,j

which has the dimensions of dollars and represents total
profit for the entire lifetime of project.


i
J
j
I
i
j i j i d q t o |

=
=
=
1
1
, . ,
TOWARDS SCHEDULING PRODUCTION RATES
FROM MULTI WELL SYSTEM

MAXIMIZING CDU1 OUTPUT,RIL
CDU1 REVENUE CALCULATION MODEL FOR
PERIOD 1.12.2001 TO 7.12.2001

DATA REFERENCE - RELIANCE IND.
LTD,JAMNAGAR
SOLVER
APPLICATION IN
EXCEL