Kurt60 bergen

Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 1

Applied Mathematical Programming in

Norwegian Petroleum field and pipeline

development

Kjetil Haugen1 and Bjørn Nygreen2

1Molde University College

2Norwegian University of Science and Technology


Our connections with Kurt

• Kurt first visited NTH(NTNU) during our preparation for our Industrial Economics program. At that time Bjørn was on a sabbatical in England and Kjetil worked on his master thesis.

• Kurt moved to Bergen just after that, and he has since that often been in Trondheim as an external examiner on several courses and PhD defences. As far as we remember, Kjetil was the first PhD candidate he evaluated in Trondheim.

• For the last 10 years, Kjetil has had a full time position in Molde , where Kurt at the same time has had a part time position.

• During the first years Kurt stayed in Norway he worked on petroleum production problems. At the same the same time we both worked on similar problems and had several discussions with Kurt.

• For this reason we have today chosen to talk about petroleum problems, even if most of our results are not new.


Norwegian petroleum production

• Phillips Petroleum Company found the first Norwegian petroleum

at the Ekofisk field in 1969.

• Production started in June 1971.

• Peek of OIL production around 2000.

• Early political discussion on whether to plan for 40, 60 or 90

mill tons of annual petroleum productions due to:

– it’s impact on the rest of the society,

– concern with the depletion rate of an exhaustible resource.

• The Norwegian politicians “agreed” on aiming for 90 mill ton.

• This became a major constraint on the planning.


The Norwegian oil production

NPD has

published

the graph on

this page

with historic

values for

Norwegian

oil

production

and future

forecasts.


Petroleum pipes from our sector

• NPD has

published

the graph

on this

page over

current

pipes

leaving

fields in the

Norwegian

sector.


Planning in Norway

1. Petroleum companies operating on our self.

2. Applied research organizations (SINTEF, CMI,..).

3. Universities (NTH (NTNU),..).

• Technical and Economical planning.

• Operational, tactical and strategic planning.

• We here report on strategic planning based on our involvement in the cooperation between NTH & SINTEF.

• In the early days most of the people involved had studied applied physics with specialization in OR at NTH.

• Tore Raum, who worked at CMI at same time as Kurt had a similar background from NTH.


Discrete deterministic strategic planning

• Early eighties: Focus on 90 mill ton petroleum.

• Simple assumptions:

– 1: Plan for different certain situations.

– 2: All major decisions were discrete.

– 3: Reduce the freedom to make the model solvable.

• CMI and SINTEF made and implemented models which

tried to serve similar planning purposes.

• The SINTEF based model has been enhanced, rewritten

and re-implemented for different computer environments

several times for STATOIL and NPD.

• We will mention some elements of the SINTEF based model

in the following:


The SINTEF based model - 1

• All decisions are about projects (original field developments,

transportation solutions and possible capacity additions) and which

year they shall be started.

• Each project can at most start once.

Production

Investments, Operating costs

2008 2013 time



• Main goal:

– Maximize NPV before tax for all the fields together.

– Minimize the sum of deviations from an input profile, mainly

investments.

• Alternative projects for alternative developments, at most

one can start.

• Precedence constraints, one project can only be started if a

specific other project also starts. With or without explicit

bounds on start times differences.

• The discrete decisions soon became to strict, because the

development of different fields were planned independently.



• Continuous yearly production based on a very simple

reservoir model.

Binding Constraint

Input profile

Optimized profile



• Global constraints, yearly lower and upper bounds, on both

production and resource input.

• Transportation of products. All produced products need to

reach their markets, either by ship or pipe. Burning of gas

was allowed in the early years.

• Pipes with known volume or weight capacity, no pressure

calculations.

• Possible markets in all nodes in the transportation network.


Stochastic planning

• When the price on raw oil dropped significantly in the

eighties, the demand for taking the uncertainty into account

during the planning.

• Kurt used integer stochastic programming in his paper

published early in the nineties.

• We used stochastic dynamic programming. Not useful in

practical planning because the users did not dare to specify

probability distributions.

• The economy group in NPD needed the largest NPD

computer reserved for technical problems to run our DP

model.


What about today?

• CMI has been reorganized. We have lost track of what they

do.

• Our model has been enhanced and moved several times.

The original structure is still an important part of a model still

in use. That is uncommon for strategic integer programming

models.

• The group in SINTEF still work on petroleum problems, also

operational and stochastic ones. StatoilHydro and GASSCO

together with SINTEF were nominated to the Franz

Edelman finals this year (2008) for a project applying

mathematical programming methods to a problem

concerning production, transportation and sale of gas.

• Planning the Norwegian petroleum still needs strategic and

more detailed models.


Many congratulations to Kurt

on the 17th of May

• We are very happy to say that knowing and working with Kurt has

been both a challenge and a great enrichment for many years.

• It is perhaps unusual for Swedes and Norwegians to enjoy such

fruitful and enjoyable companionships, but with Kurt it has all been

a pleasure.

• Even though 60 years of age for somebody may seem like a

significant age, Kurt is still going (very) strong.

• We feel certain that he will continue to be a continuous inspiration

both scientifically and personally.

• His contribution to both our institutions can not be valued enough,

and his ever lasting scientific curiosity is always inspiring.

Good luck with the next 60, Kurt!

Business

Kurt60 bergen