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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
Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 2
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.
Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 3
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.
Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 4
The Norwegian oil production
NPD has
published
the graph on
this page
with historic
values for
Norwegian
oil
production
and future
forecasts.
Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 5
Petroleum pipes from our sector
• NPD has
published
the graph
on this
page over
current
pipes
leaving
fields in the
Norwegian
sector.
Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 6
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.
Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 7
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:
Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 8
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
Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 9
The SINTEF based model - 2
• 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.
Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 10
The SINTEF based model - 3
• Continuous yearly production based on a very simple
reservoir model.
Binding Constraint
Input profile
Optimized profile
Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 11
The SINTEF based model - 4
• 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.
Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 12
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.
Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 13
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.
Workshop Kurt 60 years – Bergen 15-16/5-2008 Page 14
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!
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