Alexandria Engineering Journal (Dec 2021)
A multi-objective robust optimization model for upstream hydrocarbon supply chain
Abstract
The hydrocarbon supply chain (HCSC) is a significant part of the world's energy sector. The energy market has experienced erratic behavior over the last few years results in financial risks such as exceeding certain limits of the budget or not achieving the desired levels of cash in-flow, i.e., revenue. In this work, robust optimization and multi-objective mathematical programming are used to develop a model that eliminates or at least mitigates the impact of uncertain market behavior. Robust optimization provides tactical plans that are feasible and robust over market scenarios. The model assesses the trade-offs between alternatives and guides the decision-maker towards the effective management of the HCSC. The economic objectives are to minimize total cost and maximize revenue, while the non-economic objective is to minimize the depletion rate. The model considers the environmental aspect by limiting the emission of CO2 and the sustainability aspect by reducing the depletion rate of natural resources. Uncertain behavior of the oil market is modeled on scenario representation. A case study based on real data from Saudi Arabia HCSC is provided to demonstrate the model's practicality, and a sensitivity analysis is conducted to provide some managerial insights. The results indicate that Saudi Arabia can cover its entire expenditure, break-even-point, by producing oil at 7.18 MMbbld and gas at 3,543.48 MMcftd. Besides, the robust approach provides a preferred plan with the highest cash inflow and the lowest sustainability over other approaches, e.g., deterministic, stochastic, and risk-based. The differences show that the robust model increases oil production to compensate for the variability of the scenario.
