Supply chain networks servicing upstream operations in oil and gas fields after the shale revolution

Abstract

The recent irruption of shale resources in the oil and gas (O&G) industry has dramatically changed the paradigm for managing upstream operations. Unconventional production is largely driven by drilling new wells, yielding a much larger scale of material and service flows that need to be efficiently planned. This article presents an optimization framework for the design of integrated supply chain networks (SCNs) servicing upstream operations. Novel aspects addressed in this work are the integrated planning of material and service supplies; the economies of scale in operating, transportation and capital expenditures; the concept of waiting cost to quantify production losses; and the reverse flow of materials within closed‐loop supply chains. The merits of the proposed approach are assessed through real‐world case studies from the Argentine O&G industry. Optimal designs yield significant cost savings and confirm that the integrated planning of the SCN is critical for O&G operators after the shale revolution.

Optimal planning of artificial lift operations in a shale gas multiwell pad

“…The continued development of shale gas resources at decreasing costs is one of the most important drivers for the sustained growth of the natural gas production 3 . However, planning the development of unconventional fields is challenging due to the rapid decline of productivity curves 4 . By 2040, shale gas is expected to account for 30% of the world natural gas production.…”

“…3 However, planning the development of unconventional fields is challenging due to the rapid decline of productivity curves. 4 By 2040, shale gas is expected to account for 30% of the world natural gas production. In Argentina, it is projected to account for almost 75% of the total production by the end of 2040.…”

“…The productivity curve and the response of every well after dewatering are known. All productivity decline curves follow the functions described by Equations (1), (2), (3) and(4). For every well w the parameters Tc w , Pc w , Tmax w , a w , k w are given.b.…”

Pipeline network design for gathering unconventional oil and gas production using mathematical optimization

“…In addition to the fact that hydraulic fracturing and stimulation techniques are significantly more expensive than conventional operations, the production profiles of unconventional wells show sharp declines, calling for continued drilling to maintain the overall production. On the one hand, this leads to much larger supplies and logistics operations, requiring advanced optimization models to effectively plan materials and services procurement (Montagna and Cafaro 2019). On the other hand, the steady development of new wellpads makes it critical to manage oil and gas flows across the gathering network (Rexilius 2015), for which a long-term planning horizon should be considered in order to develop facility investment plans.…”