Shale-gas scheduling for natural-gas supply in electric power production

Brage Rugstad Knudsen, Curtis H. Whitson and Bjarne Foss

Energy, 2014, vol. 78, issue C, 165-182

Abstract: This paper describes a novel integration of shale-gas supply in geographical proximity to natural-gas power production. Shale-gas reservoirs hold special properties that make them particularly suited for intermittent shut-in based production schemes. The proposed scheme argues that shale-gas reservoirs can be used to shift storage of gas used for meeting varying demands, from separate underground storage units operated by local distribution companies to the gas producers themselves. Based on this property, we present an economical attractive option for generating companies to increase their use of firm gas–supply contracts to the natural-gas power plants in order to secure a sufficient gas supply. The shale-well scheduling is formulated as profit-maximization model for well operators, in which we seek to include their main operational challenges, while preserving an economic incentive for the operators to adopt the proposed scheme. The resulting large-scale mixed integer linear program is solved by a Lagrangian relaxation scheme, with a receding horizon strategy implemented to handle operational uncertainties. We present the proposed optimization framework by illustrative case studies. The numerical results show a significant economic potential for the shale-well operators, and a viable approach for generating companies to secure a firm gas supply for meeting varying seasonal electricity demands.

Keywords: Shale gas; Natural-gas power plants; Firm contracts; Economic optimization; Lagrangian relaxation; Receding horizon control (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:78:y:2014:i:c:p:165-182

DOI: 10.1016/j.energy.2014.09.076

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