Development of Shale Gas Supply Chain Network under Market Uncertainties

Jorge Chebeir, Aryan Geraili and Jose Romagnoli
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Jorge Chebeir: Cain Department of Chemical Engineering, Louisiana State University, Baton Rouge, LA 70803, USA
Aryan Geraili: Cain Department of Chemical Engineering, Louisiana State University, Baton Rouge, LA 70803, USA
Jose Romagnoli: Cain Department of Chemical Engineering, Louisiana State University, Baton Rouge, LA 70803, USA

Energies, 2017, vol. 10, issue 2, 1-31

Abstract: The increasing demand of energy has turned the shale gas and shale oil into one of the most promising sources of energy in the United States. In this article, a model is proposed to address the long-term planning problem of the shale gas supply chain under uncertain conditions. A two-stage stochastic programming model is proposed to describe and optimize the shale gas supply chain network. Inherent uncertainty in final products’ prices, such as natural gas and natural gas liquids (NGL), is treated through the utilization of a scenario-based method. A binomial option pricing model is utilized to approximate the stochastic process through the generation of scenario trees. The aim of the proposed model is to generate an appropriate and realistic supply chain network configuration as well as scheduling of different operations throughout the planning horizon of a shale gas development project.

Keywords: shale gas supply chain; market uncertainty; two-stage stochastic programming; binomial option pricing model (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (7)

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