Multi-Stage Stochastic Programming for Natural Gas Infrastructure Design with a Production Perspective

Lars Hellemo, Kjetil Midthun, Asgeir Tomasgard and Adrian Werner
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Lars Hellemo: Department for Industrial Economics and Technology Management, Norwegian University of Science and Technology, Alfred Getz veg 3, NO–7491 Trondheim, Norway
Kjetil Midthun: Department for Applied Economics and Operations Research, SINTEF Technology and Society, NO–7465 Trondheim, Norway
Asgeir Tomasgard: Department for Industrial Economics and Technology Management, Norwegian University of Science and Technology, Alfred Getz veg 3, NO–7491 Trondheim, Norway
Adrian Werner: Department for Applied Economics and Operations Research, SINTEF Technology and Society, NO–7465 Trondheim, Norway

Chapter 10 in Stochastic Programming:Applications in Finance, Energy, Planning and Logistics, 2013, pp 259-288 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractWe present a multi-stage stochastic model that analyzes investments in natural gas fields and infrastructure. New projects are evaluated together with existing infrastructure and planned expansions. Several uncertain factors both upstream and downstream such as reservoir volumes, the composition of the gas in new reservoirs, market demand and price levels can influence the optimal decisions. The model focuses also on the impact of the sequencing of field developments and new infrastructure on the expected security of supply. In order to analyze all these aspects in one model, we propose a novel approach to scenario trees, combining long-term and short-term uncertainty. Dimensionality and solution times of realistic investment cases from the Norwegian Continental Shelf are discussed.

Keywords: Stochastic Programming; Optimization with Scenarios; Finance; Energy; Production and Logistics Applications (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (5)

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