Optimizing SANTOS's Gas Production and Processing Operations in Central Australia Using the Decomposition Method

Abstract

Much of the natural gas consumed in Australia comes from reservoirs near the middle of the country. To take advantage of higher-priced liquid components, from 1980 to 1984 producers spent $A1.4 billion on plant to separate gas and liquids and a 500-mile liquids pipeline. The sequence of investments in producing facilities and the gas production schedule that maximize net present value over a 25-year horizon are determined with a nonlinear, decomposition-based, mathematical programming system, called SIPS, which uses a tailored reservoir simulation model to accurately predict reservoir decline. In annual planning we estimate that SIPS saves about 10 percent of the investment it considers, or $A3-6 million per year. SIPS's answers to what-if questions may yield equivalent benefits, and its impact may be much greater in such areas as gas price negotiations, responses to legislated changes in South Australian energy policy, the payment schedule for the project's loan, the optimal response to the recent collapse in oil prices, and participation factors for each of the 11 companies sharing costs and revenues in the Cooper Basin.