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Supply Chain Optimization for the Liquefied Natural Gas Business

In: Innovations in Distribution Logistics

Author

Listed:
  • Roar Grønhaug

    (Norwegian University of Science and Technology)

  • Marielle Christiansen

    (Norwegian University of Science and Technology)

Abstract

Summary The importance of natural gas as an energy source is increasing. Natural gas has traditionally been transported in pipelines, but ships are more efficient for transportation over long distances. When the gas is cooled down to liquid state it is called liquefied natural gas (LNG). The LNG supply chain consists of exploration, extraction, liquefaction, transportation, storage and regasification. Maritime transportation is a vital part of the LNG supply chain, and LNG is transported in special designed ships, LNG tankers. The demand for LNG tankers has increased considerably as the entire LNG industry continues to see strong growth. Hence, there is a great potential and need for optimization based decision support to manage the LNG fleet, liquefaction plants, and regasification terminals in this business. Here, we are studying the LNG supply chain in close cooperation with a worldwide actor within the LNG business. This actor is responsible for the LNG supply chain management except the exploration and extraction. We describe the real planning problem and present both an arc-flow and a path-flow model of the problem. Both models are tested and compared on instances motivated from the realworld problem. It is a very complex problem, so only small instances can be solved to optimality by these solution approaches.

Suggested Citation

  • Roar Grønhaug & Marielle Christiansen, 2009. "Supply Chain Optimization for the Liquefied Natural Gas Business," Lecture Notes in Economics and Mathematical Systems, in: Jo A.E.E. Nunen & M. Grazia Speranza & Luca Bertazzi (ed.), Innovations in Distribution Logistics, chapter 10, pages 195-218, Springer.
    • Handle: RePEc:spr:lnechp:978-3-540-92944-4_10
    DOI: 10.1007/978-3-540-92944-4_10
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    Citations

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    Cited by:

    1. Guoming Lai & Mulan X. Wang & Sunder Kekre & Alan Scheller-Wolf & Nicola Secomandi, 2011. "Valuation of Storage at a Liquefied Natural Gas Terminal," Operations Research, INFORMS, vol. 59(3), pages 602-616, June.
    2. Dimitri J. Papageorgiou & Ahmet B. Keha & George L. Nemhauser & Joel Sokol, 2014. "Two-Stage Decomposition Algorithms for Single Product Maritime Inventory Routing," INFORMS Journal on Computing, INFORMS, vol. 26(4), pages 825-847, November.
    3. Mutlu, Fatih & Msakni, Mohamed K. & Yildiz, Hakan & Sönmez, Erkut & Pokharel, Shaligram, 2016. "A comprehensive annual delivery program for upstream liquefied natural gas supply chain," European Journal of Operational Research, Elsevier, vol. 250(1), pages 120-130.
    4. Kristin Uggen & Marte Fodstad & Vibeke Nørstebø, 2013. "Using and extending fix-and-relax to solve maritime inventory routing problems," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 21(2), pages 355-377, July.
    5. Yueyue Fan & Allen Lee & Nathan Parker & Daniel Scheitrum & Rosa Dominguez-Faus & Amy Myers Jaffe & Kenneth Medlock III, 2017. "Geospatial, Temporal and Economic Analysis of Alternative Fuel Infrastructure: The case of freight and U.S. natural gas markets," The Energy Journal, International Association for Energy Economics, vol. 0(Number 6).
    6. Agra, Agostinho & Christiansen, Marielle & Delgado, Alexandrino & Simonetti, Luidi, 2014. "Hybrid heuristics for a short sea inventory routing problem," European Journal of Operational Research, Elsevier, vol. 236(3), pages 924-935.
    7. Papageorgiou, Dimitri J. & Nemhauser, George L. & Sokol, Joel & Cheon, Myun-Seok & Keha, Ahmet B., 2014. "MIRPLib – A library of maritime inventory routing problem instances: Survey, core model, and benchmark results," European Journal of Operational Research, Elsevier, vol. 235(2), pages 350-366.
    8. Roar Grønhaug & Marielle Christiansen & Guy Desaulniers & Jacques Desrosiers, 2010. "A Branch-and-Price Method for a Liquefied Natural Gas Inventory Routing Problem," Transportation Science, INFORMS, vol. 44(3), pages 400-415, August.
    9. Mingyu Li & Peter Schütz, 2020. "Planning Annual LNG Deliveries with Transshipment," Energies, MDPI, vol. 13(6), pages 1-24, March.
    10. Dimitri J. Papageorgiou & Myun-Seok Cheon & George Nemhauser & Joel Sokol, 2015. "Approximate Dynamic Programming for a Class of Long-Horizon Maritime Inventory Routing Problems," Transportation Science, INFORMS, vol. 49(4), pages 870-885, November.
    11. Jørgen Glomvik Rakke & Henrik Andersson & Marielle Christiansen & Guy Desaulniers, 2015. "A New Formulation Based on Customer Delivery Patterns for a Maritime Inventory Routing Problem," Transportation Science, INFORMS, vol. 49(2), pages 384-401, May.
    12. Henrik Andersson & Marielle Christiansen & Guy Desaulniers, 2016. "A new decomposition algorithm for a liquefied natural gas inventory routing problem," International Journal of Production Research, Taylor & Francis Journals, vol. 54(2), pages 564-578, January.
    13. Shiyu Chen & Wei Wang & Enrico Zio, 2021. "A Simulation-Based Multi-Objective Optimization Framework for the Production Planning in Energy Supply Chains," Energies, MDPI, vol. 14(9), pages 1-27, May.
    14. Christiansen, Marielle & Fagerholt, Kjetil & Nygreen, Bjørn & Ronen, David, 2013. "Ship routing and scheduling in the new millennium," European Journal of Operational Research, Elsevier, vol. 228(3), pages 467-483.
    15. Chandra, Saurabh & Christiansen, Marielle & Fagerholt, Kjetil, 2016. "Combined fleet deployment and inventory management in roll-on/roll-off shipping," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 92(C), pages 43-55.
    16. Michel‐Alexandre Cardin & Mehdi Ranjbar‐Bourani & Richard de Neufville, 2015. "Improving the Lifecycle Performance of Engineering Projects with Flexible Strategies: Example of On‐Shore LNG Production Design," Systems Engineering, John Wiley & Sons, vol. 18(3), pages 253-268, May.
    17. Berle, Øyvind & Asbjørnslett, Bjørn Egil & Rice, James B., 2011. "Formal Vulnerability Assessment of a maritime transportation system," Reliability Engineering and System Safety, Elsevier, vol. 96(6), pages 696-705.
    18. Sönmez, Erkut & Kekre, Sunder & Scheller-Wolf, Alan & Secomandi, Nicola, 2013. "Strategic analysis of technology and capacity investments in the liquefied natural gas industry," European Journal of Operational Research, Elsevier, vol. 226(1), pages 100-114.
    19. Pang, King-Wah & Xu, Zhou & Li, Chung-Lun, 2011. "Ship routing problem with berthing time clash avoidance constraints," International Journal of Production Economics, Elsevier, vol. 131(2), pages 752-762, June.
    20. Cho, Jaeyoung & Lim, Gino J. & Kim, Seon Jin & Biobaku, Taofeek, 2018. "Liquefied natural gas inventory routing problem under uncertain weather conditions," International Journal of Production Economics, Elsevier, vol. 204(C), pages 18-29.

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