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Models for the Minimum Cost Development of Offshore Oil Fields

Author

Listed:
  • M. D. Devine

    (University of Oklahoma)

  • W. G. Lesso

    (University of Texas)

Abstract

Since the cost of developing a single offshore oil field usually runs in the tens of millions of dollars, savings due to better development policies could be quite significant. This paper presents a general model for developing offshore fields at minimum cost. The model applies to any field developed from fixed platforms, and thus could also be used directly for the development of fields on the north slope of Alaska. The basic limitations and possible utility of the model are discussed. The mathematical programming formulation of the problem is shown to be identical in general structure to the well-known warehouse location problem. Algorithms for solving the problem are developed, whereby the algorithm for a particular problem will depend upon the general form of the platform cost function. The algorithms developed are tested and shown to be computationally practical.

Suggested Citation

  • M. D. Devine & W. G. Lesso, 1972. "Models for the Minimum Cost Development of Offshore Oil Fields," Management Science, INFORMS, vol. 18(8), pages 378-387, April.
    • Handle: RePEc:inm:ormnsc:v:18:y:1972:i:8:p:b378-b387
    DOI: 10.1287/mnsc.18.8.B378
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    Cited by:

    1. Jia-Yue Huang & Yun-Fei Cao & Hui-Ling Zhou & Hong Cao & Bao-Jun Tang & Nan Wang, 2018. "Optimal Investment Timing and Scale Choice of Overseas Oil Projects: A Real Option Approach," Energies, MDPI, vol. 11(11), pages 1-22, October.
    2. Silva, L.M.R. & Guedes Soares, C., 2023. "Robust optimization model of an offshore oil production system for cost and pipeline risk of failure," Reliability Engineering and System Safety, Elsevier, vol. 232(C).
    3. Guastaroba, G. & Speranza, M.G., 2014. "A heuristic for BILP problems: The Single Source Capacitated Facility Location Problem," European Journal of Operational Research, Elsevier, vol. 238(2), pages 438-450.
    4. Chandra Ade Irawan & Said Salhi & Kusmaningrum Soemadi, 2020. "The continuous single-source capacitated multi-facility Weber problem with setup costs: formulation and solution methods," Journal of Global Optimization, Springer, vol. 78(2), pages 271-294, October.
    5. Alessandro Aliakbargolkar & Edward F. Crawley, 2013. "Architecting methodology for spatially and temporally distributed resource extraction systems," Systems Engineering, John Wiley & Sons, vol. 16(3), pages 277-286, September.

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