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OPTIMIZATION OF LNG CHAIN BY STOCHASTIC
DYNAMIC PROGRAMMING MODEL


Abdelhakim Ainouche, Sonatrach-TRC-RTH-Hassi R’mel., Algeria; Dr Abdelnacer Smati,
Faculty of hydrocarbon University of Boumerdes., Algeria


Abstract

Having a park of four liquefaction chains, Algeria is considered as one of the principal natural gas and
LNG suppliers of Mediterranean Europe and America. The LNG market, characterized until now by
long term contracts of the “take or pay” type, will tend to change. This will result mainly in the quest by
the customers of a larger flexibility in the contracts and the multiplication of spot removings.
Consequently LNG chains, must anticipate those evolutions and include new organization forms of
their exploitation. LNG chain is a complex system, 20 to 30% of the amount that is transited is used
for energy consumption .This high value justifies the necessity to elaborate optimization algorithms
in order to reduce energy costs. To carry out this objective efficiently, a global optimization of the
chain including gas pipelines, liquefaction plants, storage capacity, port and LNG tankers fleet are
necessary. For this, a stochastic dynamic programming model has been designed .The input data of
the model are given by:
• ARMA model for the modeling of the LNG expeditions;
• Simulation model of the port functioning and storage state;
• Reliability model of the liquefaction plants and gas pipeline compressor stations;
• Optimization model of the gas pipeline and the LNG plant using a dynamic programming
procedure and MINLP (mixed integer nonlinear programming).

An application to Algerian chain Hassi R’mel –Skikda will be given.

Key words: LNG Chain, Optimization, Gas pipeline, Storage, Reliability, Stochastic,
Dynamic Programming, MINLP, Monte Carlo simulation

Introduction
With the increased demand of natural gas, liquefied natural gas (LNG) is emerging as an important
source of natural gas and getting a second look as a fuel option in the world.
The Algeria historically played a pioneering role in the development of LNG industry and the global
LNG trade. The perspectives of excess liquefaction capacities bound to the coming on line of new
trains on a given number of plants through the world will ineluctably influence on the future evolution of
the LNG market.

The LNG market, characterized until now by long term contracts of the “take or pay” type, will tend to
change. This will result mainly in the quest by the customers of a larger flexibility in the contracts and
the multiplication of spot removings. This spot, or short-term trade has grown from 1.3% of total world
exports in 1992 to nearly 4% in 1999. The emergence of the spot market is due to several factors,
including excess capacity in new projects, which is available until purchasers take full volumes; an
increasing number of buyers and sellers: and the availability of capacity at terminal. Consequently
LNG chains, characterized by a given rigidity because of the strong dependence between the
functions production, transport, liquefaction, storage and trading must anticipate those evolutions and
include new organization forms of their exploitation.

To the market flexibility must respond a larger flexibility of the LNG chain (Law of Requisite Variety of
Ashby)
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.
The Requisite Variety may be obtained by:
• An appropriate re design of interfaces between the different functions;
• A larger availability of the chain in its overall.
Those operations have a very high cost in term of investment and exploitation.
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The use of optimization techniques enables to reduce the financial impact of these necessary
changes.

1- Model of a port simulation
The ports are equipped of many loading platforms which it is question to use at best in function of the
demand evolution. The functioning of a port is a complex process. Two removal types will prevail:
• The exports by shuttles and rotations to the destination of ports defined in advance.
• The spot removals or at trip.
While waiting for the confirmation more and more important of the spot deliveries, the simulation
remains the only resort for the modeling of the port functioning and of the expeditions. Besides if the
spot removals are done with the help of LNG tankers of which the arrivals and destinations are
random, shuttles and rotations are programmed with the active competition of man. Which supposes
that the use of queuing scheme can not be reasonably recommended. This standpoint finds itself
comforted by the following functioning requirements:
• A port is composed of loading platforms of different capacities;
• An LNG tanker can load only in a platform of higher or equal capacity to its one;
• The days of swell, the loading is interrupted momentarily.
For LNG tankers organized in shuttles, the arrivals may be supposed regular and spaced by a time
equal to the time duration of a rotation. In reality, the variable state of the sea and the random duration
of unloading at the expedition port lead to delays which disrupt the arrival programming. The
functioning of a port is a dynamic process at the entrance of which a complex harmonic signal acts.
Harmonics are constituted by the regular shuttles of different periodicities. Spot arrivals and delays
may be assimilated to a noise.

Under this aspect there is place to note the homomorphism of this representation with speech
signals
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. This enables the use of theoretical aspects already developed in this field. The model
generally admitted for the speech signal is a structure of AR model (Autoregressive). From this
standpoint the extrapolation allows the modeling of expeditions by the following model:

( ) ( ) i t q a t q
e
P
i
i e
− ⋅ =

=1
(1)
where:
p : the order of the model;
i
a : coefficients of prediction
The identification of prediction coefficients is done on the basis of simulation results by the least
squares method. The model of simulation is constructed on the following hypotheses:
• The density of probability of delays in the arrivals of LNG tankers organized in shuttles follows an
exponential law of the form:
( )
αθ
α θ

⋅ = e P (2)


• For a service duration, which comprises the maneuverings, the de-ballasting, the loading and
customs formalities:

( )
τ µ
µ τ
⋅ −
⋅ = e G (3)

Where :
α : mean rate of delays;
µ : mean rate of service;
θ and τ , the time.

By analogy with the oil domain
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the choice of exponential distributions, which are the simplest to
manipulate mathematically is the most often confirmed by practice. For the spot arrivals, the adapted
model is that of completely random arrivals characterized by a Poisson process:
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( )
( )
t
m
e
m
t
t H
⋅ −


=
β
β
!
(4)
Where :
β : mean rate of spot arrivals
m : average number of LNG tankers
t : time
The parameters α , β and µ may be estimated by a statistical treatment of data during the
normal exploitation of the port.

After having admitted an initial state of the system, the use of the Monte Carlo method enables the
simulation of a chronology of LNG tankers arrivals and departures as well as the occupation period of
each loading platform. According to the real evolution of the spot expeditions the coefficients of
prediction will be corrected by the adaptive algorithm use or by Kalman filter. The vectorial form of this
algorithm is:
( ) ( ) ( ) ( ) 1 1 1 ' + + + = + k e k K k a k a (5)
( ) k a : vector of prediction coefficients at the modeling step k
( ) 1 + k K : the gain at the step ( ) 1 + k
( ) 1 + k e : the update error at the step ( ) 1 + k

2- Storage capacities modeling
The LNG storage at a terminal is characterized by a continuous supply. If receivings can be
assimilated to a determinist “controllable “ process, the expeditions them, because of delays and spot
deliveries are most often random. The port can be considered as a complex operator then and the
expeditions from the storage park as an exit signal. It becomes possible then to turn into account the
theory of the random functions in view to better know the characteristics of the exit signal, its spectral
representation and mainly the judicious choice of the planning duration and the receivings volume.
Knowing the flow rate of each loading platform, the simulation model of the port may be transformed to
furnish a chronic of the exported LNG amounts. Then the result is a chronological series of the
amounts sent, that we will assimilate to an ergodic random process. The moments of different orders
are defined then by the relationships:

( ) ( ) | | ( ) | |

− + ⋅ −

=
y y yy
M T y M y
T N
T R τ τ
1
(6)

( )
( )
y
yy
yy
D
T R
T = ρ (7)
y
M : mean of the function ( ) τ y
y
D : variance
( ) T R
yy
: Autocorrelation function
The Autocorrelation function is not a random function. Its form enables to judge the nature of the
process, which may be harmonic or purely random. In the case of a harmonic process, the planning
duration is equivalent to the half period of the correlation function. In the case of a random process,
the correlation function weakens when the interval T increases. So one must content himself with
defining the interval for which the process may be considered as stationary in the wide sense. The
expeditions of LNG being random, a statistical analysis of the evolution of the simulated stocks state
enables to define (for a given risk factor) the safety stocks level and the necessary storage capacities,
so the possibility of new constructions of tanks. The evolution of the state of stocks may be described
by the relationship:

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( ) ( ) ( ) ( ) τ τ τ τ
q Q
e
ST ST − + − =
0
1
(8)
Where:
( ) τ
0
Q : sequence of the gas pipelines flow rates chosen so that to minimize the energy costs;
( ) τ
e
q : exit flow rate from the park, random function depending of LNG tankers arrivals and the
occupation of the loading platforms.

3- Reliability of LNG chain
An LNG chain is a complex system. The modeling of complex systems, from reliability standpoint or
other, is always delicate. The systemic approach, or system approach, consists to split up the global
system in subsystems. Every subsystem being itself susceptible to be decomposed to subsystems of
lower level. Of a general way, a subsystem will be defined as a set of elements (or of lower level
subsystems) in interaction. The element is considered as the basis of the subsystem in the way that it
can not be decomposed to subelements. This results in a hierarchical organization chart having a
more or less high number of levels according to the mannered detail degree in the modeling. For the
modeling of the reliability of an LNG chain, of the type of the Hassi Rmel-Skikda chain, we adopted a
hierarchical decomposition of five levels. The modeling proceeding is of «bottom-up» type.

For systems of production where redundancies of subsystems are the most often numerous, the
failure of an element doesn't involve the total stop of the production but a decrease of performance
characterized by a matter flux lower than the nominal flow rate. The untimely nature of failures
involves by this fact a random fluctuation of the flow rate. These fluctuations can be then expressed as
probability values according to a statistical distribution law or assimilated to a random process of
discrete phase space. Every phase corresponds to a well definite failure state. In the two cases the
reliability coefficient, that characterizes the loss of performance owed to failures, can be quantified as
follows:


=
=
s
k
k k
R
Q
Q P
K
0
0
.
(9)
Where:

k
P , probability of the failure state k ;

k
Q , production flow rate associated to the failure state k ;

0
Q , design flow rate.
Probabilities of phases
k
P are determined by the use:
• Of reliability indices of the basis elements, mainly the failure rate and the repair rate;
• Of subsystems reliability diagrams;
• Of basis models of the systems reliability;
• Of the fundamental theorems of the probability theory.
The details of this important part of work are given in the second paper presented in this conference
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.
4- Optimization of the LNG chain
Costs of starts-up/stops of a liquefaction train are very high. The operating at partial load of a
liquefaction train is expressed by a decrease of the efficiency and the increase of the fuel
consumption. It can be expressed by the relationship:

( )
n
i i i
n
i
i
i i i i
q
q
q
b a q C ⋅ − =
|
|
.
|

\
|
− = β α
max
(10)
max i
q : nominal capacity of the train i
i
q : the production flow rate of the train i
i i
β α , and n : coefficients defined from the real consumption curves

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The optimization criteria kept consists in minimizing costs of energy and costs of starts-up/stops





























(11)


C : cost of energy by unit of time in $
T : period of planning
n : number of trains
ij
a : binary variable
i
Cd : cost of a start-up/stop of the train i

Constraints:

1 - constraints on the production flow rate of the LNG units in link with risks of rupture of stock and of
overstock



( )
( )
( ) ( )
( )
T
t
t t
T
t
t
V V
q Q
V V
q
st st
e i
st st
e
1 1
0
− −
+ ≤ ≤
− −

+ −
for all i varying from 1 to T

2 - constraints of flows balance

( ) t Q q a
i ij
n
j
ij 0
1
= ⋅

=
for all i varying from 1 to T


3 - constraints of link
( )
2
1 1
1
1 1
1
i
T
i
n
j
ij j i i
T
i
n
j
n
ij i
Cd
a a T q C Z Min ⋅ − + ⋅ ⋅ =
∑∑ ∑∑
= =

= =
+
α


T1


T2


T3


T4


T5


T6
+
st
V

st
V
) (t q
e
( ) t Q
0
1
q
2
q
3
q
4
q
5
q
6
q
p
Q
6
( ) ( ) s t q a t q
e
P
s
s e
− ⋅ =

=1
for all t varying from 1 to T

4 - constraints on the tolerated operating range of trains
1 6 , 0
max
≤ ≤
j
ij
q
q
for all j varying from 1 to n

( ) t Q
0
: daily flow rate of produced LNG
+
st
V : maximal storage capacity

st
V : minimal storage capacity
( ) i V
st
: state of stocks to the instant i

The model set this way brings is drawn to a nonlinear programming problem with mixed variables. Its
solving is obtained by an algorithm of generalized reduced gradient type associated to a procedure of
branch and bound type.

A failure on a gas chain is a random event, it can be foreseen only from a probabilistic standpoint. In
this context, the operator must be able to have at one’s disposal tools enabling him to immediately
define the optimal configuration of the optimal parameters of the operation to establish taking into
account the failures. In this setting a model of optimization by the criteria of the minimum of energy
consumption has been developed.

Gas pipeline operates at relatively high pressure. The high operating costs of transmission pipelines
(compared to distribution) motivate the study of these ones. For a gas pipeline of an average
complexity, the fuel consumption of compressor stations represents approximately 5-10% of the gas
entering the pipeline. Because of the compressible nature of the gas, the optimization problem of a
gas pipeline operation whatever the criterion chosen comes out to a nonlinear programming problem.
The paper by Batey
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represents one of the early attempts to develop a rational control policy. The
application of this simple principle gives very correct results when the flow rate wanted at the end of
line is close to the nominal one. However, for intermediate flow rates needing to by pass a given
number of compressor stations, the disadvantages of its application become obvious because of the
highly combinatorial nature of the problem.

Wong and Larson
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determined the steady-state optimal operating conditions of a gun barrel gas
pipeline with compressors in series. Their technical solution was to use dynamic programming to find
the optimal suction and discharge pressures of a fixed number of compressor stations but they do not
give guidelines on how to accomplish such operation. The disadvantage of the dynamic programming
technique is that it can not accommodate many decision variables
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, at time where, paradoxically, the
technology complexity tends to increase their number and expressed by not very satisfactory solutions
from practical standpoint and sometimes unfeasible.

The objective of the optimization in this case is to minimize the fuel amount which is consumed by the
gas turbine drivers
2,10


(12)

i
Pd : discharge pressure
i
Ps : suction pressure
LHV : low heating value
i
ST
η : global efficiency of station i
(
(
¸
(

¸


|
|
.
|

\
|
− |
.
|

\
|
⋅ =

=
N
i
p
i
i i
ST
Q
Ps
Pd
LHV
C
Z Min
i
1
0
1
1
γ
η
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p
Q : gas pipeline flow rate
i
C
0
: coefficient
N : number of compressor stations in the system
γ : ratio of specific heat

Operating constraints include constraints on stations and on individual turbo compressor units. At
station level constraints are imposed on suction and discharge pressures, maximum discharge
temperature and horsepower of coolers. Constraints imposed on individual turbo compressor are
sufficient to ensure a feasible operating profile at all times during the solution. Checks are made of
surge, stonewall lines and maximum horsepower for each turbo compressor.
The problem set this way is solved by a dynamic programming procedure. The dynamic programming
is dominated by the principle of optimality of Bellman according to which:
« A policy is optimal if, at a stated stage, whatever the preceding decisions may have been, the
decisions still to be taken constitute an optimal policy when the result of the previous decisions is
included ».

For the case of GK1 gas pipeline Hassi R’mel-Skikda feeding the liquefaction plant GL1K, enables to
reduce the fuel consumption of 11%.

Conclusion

The recent development of the spot transactions is the proof of the gas markets mutation. These
circumstantial sales, represented 5% of gas transactions in 2000. This number will have tendency to
increase according to a given number of specialists. This activity will represent a complementary
element of the Algerian gas strategy based on the long term. Sonatrach, one of the most active gas
operators, has already started to adapt its production tools to those new perspectives. Consequently
the LNG chains, characterized by a given rigidity must anticipate these evolutions and include new
forms of organization of their exploitation. It can be obtained by the maximization of the availability and
the minimization of production costs on the whole of the LNG chain.

We presented in this article the necessary modeling tools enabling:
• the evaluation of the quality of response of an LNG chain facing those mutations;
• the quantitative analysis and the improvement possibilities of an LNG chain availability by the
implementation of a systemic model of reliability.
• the reduction of production costs by the optimization of the whole chain taking into account the
stochastic nature of expeditions that will result from the more and more important part of the short
term market. For this last point an approach associating dynamic programming and MINLP was
implemented.


References

1. Ainouche, A., Smati, A., Global optimization of the Algerian gas pipeline network, 16th World
Petroleum Congress, Calgary, Canada, June 2000.
2. Ainouche, A., Smati, A., and Younsi, K., Optimisation des régimes d’exploitation d’un gazoduc par
un modèle de programmation non linéaire, Conférence internationale sur la productique juin 2001
Sheraton Algérie.
3. Ainouche, A., Smati, A., and Younsi, K., Reliability of LNG and natural gas transmission chain, 17th
World Petroleum Congress, Rio de Janeiro, September 2002
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8
York 1976
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