Modeling and Computational Strategies for Optimal Development Planning of Offshore Oilfields under Complex Fiscal Rules

Modeling and Computational Strategies for Optimal Development Planning of Offshore Oilfields under Complex Fiscal Rules Vijay Gupta and Ignacio E. Grossmann Department of Chemical Engineering, Carnegie Mellon University Pittsburgh, PA 15213 Abstract The main goal of this paper is to extend a simple NPV (net present value) based optimal oilfield development planning model to include complex fiscal rules. In particular, we consider a recently proposed multi-field site strategic planning model for offshore oil and gas fields as a basis to include the generic fiscal rules with ringfencing provisions. The reduction of this model to a variety of contracts is explained. The results on the realistic instances show improved investment and operations decisions due to the explicit consideration of the fiscal terms during planning. However, as the model can become computationally very expensive to solve with the extension to sliding scale fiscal rules, we also provide some reformulation/approximation techniques and solution strategies that yield orders of magnitude reduction in the solution time.