A mixed integer nonlinear program for oilfield production planning

A multi-period model, the Oil Production Optimization Program (OPOP), has b een developed as a prototype of a tool to assist field operators in maximiz ing profitability of their producing properties. The model captures both th e discrete nature of pump replacement decisions and continuous production r ate settings. The solution algorithm uses Generalized Benders Decomposition to separate out the continuous and discrete decision variables. Because it is theoretically possible that the algorithm can give suboptimal solutions , we describe it as a heuristic, but it yields the optimal solution on a sm all test problem, and intuitively reasonable results on larger, realistic p roblems for which the optimum is not known in advance. Computation times ar e just a few minutes on the realistic models, but models with many more wel ls or periods may take an unacceptably long time. Output and sensitivity fi ndings for one- and three-well cases are discussed. Several planned improve ments to both the formulation and algorithm are briefly mentioned.