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Abstract
The design and development of natural gas transmission pipeline networks are multidisciplinary problems that require various
engineering knowledge. In this problem, the type, location, and installation schedule of major physical components of a network
including pipelines and compressor stations are decided upon over a planning horizon with least cost goal and subject to network
constraints. Practically, this problem has been viewed as a conceptual design case and not as an optimization problem that tries to select
the best design option among a set of possible solutions. Consequently, conceptual design approaches are usually suboptimal and work
only for short-run development planning. We propose an integrated nonlinear optimization model for this problem. This model provides
the best development plans for an existing network over a long-run planning horizon with least discounted operating and capital costs. A
heuristic random search optimization method is also developed to solve the model. We show the application of the model through a
simple case study and discuss how non-economic objectives may also be incorporated into model.
r 2007 Elsevier Ltd. All rights reserved.
0301-4215/$ - see front matter r 2007 Elsevier Ltd. All rights reserved.
doi:10.1016/j.enpol.2007.05.022
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A. Kabirian, M.R. Hemmati / Energy Policy 35 (2007) 5656–5670 5657
to Martch and McCall (1972) problem. They considered could solve the proposed strategic planning model and
the length and diameters of the pipeline segments to be provide (near) optimal development plans over the long-
variables. But their problem formulation did not allow run planning horizon.
unbranched network, so complicated network systems The remainder of this paper is organized as follows.
could not be handled. Olorunniwo (1981) and Olorunniwo Section 2 discusses about the model. After introducing the
and Jensen (1982) provided further breakthrough by notation and main parameters of the model in Sections 2.2
optimizing a gas transmission network including the type and 2.3, we talk about the integrated model of this paper
and location of pipelines and compressor stations. Edgar by introducing decision variables, constraints, and objec-
and Himmelblau (1988) simplified the problem addressed tive function. There is a submodel within the integrated
by Olorunniwo (1981) and Olorunniwo and Jensen (1982) model that finds best operating condition of the network
to make sure that the various factors involved in the design over time. This submodel is discussed in Section 2.5. The
are clear. They assumed the gas quantity to be transferred optimization algorithm of the model is discussed in Section
along with the suction and discharge pressures to be given 3 and we use a case study in Section 4 to demonstrate the
in the problem statement. They optimized the variables applicability of the model and the proposed solver method.
such as the number of compressor stations, the length of Section 5 discusses about the flexibility of the model in
pipeline segments between the compressors stations, the incorporating various decision criteria and constraints in
diameters of the pipeline segments and the suction, and the planning model. Finally, Section 6 concludes the paper.
discharge pressures at each station. They considered the
minimization of the total cost of operation per year
including the capital cost in their objective function against 2. Proposed model
which the above parameters are to be optimized. Edgar and
Himmelblau (1988) also considered two possible scenarios: We discuss about the model of this paper in this section.
(1) the capital cost of the compressor stations is linear Before going through the details, we briefly introduce all
function of the horse power and (2) the capital cost of the notations in Table 1.
compressor stations is linear function of the horsepower
with a fixed capital outlay for zero horsepower. 2.1. Problem definition
The development planning of natural gas network
requires various engineering, economics, and management The problem addressed in this paper focuses on
knowledge. But what practically is done in developing transmission of high-pressure processed natural gas from
countries like Iran, which holds the second largest natural production facilities to distribution centers or major
gas resources in the world, is based on conceptual designs consumption sites. The development and extension projects
of engineers to satisfy short-run demand of consumers. of a natural gas transmission network have different
Pursuing this policy over years has led to a complex and phases, which differ from country to country based on
inefficient pipeline network that is growing annually. On the rules and economic policies imposed by the govern-
the other hand in theory, the literature also lacks an ments. The major phases of a typical development project
integrated strategic planning method to consider different in the US are provided in Table 2 (Transportation
aspects of the problem over a long-run horizon. Specifi-
cally, these issues include: Table 1
Parameters of the model
1. The short-run development planning in the heart of a Notation Parameter, sets, and variables
long-run strategic plan,
2. The best type and location of the new compressor o Length of long-run planning horizon
stations, u Length of short-run planning horizon
l Number of short horizons in a long horizon
3. The best type and routing of the pipelines, Cjk Set of supply nodes in kth year of jth short horizon
4. The scheduling of implementing new pipelines and Djk Set of demand nodes in kth year of jth short horizon
compressor stations in the network, ijk Lower bound of gas supply of ith node in kth year of jth
5. The best combination of natural gas procurement from short horizon
available sources, and dijk Upper bound of gas supply of ith node in kth year of jth
short horizon
6. The best operating conditions of compressor stations in
t The number of periods of a year
different periods of each year of the long-run horizon. yijkl The demand of ith node in lth period of kth year of jth short
horizon
In this paper, we provide an optimization model to Zijkl Upper bound of the pressure demanded/supplied in ith node
address these issues. This strategic planning model is a at lth period of kth year of jth short horizon
gijkl Lower bound of the pressure demanded/supplied in ith node
complement to the available studies in the literature and
at lth period of kth year of jth short horizon
could bridge the gap between the theoretical researches and Ij Available compressor station entrance nodes at short
practical needs. In addition to the model, a specific horizon j
heuristic random search algorithm is also developed which Oj Available compressor station exit nodes at short horizon j
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The model plans some changes in the network structure 2.3.1. Demand and supply parameters
for each short horizon. These changes could be considered The combination of locations of demand and
as ‘‘development plans’’. We assume that the development supply nodes must be forecasted by the modeler.
plan for short horizon j þ 1 are implemented during We assume that these combinations are fixed during
previous short horizons and finished no later than the each year of long horizon, but can be modified at the
end of short horizon j. So the changes in the structure are end of each year; for instance, a new gas supplier may
available to be utilized in short horizon j þ 1. The planned- be added at the end of year j to the combination of
ahead changes for the first short horizon are implemented supply nodes for this year so that the new supplier may
before the start of the long horizon. The model considers a start to feed gas into network from the beginning of year
short horizon called ‘‘short horizon zero’’ before the first j þ 1. We denote the sets of supply and demand nodes in
short horizon, so that the required changes for the first kth year of jth short horizon by Cjk and Djk , respectively,
short horizon are implemented until the end of the short where
horizon zero. The hidden assumption here is that the
j ¼ 1; 2; . . . ; l; k ¼ 1; 2; . . . ; u.
demand of all consumers before the start of the long
horizon is met by the available network before long We also need to define the sets of supply and demand
horizon. nodes for the last year of planning horizon zero; these two
sets are denoted by C0;u and D0;u , respectively.
In this paper, the demand and supply are measured by
2.3. Network structure their mass flow rate (kg/year). We assume that the amount
of potential gas supply in each supply node is limited to a
The model assumes a study area that has some natural range. These ranges must be forecasted in order to
gas consumers and suppliers during long horizon. construct and run the model. The parameters ijk and dijk
The major physical components of a real gas transmis- represent upper and lower bounds of gas supply of ith node
sion network are pipelines and compressor stations. These in kth year of jth short horizon where
two components are represented by some edges in the
network of the model; one edge for each pipe and one edge i 2 Cjk ; j ¼ 1; 2; . . . ; l; k ¼ 1; 2; . . . ; u.
for each compressor station. The model also requires the forecasts of the demand for
Along with the mentioned edges, the network has five each demand node over the long horizon. The actual
types of nodes: demands follow specific time series and are continuous
functions of time. But for simplicity, each year is split into
Demand nodes. a number of periods, say t periods, and the model tries to
Supply nodes. satisfy the forecasted average demand of each period. The
Compressor station entrance nodes. lth period of each year starts at time tl1 and ends at tl,
Compressor station exit nodes. where we set t0 ¼ 0 and tt ¼ 1. We denote the forecasted
Transshipment nodes. average demand of ith node in lth period of kth year of jth
short horizon by yijkl , where
The demand nodes are major locations of consuming
i 2 Djk ; j ¼ 1; 2; . . . ; l; j ¼ 1; 2; . . . ; l; l ¼ 1; 2; . . . ; t.
natural gas in the study area. The demand nodes are either
the central point of major consumption regions in the study
The demand nodes not only consume a specific mass
area or export terminals of natural gas from the study area
flow rate in each period, but also need the pressure of the
to outside. In contrast, supply nodes are locations of
gas to be within a range. Also, the supply nodes release the
resources of processed natural gas in the study area. These
gas with a pressure that is bounded to a range. We denote
nodes are either refineries or plants producing natural gas
the user-defined upper and lower bounds of the pressure
or the import terminals of natural gas from outside of the
demanded/supplied in ith node at lth period of kth year of
study area.
jth short horizon by Zijkl and gijkl, respectively, where
Entrance nodes of compressor stations are points where
gas enters a compressor station edge to be compressed. i 2 Djk [ Cjk ; j ¼ 1; 2; . . . ; l; k ¼ 1; 2; . . . ; u;
Another set of nodes, exit nodes, are considered at the end
of compressor station edges, where compressed gas flows l ¼ 1; 2; . . . ; t.
through the network by compressor stations.
Transshipment nodes are the places where more than 2 2.3.2. Parameters of network components
pipe edges are joined. In each transshipment node, the gas The sets of available compressor station entrance and
flows into the node via some pipe(s) and flows out through exit nodes at short horizon j are denoted by Ij and Oj,
some other(s). respectively. We also define the set H j as the union of I j
Each node in the network is assigned a unique code in and Oj where
the model. The edges are recognized by the codes of their
corresponding end nodes. j ¼ 0; 1; . . . ; l.
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Transshipment nodes as the potential locations of joint ematically presented in this section after defining decision
of a number of pipes help the model find optimal pipeline variables of the planning problem.
routes with the goal of least total net present cost. The
modeler selects a set of points inside the study area for each 2.4.1. Decision variables
short horizon where by the new pipes in the development Development plans are nothing but the type and location
plans may join at these points. But these potential points of new pipes and compressor stations in the network. So we
are not necessarily the joint place of pipes because the define one set of decision variables for pipes and another
optimal routes obtained by the model may pass through set for compressor stations.
specific transshipment nodes and ignore the others due to Any two nodes that are not adjacent with a compressor
cost issues. A transshipment node is called ‘‘active’’ if it is station edge may be planned to be linked with one or more
the joint location of pipes; otherwise, it is named pipes in a development plan for a short horizon. Let us
‘‘inactive’’. We denote the set of potential transshipment denote the type code of nth new pipe between nodes i; i0 in
nodes for short horizon j with Tj which is a combination of development plan for jth short horizon by X ii0 jn (note that
active and inactive transshipment nodes. The set of active more than 1 pipe may be installed between 2 points) where
transshipment nodes in the available pipeline network at
jth short horizon is also denoted by Aj where ioi0 ; i; i0 2 Cj;u [ Dj;u [ T j [ H j1
0
ði; i ÞeK j1 ; j ¼ 1; 2; . . . ; l; n ¼ 1; 2; . . . ; x,
j ¼ 0; 1; . . . ; l.
where x is the maximum number of new pipes between any
Two types of edges were defined for the network of the 2 nodes in a development plan; this user-defined parameter
model. We suppose that the number of different pipe edges limits the set of pipe decision variable. If no pipe is planned
is limited. Specifically, there are r different types of pipeline between 2 nodes in a development plan, the corresponding
that could be used in the network. These pipes which have
decision variable takes zero. We have
unique type codes may differ in technical specifications
such as diameter, thickness, etc. Similarly, we suppose that X ii0 jn 2 f0; 1; 2; . . . ; rg.
there are s different types of compressor stations. Again, We assume that the new compressor stations are located
these compressor stations may differ in technical specifica- in the middle of some pipe edges. This means that the
tions like the number of compressors, fuel, etc. and have optimization algorithm of the model selects some pipe
unique type codes. edges and split each in to 3 edges; 2 pipe edges and one
The set of pipe edges in the available network of short compressor station edge between them. In order to define
horizon j is denoted by Pj. The members of this set are the new decision variable, we need to define the updated
vectors (i,i0 ) where ioi0 and i,i0 are 2 adjacent nodes pipe set Pj1 as
through a pipe. If more than 1 pipe link i,i0 (parallel pipe
edges in the network), the set of pipe edges includes vector Pj1 ¼ Pj1 [ fði; i0 Þioi0 ; i; i0 2 Cj;u [ Dj;u [ T j [ H j1 ;
(i,i0 ) as many as the number of parallel pipes between the X
x
corresponding nodes. Similarly, we define Kj as the set of ði; i0 ÞeK j1 ; ð X ii0 jn Þa0g ð1Þ
compressor station edges containing vectors (i,i0 ) where n¼1
ioi0 and i,i0 are 2 adjacent nodes through a compressor The set Pj1 contains the pipe edges in available network
station. Again we have of short horizon j 1 and new pipes that are planned in the
j ¼ 0; 1; . . . ; l. development plan of short horizon j.
We define decision variable Y ii0 j as the compressor
We also define Gii0 j as the set of pipe types between i, and station type that is planned to be installed in the middle of
i0 in available network of short horizon j. Clearly, if only pipe edge ði; i0 Þ in the development plan of jth short horizon
one pipe links i,i0 for short horizon j, Gii0 j has just one where
member which is the type code of the pipe. We have
ioi0 ; ði; i0 Þ 2 Pj1 ; j ¼ 1; 2; . . . ; l.
0
ði; i Þ 2 Pj ; j ¼ 0; 1; . . . ; l.
Another possibility for compressor station decision
Similarly, the compressor station type between i; and i0 variable is the case that a previously installed compressor
in available network of short horizon j is denoted by mii0 j station is upgraded in a development plan. Therefore, we
where extend the definition of the decision variable Y ii0 j to the
ði; i0 Þ 2 K j ; j ¼ 0; 1; . . . ; l. type code of upgraded compressor station that replaces
with existent compressor station ði; i0 Þ in the development
plan of jth short horizon where
2.4. Integrated model
ioi0 ; ði; i0 Þ 2 K j1 ; j ¼ 1; 2; . . . ; l.
The integrated strategic planning model is an optimiza- Like decision variable X ii0 jn , we set Y ii0 j ¼ 0 if no new
tion framework, which involves an objective function and a compressor station is planned to be installed between
number of constraints. This optimization model is math- nodes i and i0 in development plan of jth short horizon.
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Any way, we have 2.4.2.1. Capital costs. We assume that the capital cost of
installing a compressor station varies for different short
Y ii0 j 2 f0; 1; 2; . . . ; sg.
horizons and is a function of the compressor station type.
Let us denote this capital cost of replacing compressor
2.4.2. Objective function station type a with compressor station type a0 at jth short
Various goals may be pursued in gas transmission horizon with acaa0 j . If a0 ¼ 0, no compressor station already
pipelines network design and planning. Among these, cost, exists in the installation location to be upgraded and acaa0 j is
reliability, and responsiveness are probably the most just the capital cost of a new compressor station type a at
important and evident. But in addition to these objectives, jth short horizon. We assume that the capital cost of a
environmental and social criteria must also be considered pipeline is a function of pipe type and locations of end
in the planning model to ensure a sustainable development. nodes; this cost varies for different short horizons as well.
Our objective function here nominally includes cost-related Let us denote the capital cost of installing pipeline type b
objectives. Specifically, we use the net present worth between nodes i and i0 at jth short horizon with apbii0 j . For
(NPW) of operating and capital costs in long-run horizons. these parameters,
In Section 5, we discuss how various other objectives may a ¼ 1; 2; . . . ; s; a0 ¼ 0; 1; . . . ; s; a ¼ a0 ;
be incorporated into the cost-based objective function of
b ¼ 1; 2; . . . ; r; j ¼ 0; 1; . . . ; l 1.
the model.
Considering a cash flow of costs and possibly revenues Now we calculate the total capital cost ajk as
related to installation and operation of the network, we X
ajk ¼ nc acmi;i0 ;jþ1 ;0;j
calculate the NPW at the beginning of long horizon as the k
ði;i0 Þði;i0 Þ2ðK jþ1 K j Þ
objective function to be minimized: X
þ nc acmi;i0 ;jþ1 ;mi;i0 ;j ;j
X
l X
n ajk þ bjk k
ði;i0 Þði;i0 Þ2ðK jþ1 \K j Þ; mi;i0 ;jþ1 ami;i0 ;j
min NPW ¼ ,
j¼0 k¼1 ð1 þ wÞðj1Þuþk1 X X
z
þ npk apX 0
where w is the effective annual interest rate and ajk and bjk n o m¼1 i;i0 ;jþ1;m ;i;i j
ði;i0 Þði;i0 Þ2ðPj Pj Þ
are, respectively, capital and optimal operating costs at kth
year of jth short horizon, so that j ¼ 0; 1; . . . ; l 1; k ¼ 1; 2; . . . ; u,
j ¼ 0; 1; :::; l 1; k ¼ 1; 2; :::; u, nck npk
where and are, respectively, the percent of capital cost of
installing compressor stations and pipelines for each short
We assume that the capital and operation costs are horizon which occur in kth year. Of course, we must have
occurred at the beginning of the year. X
u X
u
The capital costs occurred in each short horizon are nck ¼ 1; npk ¼ 1.
functions of the variables of development plan for the k¼1 k¼1
subsequent short horizon (remember that the development
plan for a short horizon is implemented in its previous 2.4.2.2. Operating costs. Generally, operating cost for the
short horizon). Specifically, the two decision variables sets pipeline network are those costs that are not classified as
defined earlier, pipeline and compressor station variables, capital costs. We only consider two major operating costs
are the only variables that affect the capital cost function. in the model:
In contrast, this is not the case for operating costs because
there are 2 other sets of variables along with pipeline and The operating cost of compressor stations.
compressor station variables that could alter the values of The supply cost of natural gas to the network.
operating cost. These new variables as the decision
variables of the so-called ‘‘Submodel’’ are pressure of the Compressor stations as the hearts of the network
gas in nodes and the mass flow rate in pipes. Given a consume energy to increase gas pressure in the network.
network structure for satisfying the demand of consumers These stations have some other operating costs such as
for a period, different combinations of pressure and mass maintenance, labor, and overhead.
flow rate may be found that could be technically feasible; The gas is supplied to the network by different sources
hence, we define bjk as the total minimum (optimum) including refineries and importation from outside of the study
operating cost of all periods of kth year of jth short horizon area. Given the forecast of the consumption in demand nodes
if the combination of pressure and mass flow rate variables for a period, one may find different combination of gas
for all periods of the corresponding year take their optimal supply from supply nodes to satisfy the demands. But, the
values that lead to least operating costs. sales cost of gas from the supply nodes to the network could
We also set be different for different supply nodes. So the combination of
gas supply could affect the costs of model. Therefore, we also
al;k ¼ 0; b0;k ¼ 0; k ¼ 1; 2; . . . ; u. define the operating cost of gas supply.
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Given a fixed network structure for a period, both logically acceptable options. Three types of this class of
operating cost defined above are functions of steady-state constraints are as follows:
mass flow rate in the pipes and gas pressure in the nodes. In
fact, whenever we have a fixed structure for the network to 1. There must be at least one path between any demand
satisfy the demand of some consumers, we may find node (with a positive demand) and at least one of the
different combination of mass flow rate and pressure supply nodes; otherwise there is no way that the given
variables for different parts of the network that can satisfy network structure could satisfy the consumption of the
demands. These different combinations of mass flow rates demand nodes. Many algorithms exist in graph theory
and pressures could have different operating costs. Hence, to check the existence of these paths (see Ore, 1963;
there must be an optimization model within our integrated Harary, 1969).
model to find the best combination of mass flow rates and 2. The structure of the network must not have transship-
pressures in the network for a given network structure. We ment nodes that are adjacent to exactly one edge. In
call this new optimization model as ‘‘submodel’’. The other words, the number of pipes or compressor stations
objective function of this submodel is minimization of the connected by a transshipment node must be zero or
operating cost. This submodel is subject to many technical more than 2.
constraints. 3. The transshipment nodes cannot be the joints place of
The procedure that is used in our model is that whenever any combination of pipes. Technically, it may be
we have a fixed network structure for a period, we run the infeasible to join specific types of pipes together. These
submodel to find least possible operating cost for the given constraints must be defined with more details based on
network, then this cost is plugged into the objective the type of available pipelines and engineering designs.
function of our integrated model.
As we will see in Section 2.4.3, some constraints of the In the 3rd class of constraints, the total financial budget
integrated model are also affected by the best feasible available in each year of the long horizon is assumed to be
values of mass flow rates and pressure variables of the limited. If this budget for the kth year of jth short horizon
network. So, we postpone discussing about more details of is denoted by Bjk ,
the submodel problem until Section 2.5.
ajk þ bjk pBjk ,
2.4.3. Constraints j ¼ 0; 1; 2; . . . ; l; k ¼ 1; 2; . . . ; u.
There are 4 classes of constraints for the integrated
The 4th class of constraints is basically the constraints of
model as follows (in Section 5, we discuss how various
the submodel introduced in Section 2.4.2.2. In the perspective
other constraints including some environmental and social
of integrated model, these constraints are generally defined to
limitations may be incorporated into model):
make sure that the network structures under study can meet
the demand of consumers. We discuss about the details of
Class 1: domain of variables. submodel constraints in Section 2.5.3.
Class 2: network structure constraints.
Class 3: financial budget constraints.
Class 4: submodel constraints. 2.5. Control optimization submodel
given by a nonlinear function of flow rates and pressures. In horizon if requested mass flow rate out of the node and
the real world, these types of instances are very large both in pressure are M and P, respectively, by psijkl ðM; PÞ. There-
terms of the number of decision variables and the number of fore, the total operating cost of gas supply is
constraints, and very complex due to the presence of 00 1
Wii0 j
nonlinearity and nonconvexity in both the set of feasible X X X
$sjkl ¼ @@ V hii0 jkl Aðtl tl1 Þ
solutions and the objective function.
i2Cjk i0 2YðiÞ h¼1
The submodel must be run for each period of each year 0 0 111
of any given network structure of a short horizon. So, we Wii0 j
X X
develop the submodel concepts for an arbitrary period, say @psijkl @ V hii0 jkl ; W ijkl AAA,
lth period of kth year of jth short horizon. i0 2YðiÞ h¼1
Class 4 (Entrance and exit nodes of compressor stations): Y1 ðiÞ ¼ fi00 jði; i00 Þ or ði00 ; iÞ 2 Pj g,
Y2 ði0 Þ ¼ fi000 jði0 ; i000 Þ or ði000 ; i0 Þ 2 Pj g,
If W ijkl oW i0 jkl 3i 2 I j and i 0 2 Oj ,
ði; i0 Þ 2 K j ; i0 2 I j
otherwise if W ijkl XW i0 jkl 3i 2 Oj and i0 2 I j ,
ði; i0 Þ or ði0 ; iÞ 2 K j . Class 6. Pressure drop
Class 5 (Mass conservation in nodes): jW 2ijkl W 2i0 jkl j ¼ zhii0 V 2hii0 jkl ,
Demand nodes ði; i0 Þ 2 Pj ; h ¼ 1; 2; . . . ; Wii0 j ,
Wii0 j where zhii0 is the pipe resistant of hth pipe between nodes i
X X
V hi0 ijkl ¼ yijkl ; i 2 Djk , and i0 .
i0 2YðiÞ h¼1
Class 7. Operational constraints of compressor stations.
YðiÞ ¼ fi0 jði; i0 Þ or ði0 ; iÞ 2 Pj g.
Compressor stations cannot increase any pressure to any
Supply nodes pressure. These components may not be able to work with
any incoming mass flow rate. Let us denote the set of
Wii0 j feasible vectors of (incoming mass flow rate, inlet pressure,
X X
ijk p V hii0 jkl pdijk ; i 2 Cjk , and outlet pressure) for a compressor station of type T by
i0 2YðiÞ h¼1 OðTÞ. Then,
YðiÞ ¼ fi0 jði; i0 Þ or ði0 ; iÞ 2 Pj g. 0 1
Wii0 j
X X
@ V hi00 ijkl ; W ijkl ; W i0 jkl A 2 Oðmii0 j Þ,
Transshipment nodes i00 2YðiÞ h¼1
For j ¼ 2; 3; . . . ; l, the sets Cj;u ; Dj;u ; H j1 ; Pj1 ; K j1 are formed as follows. First a feasible solution is created for
known only if the values of decision variables for all previous the first short horizon (this solution is called the ‘‘trunk’’ of
short horizons are known; hence, since the index range of the the tree or the ‘‘first level branch’’; we explain later how a
decision variables of current short horizon depends on these feasible solution may be created). Knowing the values of
sets, it means that the index range of decision variables of jth the decision variables of the first short horizon (trunk
short horizon depends on the values of the decision variables solution in the tree), the algorithm creates b2 different
of all previous short horizons. solutions for the second short horizon (these solutions are
Also, another type of interdependency between the called ‘‘second-level branches’’). The trunk solution plus
decision variables exits. The set Pj1 depend on the values any one of the second-level branches determine develop-
of X ii0 jn (see Eq. (1)) as well as the values of decision ment plans of the first and second short horizons. In the
variables of all previous short horizons which means the next step, the algorithm creates b3 solutions for the third
values of decision variable X ii0 jn must be known in order to short horizon given the trunk solution plus each one of the
know the index range of the decision variable Y ii0 j . second level branches. In a general step j, the algorithm
These interdependencies and the fact that the constraints creates bj solution for short horizon j given any path from
and objective function of the model are highly nonlinear the trunk of the tree to the end of any of the (j–1) th-level
rule out the application of powerful mathematical pro- branches.
Ql Using this procedure, a solution tree would have
gramming approaches and direct use of the metaheuristic j¼2 b j complete solution where a complete solution is any
methods available in the optimization literature. path in the graph of the tree from the first-level branch
The key point here is that the optimization algorithm for (trunk) to any one of the lth-level branch. Here, bj :
the model; is not as important as using a robust and j ¼ 2,3y,l is a user-defined parameter.
complete model because when a model plans the develop- A feasible solution for a short horizon is created with a
ment of the network over a long horizon like 20 years, it random search method. The algorithm first assigns values
does not really matter for the top managers and policy from set f0; 1; 2; . . . ; rg to X ii0 jn at random (with a limited
makers if the model optimization run time is 1 minute or 10 maximum number of parallel pipes) and knowing the
days! Most of the effort in the literature has diverted to assigned values of X ii0 jn , the algorithm, then, randomly
finding fast solutions to the problem. Considering this fact assigns values from set f0; 1; 2; . . . ; sg to Y ii0 j . Knowing the
and the limitations in choosing an optimization method values of both decision variables, the constraints of the
due to interdependencies of the index range of the decision integrated model are checked to determine the feasibility of
variables, we propose a heuristic random search method in the solution comprised of the values of both decision
the next section which sequentially and randomly assigns variables. If all constraints are satisfied, a feasible solution
values to decision variables and evaluates the objective has been produced. Verification of constraints of integrated
function in search of the optimum development plans. model requires running the control optimization submodel
for each period of each year of the corresponding short
3.2. Steps of the algorithm horizon. We use a genetic algorithm approach for finding
(near) optimal solution of the submodel.
We define a complete solution as a feasible combination of When a tree is constructed in an iteration, the objective
development plans which satisfies all constraints of the function of each complete solution in the tree is evaluated
integrated model. In other words, a complete solution using the objective function of the integrated model which
consists of the values of all decision variables for all short consists of capital cost of the new physical components of
horizons. Also, a feasible development plan for a specific the network to be installed in development plans plus the
short horizon is simply called a ‘‘solution’’. Therefore, a optimum operating cost of utilizing the network during the
complete solution is a combination of solutions of all short long-run horizon obtained by running the submodel. The
horizons. best combination of development plans after a number of
The optimization algorithm of the model has an iterative iterations of the optimization algorithm would be the
procedure which produces a number of complete solutions created complete feasible solution with least objective
in each iteration and evaluates their objective functions. function.
This iterative algorithm continues until one or more of the
terminating conditions of the algorithm are satisfied. The 4. Case study
best found complete solution at the end of the algorithm
converges to global optimum if the number of iterations This section demonstrates the application of the model
goes to infinity. As examples of the terminating conditions, and designed heuristic optimization algorithm to a
one may use maximum number of iterations, maximum simplified case study.
number of stalled iterations (consecutive iterations without
any improvement in the objective function of the best 4.1. Definitions and parameters
found complete solution), etc.
The algorithm constructs a ‘‘solution tree’’ in each An arbitrary study area requires a strategic plan for
iteration which is a set of complete solutions. This tree is development of an existing natural gas transmission
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Pout 0:4=1:4
operating cost ¼ 5 40; 000 V in , Table 5
Pin
Types of pipeline edges of the available network
where V in is the daily volumetric incoming flow rate, Pin
Edge Type
the inlet pressure and Pout the outlet pressure.
We also calculate the capital cost (dollar) of a (1,2) 8
compressor station throughout the long horizon using the (3,4) 8
(5,7) 10
(6,7) 9
(4,7) 8
Table 3 (7,8) 8
Parameters of the model (8,10) 8
(9,11) 8
Parameter Value (4,10) 8
o 10
u 5
following formula:
l 2
t 1 operating cost ¼ 485 877 V in .
r 14
s 1 Table 10 shows the capital cost of installing 100 km of
x 2
pipelines in the study area throughout the long horizon (we
w 0%
assume installation location doesn’t affect the cost).
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Table 8
Range of production rates of the supply nodes
5. Discussion
Supply node Supply rate throughout the Supply rate throughout the Development of natural gas transmission networks
first short horizon second short horizon could affect different sectors such as economy, society,
(million m3) (million m3)
environment, and politics. So far, we discussed about the
Min Max Min Max most evident issues in network development planning
including technical, structural and economics of the pipe-
1 5 10 10 15
line network. In this section, we discuss how other issues
5 25 40 35 50
13 0 30 0 40 such as environmental, social, safety, and political criteria
could be incorporated into a typical network development
project in general and our model in particular.
Some parts of these issues are beyond the scope of the
Table 9 model of this paper. The proposed model covers only the
Price of natural gas first phase of a typical network development project as
outlined in Table 2 and for instance, many of the
Supply Forecasted price throughout Forecasted price throughout the environmental concerns could be considered in the last
node the first short horizon ($/ second short horizon ($/
million m3) million m3)
phases of a network development project (installation and
inspection) and are unrelated to our strategic planning
1 30 33 model.
5 36 42
13 45 49
Table 10
Capital cost of installing 100 km pipeline
1 4
We used 1000 iterations of the optimization algorithm
2 6
with b2 ¼ 3; which means that the algorithm has created 3 8
3000 complete solutions. The optimum complete solution 4 10
found in the first 1000 iterations had very simple 5 12
development plans which suggest these solutions: 6 16
7 20
8 24
Optimum solution of the first short horizon (require- 9 30
ments of development plan 1): 10 36
J Install a pipeline of type 7 between nodes 11 and 13 11 40
(X 11;13;1;1 ¼ 7). 12 42
J Install a pipeline of type 7 between nodes 11 and 12 13 48
14 56
(X 11;12;1;1 ¼ 7).
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5668 A. Kabirian, M.R. Hemmati / Energy Policy 35 (2007) 5656–5670
protected area; and for the second option, no transship- down for any reason, the production and receiving facilities
ment node is considered inside the protected area and an and refineries often also have to be shut down because gas
infinite cost of installation is assumed in the model which cannot be readily stored, except perhaps by increasing the
recommends the optimization algorithm not to trespass the pipeline pressure by some percentage. All these damages
absolutely protected area or pay an infinite cost. and failures involve cost.
Reliability and safety criteria could be incorporated into
5.2. Social issues the cost-based objective function of the model if the
modeler could measure the level of reliability in cost. The
Social justice is based on the idea of a society which reliability cost has two parts. The first part is a fixed cost
gives individuals and groups fair treatment and a just which is paid at the time of installing a physical component
share of the benefits of society. Governments seek to of the network. This cost should be considered in the
provide a minimum level of income, service, or other capital cost of the component (pipeline or compressor
support for disadvantaged peoples to improve indicators of station). The second part is the cost of inspections and
social justice and welfare. Natural gas is one of these safety measures after the physical components of the
services that could be used as a tool to pursue certain social network are installed. Obviously, this part of the reliability
policies. cost is a part of the operating cost.
A common problem in developing countries is centrali- The development plans in the model are based on the
zation of the country resources, income and welfare in forecasts of the consumption in demand nodes and
limited metropolitan areas (such as Tehran, Khomei- production range in supply nodes. But, the actual
nishahr, Shahinshahr and Varnosfaderan State in Iran). production or consumption during the long horizon may
This geographically unbalanced development causes many deviate from forecasts. The network must be reliable in this
social and economical problems for people living far from situation to provide actual demanded natural gas of the
these developed areas. These problems include migration to consumers during the long-run horizon. The risk of poor
metropolitan areas, unemployment, and in general, poor reliability in this case is significant because inadequacy of
standards of living and quality of life outside major cities. supplied natural gas to certain consumers like large
In the perspective of natural gas development planning, the manufacturing industries or power plants could shut down
governments may indirectly subsidize the physical devel- these facilities for a longer period of time than a failure in
opment of the network in certain geographical areas to the network. Also, when inadequate natural gas is
supply cheaper gas to rural and undeveloped areas and supplied, consumers may use more polluting fuels and this
share the benefits of using this source of energy more fairly problem leads to environmental damages. However, this
and improve social justice. These subsidies could be problem could be addressed in the model by applying a
subtracted from the capital cost of installing pipelines margin of safety to the forecasts or accounting for the cost
and compressor stations for undeveloped areas in our of probable inadequate supply of natural gas in the
model. objective function.
The integrity of the pipeline network and its related Regional economic collaborations possess the power to
equipment is one of the industry’s top concerns. The threat engender as well as transform social and political discourse
of catastrophic pipeline rupture, though extremely unlikely between countries. Energy ties play a more important role
given the industry’s safety precautions, hangs over the in the economics and politics of energy rich countries. Such
head of every pipeline executive and employee. Pipe- regional and international energy relations sometimes serve
lines require regular patrol, inspection, and maintenance the political goals of the countries. For instance, since the
including internal cleaning and checking for signs of gas discovery of natural gas reserves in Iran’s South Pars fields
leaks. in Persian Gulf in 1988, the Iranian government began
Poor reliability and safety measures in a network could increasing efforts to promote higher gas exports abroad.
result in various failures and damages. Corrosion is a The export of this energy resource could end political
serious problem plaguing the industry. This is a sneaky isolation of the country. With this aim, Iran is negotiating
enemy and unless it has caused obvious damages, corrosion with India and China to export natural gas to these
is very difficult to detect and locate accurately. To large regional consumers in the near future. In our
minimize corrosion, pipeline companies install electrical model, each natural gas export terminal in the long-run
devices called catholic protection systems, which inhibit horizon is a demand node; therefore, the export quantities
electrochemical reactions between the pipe and the at these nodes should be forecasted. The governments
surrounding materials. Mechanical damages also occur may subsidize installing physical components of net-
when heavy construction equipments dent the pipe, scrape work structure and reduce associated capital costs to
off its coatings, gouge the metal or otherwise deform the encourage the export. Such policies could help political
pipe in some way. However, if the pipeline has to be shut interests.
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