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LP Model 2022

Linear programming techniques are used to optimize refinery operations like blending and production planning. The basic components of a linear programming model include decision variables, an objective function to optimize (like maximize profit), and constraints. Refineries use periodic linear programming strategies to develop strategic, annual, and short-term optimization plans to maximize profitability under a dynamic business environment with changing crude prices, product demands, costs, and regulations.

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Hamza Masood
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123 views13 pages

LP Model 2022

Linear programming techniques are used to optimize refinery operations like blending and production planning. The basic components of a linear programming model include decision variables, an objective function to optimize (like maximize profit), and constraints. Refineries use periodic linear programming strategies to develop strategic, annual, and short-term optimization plans to maximize profitability under a dynamic business environment with changing crude prices, product demands, costs, and regulations.

Uploaded by

Hamza Masood
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Linear programming techniques to solve refinery blending and

production planning
INTRODUCTION TO LP MODEL

• Linear programming (LP, also called linear optimization) is a


method to achieve the best outcome (such as maximum profit
or lowest cost) in a mathematical model, represented
by linear relationships
•  This technique is useful for quantitative decisions in business planning,
in industrial engineering, and also in social and physical sciences.
• The pioneer work to implement LP model for oil industry was
conducted by Charnes, Cooper and Mellon in 1954,
LP model Guidelines
General guidelines for the implementation of L.P. model in practice.
The principal phases for implementing OR in practice include the
following:
1. Definition of the problem.
2. Construction of the model.
3. Solution of the model.
4. Validation of the model.
5. Implementation of the solution
LP model for oil refineries

LP model depend upon the following variables:


i) Feed flow rate: A combination of rates of flow of crude oil
and product streams
ii) Feed properties to be standardized by blending various
crude oils, having different properties,
iii) Operating variables: 2 types independent and dependent
variables e.g. Temperature, pressures, flow rates and
properties etc.
iv) Formulate objective functions and solve for the known
constraints, (time, market and material constraints)
v) Transport Model
Linear programming formulation 

Constraints or limitations
The LP Model
There are two basic LP models:
i. the maximization model in standard form,
ii. the minimization model in standard form.
For example, to maximize profit,
Problem: A refinery produces 2 brands of petrol, high octane and primer petrol
from two raw materials, M1 and M2. The following table provides the basic
data of the problem. high primer Maximum
The daily demand of primer petrol cannot octane petrol availability
(tons) (tons) (tons)
exceed high octane by more than 1 ton.
Also, the maximum daily demand for primer
petrol is 2 tons. Raw
materials M1
6 4 24
Management wants to determine optimum
(best) product mix of both brands that Raw
materials M2
1 2 6
maximizes the total daily profit.

Profit per ton


($ 1000) 5 4

Solution: 3 basic components of LP models,


1. Decision variables that a manager seeks to determine.
2. Objective (goal) that needed to optimize (maximize or minimize).
3. Constraints that the solution must satisfy.
Assume
x1 = Tons produced daily of high octane
x2 = Tons produced daily of primer petrol
Profit from high octane = 5x1 thousand2 dollars Objective function:
Profit from primer petrol = 4x2 thousand2 dollars Maximize z = 5x1 + 4x2
Subject to given constraints
6x1 + 4x2 < = 24 (1) Graphical LP solution
x1 + 2x2 <= 6 (2) The graphical solution includes two steps:
-x1 + x2 < = 1 (3) 1. Determination of the feasible solution space by
x2 <= 2 (4) drawing a graph for each constraint.
x1, x2 > 0 (5) 2. Determine optimum solution from all the points
in the solution space.
• Substitute x1, x2 = (0, 0) automatically yields zero
for the left-hand side.
• Since it is less than 24, the half-space containing
(0, 0) is feasible for inequality
• (1) as the direction of the arrow in Fig. shows.
• A similar application of the reference-point
procedure to the remaining constraints produces
the feasible solution
• Space ABCDEF in which all the constraints are
satisfy.
Linear Programming problem:
A refinery must produce 100 gallons of gasoline and 160 gallons of diesel to meet customer
demands. The refinery wants to minimize the cost of crude and two crude options exist.
The less expensive crude costs $80 per barrel while a more expensive crude costs $95 per
barrel. Each barrel of the less expensive crude produces 10 gallons of gasoline and 20
gallons of diesel. Each barrel of the more expensive crude produces 15 gallons of both
gasoline and diesel. Find the number of barrels of each crude that will minimize the refinery
cost while satisfying the customer demands.
Solution:
X = Barrels of less expensive crude costs $80 per barrel
less more
Y= Barrels more expensive crude costs $95 per barrel expen expensive
Objective function Minimize cost, Z= 80 X + 95 Y sive crude
crude
Subject to
Diesel constraint 20X + 15 Y >= 160 Diesel 20 15

Gasoline constraint 10X + 15 Y >= 100 Gasoline 10 15


Cost $ 80 $ 95
Non-negativity constraint X, Y > 0
ROLE OF OPTIMIZATION IN REFINING BUSINESS

 Objectives of optimization in refining business;

• to maximize profitability,
• to minimize fixed and operational costs;
• to develop investment plans for capacity enhancement,
• to impart flexibility in operation and management
• to control oil tradeoff because of world economy slowdown and
global recession due to
i. high interest rates, wars, calamities and higher inflation,
ii. Ukraine/Russia war impact on energy and commodity prices,  
Linear & Non-linear Models for Oil Trading and Processing

• Linear programming is applied to optimize to solve processing


and blending and other production problems.
• maximizing profitability or cost minimization etc.
• Sensitivity Analysis using software's solutions,
• Unforeseen Constraints convert linear models to non-linear model.

• Mixed-Integer Nonlinear Programming (MINLP)


i. MINLP has proven to be a powerful tool to face challenges of
nonlinear trends in oil related industries.
ii. MINLP is suitable technique for discrete / discontinuous
variables, non-linear equality and inequality constraints.
Periodic Optimization Strategies

Traditionally, oil refineries apply periodic optimization strategies due to dynamic


environment of oil related trading and processing:
i. Strategic plans for future concerning expansion ;
ii. Annual plans for budgeting, crude contracts and maintenance & shutdown etc.;
iii. Short-term (typically weekly) plans regarding crude availability, product delivery,
operational and logistic constraints and economic issues;
v. Profitability improvement plans - local or plant-level modifications, and revamp
projects.
Periodic plans - according to the foreseen and dynamic circumstances;
Dynamic environment & Technology Challenges
• Oil industries work under dynamic environment because of
i. volatile crude prices, higher demand for lighter products, national & internal legislation and
new emission standards.
ii. Continuous increasing demand – capacity enhancement,
iii. Declining opportunities of crudes, and stringent specifications.
iv. Introduction of value-addition and novel products from crude oil.
• Profitability depends upon different variables:
i. Feedstock costs (primarily crude oil)
ii. Fuel costs and other operational costs for the refinery itself
iii. Costs of complying with emissions regulations (particularly Sox and NOx)

• Licensed/classified technologies:

i. Technologies are developed by researchers and trading companies e.g., Shell Catalysts &
Technologies’ (SCTs) .
ii. On 1st January 2020, International Maritime Organization (IMO) implemented a regulation i.e.,
0.50% global Sulphur limit for marine fuels.

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