Operations research enables better planning of natural gas pipelines

Abstract

© 2019 INFORMS. China's natural gas consumption has nearly doubled over the last five years. To better meet demand, the China National Petroleum Corporation (CNPC), China's largest oil and natural gas producer and supplier, partnered with researchers from the University of California, Berkeley, and Tsinghua University in Beijing to apply innovative operations research to develop and implement new software that helps CNPC improve the management of its gas pipeline network. Previously, all pipeline production and construction planning for CNPC, which controls 72% of the country's natural gas resources and 70% of its pipeline network, was conducted by traditional methods using spreadsheets. However, because of the network's increasing size and complexity, using the traditional method resulted in excess costs and wasted resources. Since the implementation of the newsoftware, which uses a three-stage convex relaxation method and iterative piecewise linear approximation methods, at the end of 2014, CNPC has realized approximately $530 million in increased profits. Moreover, the resulting increased efficiency of the existing pipeline network allowed the company to postpone adding new pipelines, leading to an official budget reduction of over $20 billion in construction costs for the subsequent five years.