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PROCEEDINGS, INDONESIAN PETROLEUM ASSOCIATION

Thirty-Third Annual Convention & Exhibition, May 2009

DYNAMIC OPTIMIZATION MODEL AND ECONOMIC ANALYSIS

FOR GAS PIPELINE: CASE STUDY OF MATINDOK BLOCK

Arsegianto*
Evi Wahyuningsih*
Kunarto*
Widia Kusumastuti*
Suprapto Sumardan**

ABSTRACT INTRODUCTION

The design of gas pipeline requires information of
gas rate and pressure of gas to be delivered.
Investment for pipeline and compressor are not
inexpensive, therefore economic study through
optimization process is required to minimize the
cost.
In reality, gas demand increases over time so
“static” optimization of pipe size to deliver the gas
will not fit to the condition. New pipeline might be
installed to serve the increased demand in the future
if the existing pipe size is designed just to serve the
current demand, while oversized pipe diameter
would be wasteful to serve the current demand. An
optimization using dynamic model, then, would suit
for the problem raised.
This paper explains how dynamic model can assist
gas pipeline design for increasing demand. This
model wraps up the long term period of fulfilling
gas demand with an optimum strategy of pipeline
development.
A case study presented in this paper outlines the
dynamic model to optimize gas pipeline in
Matindok Block, in Sulawesi. The economic aspect
is also discussed as objective parameter in the
optimization model. The study gives
recommendation of constructed pipeline and
compressor design based on technical aspect and
economic analysis which satisfies all design
constrains.
Keywords: gas transmission pipeline, dynamic
optimization
* Institute of Technology Bandung
** PT. Pertamin EP
Recently, natural gas demands have been increasing
significantly as the government lunched the policy
of diversifying energy sources. Lower price and
environmentally more benign makes gas become
more competitive and ready to substitute for oil
fuel. This situation has driven the energy
management planner as well as oil and gas
contractors to conceive more progressive plan and
strategy to supply natural gas with abundant
demand.
Pipeline is still the best production facility to
transmit gas for long distance consumers. Pipeline
construction is depending on the quantity of gas, the
condition of produced fluid, topography, and
distances from produced field to gas buyers. The
gas transmission network system includes source of
gas, delivery point and compressor station used to
reach the desire pressure to deliver the gas.
The development of gas transmission pipeline
network consumes a huge investment cost. Two
main components of cost are the cost related to
pipeline system and the cost related to compressor
system. The cost of pipeline depends on its
diameter, which increases with respect to the
diameter of pipe. The cost of compressor depends
on its power. The use of small pipe will increase the
pressure drop and consequently will need
compressor with high power, which then increases
the compressor cost. In order to minimize the total
cost, we have to find the proper balance between
pipeline cost and the compressor cost.
Somehow, the design of pipeline network should
also satisfy some constraints. The constraints are
pipeline flow equation and allowed maximum
pressure related to the pipe strength.
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By using pipeline optimization result the operator
can set the size of pipeline and compressor to
anticipate increasing demand along the life cycle of
the project. This method is also able to handle
future problem when gas demand and new
consumers join the pipeline network.
Gas demanded by consumers must be considered
the reservoir capacity to produce gas.
Important components that must be considered
before flowing the gas to consumers as follows:
1. Gas quantity (MMSCFD) and yearly gas
quantity (BSCFY)
2. Contract period ( 15, 20, 0r 25 years)
3. Gross Heating Value (GHV) and Net Heating
Value( NHV)
4. Gas composition interval (C1,C2,….,C5+)
5. Pressure and temperature at gas sale gate
6. Minimum and maximum allowable gas flow
rate
7. Location and distance from gas source
METHOD
Minimization in gas transmission pipeline is one of
problems faced by several gas industries in
Indonesia. The features needed in gas transmission
system including;
1. The optimal diameter sizes.
2. The minimum recommended diameter size and
thickness of the pipeline.
3. The operating pressure of the compressor and
the gas in pipeline.
4. The maximum number of compressor and
horsepower required.
The parameters to be considered for network
optimization are initial investment cost, operating
and maintenance cost of pipeline and compressor,
as well as other cost included in this system.
The variables that associate with gas transmission
system are:
1. Gas flow rate (Qg)
2. Inlet pressure (Pinlet)
3. Outlet Pressure (Poutlet)
4. Pipe diameter (ID, OD)
5. Pipeline segment
6. Suction pressure of compressor (Ps)
7. Discharge pressure of compressor (Pd)
The method used is a non linier programming called
double heuristic method, which is a modification of
the least difference heuristic algorithm. Using this
method, the solutions can be used to give
alternatives pipe sizes which close to possible
optimum answer. In this case, the pipe sizes
(diameter and wall thickness) are available in data
base and pipe design is determined based on API
classification.
Generally, investment in pipe gas transmission
comprises of investment cost for pipe and
investment cost for compressor. Investment cost for
pipe depends on the line and terrain as well as its
location. Cost generally increases with size and is
much higher in densely populated areas. The
optimum diameter of pipe can be determined based
on economic and technical consideration. Economic
pipe diameter can minimize capital cost and
operational cost. Larger the size of pipe diameter
will increase the capital cost, but will minimize
operational cost since the pressure drop is lower.
Cost formulas used in this paper as follows:
1. The annual capital cost for pipeline depends on
its diameter and wall thickness.
CI P = 15,894 C p L ( OD- t ) t (1)
2. Total operating cost is linear function of
compressor horse power and pipeline maintenance
cost.
OCcomp = 0.74569885 (1+Ch p ) ghp Ce Hy (2)
OCpipe = Cfp× CIP (3)
3. Total Cost is calculated as follows.
TotalCost =CIP +CIC+OCpipe +OCcomp + ROW + Labor + Misc (4)
Case Study
Figure 1 gives an illustration of Matindok Block
gas pipeline development. Topography data shows
that Donggi Field is the furthest field from
consumer with 60.5 km of distance followed by
Minahaki with 48. 3 km. The gas rate demand at
first year is set to 45 MMSCF sent from Donggi
Field and 46 MMSCF of gas delivered from
Matindok Field. For the next five years it is
predicted that gas production from Donggi Field
will be increased to 60 MMSCFD to satisfy gas
demand. Gas composition for each field is shown in
Table 1. Pipeline design and cost properties are
shown in Table 2 and 3 respectively.
Using Transgas method, gas pipeline is optimized to
obtain the optimum diameter and compressor size.
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Since gas rate design is not constant due to McAllister, E.W., 2002, Pipeline Rules of Thumb
increasing gas demand in future, a dynamic Handbook, 5th edition, p.575-576
programming is applied to solve the optimization
problem. Steiner, H.M., 1996, Engineering Economic
Principles, 2nd edition, p.143-162; 239-241; 267.
Each pipe is optimized using pertinent data and pipe
constraints. To find optimum diameter API 56 XL
American Petroleum Institute., 1980, API
data base is used with range of 10 in – 40 in of
Specification for Line Pipe,p.15
diameter. Applying dynamic optimization method
the optimum diameter result for each pipe segment
is the available diameter and thickness that exist in
pipeline industry. Using gas rate design for each Nomenclature
field as shown in Table 4 and also considering the
increase of gas production at year 5, the method Ce = electricity price (US$/Kwh)
gives pipeline optimal design as shown in Table 5. Cfp = fraction of pipe operating cost to annual
TransGas program shows that the constructed investment cost of pipeline
pipeline for each segment is 12.75 inch. It means Chp = compressor price (US$/hp)
the only variable that will be changed due to Cins = Pipe installation cost (US$/inch/m)
changes in gas rate is the compressor size for each Cp = pipe unit price (US$/ton)
gas source which gives different compressor sizes d = pipe inside diameter (in)
for year 1, 5 and 20 as shown in Table 6 D = pipe outside diameter (in)
E = join factor
The case also presents the economic calculation for F = design factor
pipe and compressor investment and operating cost ghp = compressor horsepower (hp)
as its objective function as shown in Table 7. h = elevation (ft)
Hy = operating hours compressor in a year
CONCLUSION (hour)
k = adiabatic (isentropic) exponent
Pipeline optimization is a method to minimize total L = pipe length (mile)
cost (all cost incurred) along the project life cycle. M = non-linear constant between pipe’s
For the dynamic case represented by the increasing price and pipe diameter
demand of gas delivery through the pipeline, n = life time of the equipment
information of future value this parameter has to be pd = compressor discharge pressure (psia)
carefully predetermined since this parameter ps = compressor suction pressure (psia)
determines the optimum value of pipe diameter and pb = base pressure (psia)
compressor size and location. Qg = gas flow rate (MMSCFD)
r = discount rate
REFERENCES S = yield strength pipe (psia)
t = wall thickness (inch)
Arsegianto, 2000, Diktat Kuliah: Ekonomi Minyak T = temperature of gas (oR)
dan Gas Bumi, p.2-8 – 2-9; 2-19 Departemen Tb = base temperature (oR)
Energi dan Sumber Daya Mineral., 2004, Kebijakan Td = temperature derating factor
Energi Nasional 2003-2020, p.3;43 Z = gas deviation factor
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TABLE 1 - GAS COMPOSITION

Donggi Field gas Matindok Field gas Gas mixture

Component composition (% composition (% composition
mole) mole) (%mole )
Hydrogen Sulfide 0.1391 0.384 0.22910
Carbondioxide 3.18 2.23043 2.83104
Nitrogen 1.14213 3.03 1.83591
Methane 91.22076 80.97919 87.45706
Ethane 1.5158 6.49778 3.34664
Propane 1.20215 3.06306 1.88602
i-Butane 0.34065 0.7275 0.48281
n-Butane 0.33898 0.94917 0.56322
i-Pentane 0.18483 0.65306 0.35690
n-Pentane 0.1087 0.39829 0.21512
Hexanes 0.08113 0.34852 0.17939
Heptane plus 0.54367 0.73681 0.61465

TABLE 2 - COMPRESSOR PROPERTIES

Maximum HP 20,000 hp
Ep 0.85
k 1.4
Hy 8,670 hours
Pb 14.7 psia
Tb 520 Rankine
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TABLE 3 - COST PROPERTIES

Allowed IRR 12%

r 10%

n 20 years

Cfp 4%

Ce 0.1 US$/Kwh

Cp 5,000 US$/ton

Chp 1,000 US$/hp

ROW 10 US$/m

CIns 20 US$/inch/m

TABLE 4 - GAS PRODUCTION YEAR 1-20

Year Qg Donggi ((MMSCFD) Qg Matindok (MMSCFD)

0 45 46
5 45 60
20 60 60

TABLE 5 - PIPE OPTIMUM DIAMETER

Pipe Segment Optimum Diameter (inch)

Donggi - Junction 12.75

Matindok Junction 12.75
Junction - LNG 12.75
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TABLE 6 - COMPRESSOR OPTIMUM SIZE

Donggi Matindok
Year

Pd hp Pd hp
1 976 2704 841 1900
5 1056 3846 879 2256
20 1056 3846 917 2256

TABLE7 - PIPELINE CONSTRUCTION TOTAL COST

Pipe Cost 92 (Million US$)

Pipe Installation Cost 15.6 (Million US$)
Pipe Investment Cost 76.4 (Million US$)
Pipe Operation Cost 3.05 (Million US$)
Compressor Investment Cost 3.1 (Million US$)
Compressor Operation Cost 2.4 (Million US$)
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Compressor Design

A1= 0.31506237
A2= -1.04670990
A3= -0.57832729
A4= 0.53530771
A5= -0.61232032
A6= -0.10488813
A7= 0.68157001
A8= 0.68446549

Gas Flow Equation

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BS Matindok
Ps= 400 psia

4.763 km

LNG plant
15.07 km

45.4 km
Pout= 700 psia
BS Donggi

Ps= 500 psia

Figure 1 - Matindok Block Gas Pipeline Plan