Novel cost allocation framework for natural gas processes: methodology and application to plan economic optimization
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Natural gas plants can have multiple owners for raw natural gas streams and processing facilities as well as for multiple products. Therefore, a proper cost allocation method is necessary for taxation of the profits from natural gas and crude oil as well as for cost sharing among gas producers. However, cost allocation methods most often used in accounting, such as the sales value method and the physical units method, may produce unacceptable or even illogical results when applied to natural gas processes. Wright and Hall (1998) proposed a new approach called the design benefit method (DBM), based upon engineering principles, and Wright et al. (2001) illustrated the potential of the DBM for reliable cost allocation for natural gas processes by applying it to a natural gas process. In the present research, a rigorous modeling technique for the DBM has been developed based upon a Taylor series approximation. Also, we have investigated a cost allocation framework that determines the virtual flows, models the equipment, and evaluates cost allocation for applying the design benefit method to other scenarios, particularly those found in the petroleum and gas industries. By implementing these individual procedures on a computer, the proposed framework easily can be developed as a software package, and its application can be extended to large-scale processes. To implement the proposed cost allocation framework, we have investigated an optimization methodology specifically geared toward economic optimization problems encountered in natural gas plants. Optimization framework can provide co-producers who share raw natural gas streams and processing plants not only with optimal operating conditions but also with valuable information that can help evaluate their contracts. This information can be a reasonable source for deciding new contracts for co-producers. For the optimization framework, we have developed a genetic-quadratic search algorithm (GQSA) consisting of a general genetic algorithm and a quadratic search that is a suitable technique for solving optimization problems including process flowsheet optimization. The GQSA inherits the advantages of both genetic algorithms and quadratic search techniques, and it can find the global optimum with high probability for discontinuous as well as non-convex optimization problems much faster than general genetic algorithms.
Jang, Won-Hyouk (2005). Novel cost allocation framework for natural gas processes: methodology and application to plan economic optimization. Doctoral dissertation, Texas A&M University. Texas A&M University. Available electronically from