Integrated Oil-Field Management: From Well Placement and Planning to Production Scheduling M. Sadegh Tavallali †,‡ and Iftekhar A. Karimi* ,† † Department of Chemical & Biomolecular Engineering, National University of Singapore, 4 Engineering Drive 4, Singapore 117585 ‡ Department of Chemical Engineering, Shiraz Branch, Islamic Azad University, Shiraz, Iran 71987-74731 * S Supporting Information ABSTRACT: Integrated management can benefit oil-field development and exploitation tremendously. It involves holistic decisions on the order, placement, timing, capacities, and allocations of new well drillings and surface facilities such as manifolds, surface centers, and their interconnections, along with well production/injection profiles. These decisions have profound long- term impacts on field productivity; however, the dynamic nature of oil reservoirs makes them strongly intertwined and highly complex. Hence, a dynamic, holistic, and integrated approach is necessary. Most existing well placement studies ignore surface effects and drilling-rig availability and assume that all wells are opened simultaneously at the beginning of the production horizon. In this work, we extend our previous study [Tavallali et al. Ind. Eng. Chem. Res. 2014, 53 (27), 11033] and develop a mixed integer nonlinear programming (MINLP) approach for addressing such limiting assumptions. We develop a revised outer- approximation algorithm involving two multiperiod, nonconvex MINLPs and several local search strategies. Numerical results for a literature example show significant improvement in the net present value for oil-field development. 1. INTRODUCTION Oil and gas are major energy resources for the modern world and will continue to be so for the near future. They are typically produced by drilling production wells in huge petroleum fields with several reservoirs. Well drilling can account for up to 60% of the total capital expenditure (CAPEX) required for a field. On average, 1829 drilling rigs were active in 2002, which doubled to almost 3518 rigs in 2012. 2 Additionally, according to the International Association of Drilling Contractors (IADC), nearly 572.334 million man-hours were spent on 74% of the worldwide oil and gas well drilling-rig fleets 3 in 2012. Clearly, the overall profitability of an oil-field exploitation project depends greatly on the cost effectiveness and efficiency with which the field is developed and operated over its lifetime. Wells are the only access to a subsurface pay zone, but surface facilities are necessary for processing the extracted fluids to obtain the valued oil. Naturally, surface-facility installations and retrofitting follow most drilling activities. The best field- development strategies involve many critical technoeconomic decisions, including (but not limited to) locating the best drilling sites, determining their numbers and capacities, identifying the best surface-facility installations, performing continual retrofitting and scheduling, and making the best production decisions. These strategies must consider numerous subsurface and surface factors and conditions, as well as market and economy constraints. 1.1. Planning and Scheduling of Field Development. Figure 1 shows a schematic of a multireservoir oil field and its surface infrastructure. The subsurface fluids (oil, gas, and water) are usually distributed anisotropically in the underground porous media. Wells connect the subsurface reservoirs with various surface facilities. The subsurface pressure drives oil production through what are known as producer wells. This driving force is often boosted by injecting a fluid such as water through what are known as injection wells. The multiphase oil flow from a producer well traverses through the well tubing to a manifold and then a surface center. A series of valves regulates the flow along this path. A similar surface infrastructure exists for the injection network, where water flows from water processing centers through manifolds to injection wells. Petroleum fields are spatiotemporally dynamic subsurface systems with nonlinear, complex, and intertwined interactions with production, injection, and processing networks at the surface. Manifolds and/or centers are usually shared among multiple wells and fields, and the variations in the operation of one element can significantly affect the performance of the others. In fact, activities such as drilling and installation affect the field dynamics dramatically. Satisfactory and profitable exploitation of a field requires that one consider the entire system dynamics over long periods using an integrated approach. Trapp field in Russell and Barton counties of Kansas illustrates this point very well. This field spans 56960 acres and was explored in 1929. 4 Figure 2 shows the history of its oil production and active wells. As is evident, oil production expectedly declined over the years, and the declines had to be arrested periodically by well-planned and scheduled develop- ment activities. Since 1929, 3979 wells have been drilled in this field, but only a fraction of these wells are active now. A typical well can undergo many transformations before being abandoned for good. It might begin as a producer well, then it might be shut in for a while, and then it might be reworked and started again. Some producer wells can be converted to injector or enhanced oil recovery (EOR) wells. In all of these Received: September 7, 2015 Revised: December 16, 2015 Accepted: December 22, 2015 Published: December 22, 2015 Article pubs.acs.org/IECR © 2015 American Chemical Society 978 DOI: 10.1021/acs.iecr.5b03326 Ind. Eng. Chem. Res. 2016, 55, 978-994