Oil Refinery

Petroleum Refinery Planning and Optimization Using

The developments of modern software and optimization techniques have caused organizations to challenge themselves in the way they conduct business, how efficiently they operate and how effectively their entire supply chain is managed. The petroleum industry is one that has taken on the use of software solutions to maximize profit margins and maintain order in a very chaotic environment. The use and development of Linear Programming has been of great value to the industry. For example, the process of selecting the right crude is linked not only to transportation costs involved in delivering it to the refinery, but it must take into consideration the refinery configuration, capabilities and constraints in converting the crude into products, as well as the product volume and price fluctuations.

In order to develop an effective model of the industry, it first needs to be broken down into areas that are directly related to the path of optimization. In the case of the petroleum industry, those factors are crude selection, crude transportation, crude processing and product demands.

Crude selection is a very important factor since the cost of the crude accounts for about 90% of the refinery input cost. Therefore, the selection of the optimum crude mix is very important to achieve the highest profit margins. The challenge comes because the number of options for buying the crude under a very volatile price market are so large that it is very difficult to evaluate them all and decide on the optimum mix.

Once the crude is selected, the focus switches to optimizing the transportation costs from the crude suppliers to the refinery. The costs can be minimized by various methods such as cargo size, loading and unloading facilities and taxes, etc. All of these are constraints that must be considered.

The next challenge the industry faces is the processing of the crude at the refineries. The main goal is to process the crude in the best manner and maximize the cost per barrel ($/bbl). Determining the best option is almost impossible without the use of optimization software.

The product demands, quality and prices drive the crude processing operations. Multiple blending options and supply chains in order to make different grades of petroleum make the task of petroleum planning very demanding.

The need for optimization in refinery operations has quickly risen from a want