Supply Chain Optimization for the Liquefied Natural Gas Business

The importance of natural gas as an energy source is increasing. Natural gas has traditionally been transported in pipelines, but ships are more efficient for transportation over long distances. When the gas is cooled down to liquid state it is called liquefied natural gas (LNG). The LNG supply chain consists of exploration, extraction, liquefaction, transportation, storage and regasification. Maritime transportation is a vital part of the LNG supply chain, and LNG is transported in special designed ships, LNG tankers. The demand for LNG tankers has increased considerably as the entire LNG industry continues to see strong growth. Hence, there is a great potential and need for optimization based decision support to manage the LNG fleet, liquefaction plants, and regasification terminals in this business. Here, we are studying the LNG supply chain in close cooperation with a worldwide actor within the LNG business. This actor is responsible for the LNG supply chain management except the exploration and extraction. We describe the real planning problem and present both an arc-flow and a path-flow model of the problem. Both models are tested and compared on instances motivated from the real-world problem. It is a very complex problem, so only small instances can be solved to optimality by these solution approaches.