Optimization of LNG Supply Chain

Natural gas is traditionally transported from gas fields to consumer sites with pipelines, but the total cost of pipeline transportation is unfeasible for long distances. The best way to introduce natural gas to new, scattered areas is by transporting it as liquefied natural gas (LNG). This paper presents a mathematical model to aid decision making in the LNG supply chain design, with the focus on inter-terminal transportation. The model, which considers distribution of LNG to consumers from multiple supply terminals through multiple satellite terminals by a heterogeneous fleet of ships, utilizes mixed integer linear programming for finding a supply chain structure that minimizes costs associated with fuel procurement. The model has been tested in a case study inspired by a potential real-life LNG supply chain in the Caribbean islands. The results show that the model works consistently and the computation time is relatively short. The proposed MILP model results in a flexible framework that can be easily implemented in other optimization-based applications.