(372i) Involving Economic Incentives in Optimizing the Methanol Supply Chain Considering Conventional and Unconventional Resources

Authors: 
Villicaña, E., UNIVERSIDAD MICHOACANA DE SAN NICOLAS DE HIDALGO
Ponce, J. M., Universidad Michoacana de San Nicolás de Hidalgo
El-Halwagi, M., Texas A&M University
This work addresses the methanol supply chain from natural gas obtained by unconventional sources such as shale gas and offshore production and conventional forms of extraction, as well as the importation of natural gas. Methanol is not only used as another fuel but can also be used for the manufacture of different chemical products. A mathematical model is developed for the strategic planning of the methanol supply chain to meet the demands of potential markets considering existing methanol plants; it was also proposed the installation of new production plants as some places do not have the necessary infrastructure to cover the requirements. However, making these decisions can be very complicated, which is why it was opted the use of economic incentives granted by the government to encourage national production of methanol and avoid importation. For the use of economic incentives an objective production is established and the magnitude will depend on reaching the target. It is also considered the uncertainty associated with the unit sale cost as well as the national demand of natural gas and methanol. To consider the sustainability of the problem, the associated costs, the lower consumption of fresh water in the production of natural gas and the reduction of CO2 equivalent were considered.

Finally, the multi-objective function consists in maximizing Profit which involves the sale of methanol, natural gas and petroleum produced, plus the economic incentives obtained minus all the expenses related to extraction, treatment and distribution of each product; the minimizing of the total fresh water used in production of unconventional and conventional natural gas, and minimizing the total emissions generated in the different processes. The proposed model is a Mixed Integer Linear Programming problem and it was implemented in the software GAMS, where the solver DICOPT was used to solve the addressed work.

To prove the proposed methodology, it was applied to a case study from Mexico, two different schemes are analyzed, scheme A does not consider the uncertainty or economic incentives, and scheme B considers uncertainty, economic incentives and restrictions on the importation of methanol. Results show that by encouraging the national production of new methanol plants, the incentives generated are up to 113% better than if the importation and production of the only existing plant in Mexico were used.