Applications of clustering models in offshore drilling for crude oil and natural gas

An important problem in offshore drilling for crude oil and natural gas is to find the optimum allocation of wells to drill, to multiple drilling rigs; to minimize the total cost of drilling. In practice, the drilling cost of each well is a function of both the distance to the drilling rig and the rig’s individual cost. In this paper, we consider this problem and present both an exact and a heuristic algorithm under two cases. Case 1 considers the problem in which rig locations are given, while Case 2 considers the problem in which rig locations are to be determined optimally. The new models and algorithms are unique because each drilling rig has a different cost rate per mile. Using data from an offshore oil field under development, the new models are used to minimize the total drilling cost for the two cases. In addition, a computational study is conducted, confirming the effectiveness of the proposed heuristic algorithm.