Model-based economic optimization of oil production has a significant scope to increase financial life-cycle performance. The net-present-value (NPV) objective in this optimization, because of its nature, focuses on long-term gains, whereas short-term production is not explicitly addressed. At the same time, the achievable NPV is highly uncertain because of strongly varying economic conditions and limited knowledge of the reservoir-model parameters. The prime focus of this work is to develop optimization strategies that balance both long-term and short-term economic objectives and also offer robustness to the long-term NPV. An earlier robust hierarchical optimization method honoring geological uncertainty with robust long-term and short-term NPV objectives serves as a starting base of this work. We address the issue of extending this approach to include economic uncertainty and aim to analyze how the optimal solution reduces the uncertainty in the achieved average NPV. An ensemble of varying oil prices is used to model economic uncertainty with average NPVs as robust objectives in the hierarchical approach. A weighted-sum approach is used with the same objectives to quantify the effect of uncertainty. To reduce uncertainty, a mean-variance-optimization (MVO) objective is then considered to maximize the mean and also minimize the variance. A reduced effect of uncertainty on the long-term NPV is obtained compared with the uncertainty in the mean-optimization (MO) objectives. Last, it is investigated whether, because of the better handling of uncertainty in MVO, a balance between short-term and long-term gains can be naturally obtained by solving a single-objective MVO. Simulation examples show that a faster NPV buildup is naturally achieved by choosing appropriate weighting of the variance term in the MVO objective.

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