Integrated shale gas supply chain design and water management under uncertainty

The development of shale gas resources is subject to technical challenges and markedly affected by volatile markets that can undermine the development of new projects. Consequently, stakeholders can greatly benefit from decision‐making support tools that integrate the complexity of the system along with the uncertainties inherent to the problem. Accordingly, a general methodology is proposed in this work for the evaluation of integrated shale gas and water supply chains under uncertainty. First, key parametric uncertainties are identified from a candidate pool via a global sensitivity analysis based on a deterministic optimization model. Then, a two‐stage stochastic model is developed considering only the key uncertain parameters in the problem. Moreover, the merits of modeling uncertainty and implementing the stochastic solution approach are evaluated using the expected value of perfect information and the value of the stochastic solution metrics. Furthermore, the conditional value‐at‐risk approach was implemented to evaluate different risk‐aversion levels and the corresponding impacts on the shale gas development plan. The proposed methodology is illustrated through two real‐world case studies involving six and eight potential well‐pad locations and two options of well‐pad layouts.