An analysis of the natural gas production supply chain in the Permian Basin using Goldratt's theory of constraints

A theory of constraints (TOC) model of supply-chain capacity and its limiting effect on natural gas production capacity coming from the Permian Basin is developed and presented. The authors use the model to better understand production capacity limitations and to explore the possible impediments that may be preventing the capacity of the Permian Basin from increasing. From this model numerous suggestions (solutions, injections) are made as to how to alleviate the impediments related to the extraction, transport, refining and distribution of natural gas coming out of the Permian Basin. Major issues associated with the Permian Basin are addressednamely the flaring of natural gas and the leakage of methane from dormant and abandoned wells. One purpose of the model is to foster a basic appreciation for the different lead times and fixed costs associated with capacity expansion of the various supply chain components.