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The encyclopedia · Engineering & Operations · Technical decision · 1980–2014

Chevron's refineries run on a linear program that adds about $1 billion a year.

Seven Chevron refineries use one LP-based modeling tool to pick crude, products and investments — worth roughly $10 billion over three decades.

Chevron

the move

Chevron built a software modeling tool that its seven company-owned refineries use to select the most profitable crude, evaluate product options, optimize processes and screen capital projects.

The tool is a linear program with distributive recursion, used in both operations and strategic planning; over 30-plus years the company kept improving it until it was embedded in the fabric of the downstream business.

Chevron estimates the effort now contributes close to $1 billion a year and roughly $10 billion cumulatively. INFORMS named the work a finalist for its 2013 Franz Edelman Award.

why it works

  • A single modeling standard lets refineries compare the same options on the same math.
  • Distributive recursion handles the nonlinear detail plain linear programming misses.
  • Deep integration with business processes made the model the default, not a special study.
the payoffOne LP model across seven refineries compounds for decadesinspired

what transfers

A decision model kept and improved for decades compounds: embed it in core processes, feed it trusted data, and its value grows far beyond the first deployment.

what came after

Chevron's downstream business still runs on the model and its successors; the 2014 Interfaces paper documenting the system became a reference case for linear programming in process industries, and the Edelman finalist citation is used in OR teaching.

references

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