Stay Ahead, Stay ONMINE

Introduction to Minimum Cost Flow Optimization in Python

Minimum cost flow optimization minimizes the cost of moving flow through a network of nodes and edges. Nodes include sources (supply) and sinks (demand), with different costs and capacity limits. The aim is to find the least costly way to move volume from sources to sinks while adhering to all capacity limitations. Applications Applications of […]

Minimum cost flow optimization minimizes the cost of moving flow through a network of nodes and edges. Nodes include sources (supply) and sinks (demand), with different costs and capacity limits. The aim is to find the least costly way to move volume from sources to sinks while adhering to all capacity limitations.

Applications

Applications of minimum cost flow optimization are vast and varied, spanning multiple industries and sectors. This approach is crucial in logistics and supply chain management, where it is used to minimize transportation costs while ensuring timely delivery of goods. In telecommunications, it helps in optimizing the routing of data through networks to reduce latency and improve bandwidth utilization. The energy sector leverages minimum cost flow optimization to efficiently distribute electricity through power grids, reducing losses and operational costs. Urban planning and infrastructure development also benefit from this optimization technique, as it assists in designing efficient public transportation systems and water distribution networks.

Example

Below is a simple flow optimization example:

The image above illustrates a minimum cost flow optimization problem with six nodes and eight edges. Nodes A and B serve as sources, each with a supply of 50 units, while nodes E and F act as sinks, each with a demand of 40 units. Every edge has a maximum capacity of 25 units, with variable costs indicated in the image. The objective of the optimization is to allocate flow on each edge to move the required units from nodes A and B to nodes E and F, respecting the edge capacities at the lowest possible cost.

Node F can only receive supply from node B. There are two paths: directly or through node D. The direct path has a cost of 2, while the indirect path via D has a combined cost of 3. Thus, 25 units (the maximum edge capacity) are moved directly from B to F. The remaining 15 units are routed via B -D-F to meet the demand.

Currently, 40 out of 50 units have been transferred from node B, leaving a remaining supply of 10 units that can be moved to node E. The available pathways for supplying node E include: A-E and B-E with a cost of 3, A-C-E with a cost of 4, and B-C-E with a cost of 5. Consequently, 25 units are transported from A-E (limited by the edge capacity) and 10 units from B-E (limited by the remaining supply at node B). To meet the demand of 40 units at node E, an additional 5 units are moved via A-C-E, resulting in no flow being allocated to the B-C pathway.

Mathematical formulation

I introduce two mathematical formulations of minimum cost flow optimization:

1. LP (linear program) with continuous variables only

2. MILP (mixed integer linear program) with continuous and discrete variables

I am using following definitions:

Definitions

LP formulation

This formulation only contains decision variables that are continuous, meaning they can have any value as long as all constraints are fulfilled. Decision variables are in this case the flow variables x(u, v) of all edges.

The objective function describes how the costs that are supposed to be minimized are calculated. In this case it is defined as the flow multiplied with the variable cost summed up over all edges:

Constraints are conditions that must be satisfied for the solution to be valid, ensuring that the flow does not exceed capacity limitations.

First, all flows must be non-negative and not exceed to edge capacities:

Flow conservation constraints ensure that the same amount of flow that goes into a node has to come out of the node. These constraints are applied to all nodes that are neither sources nor sinks:

For source and sink nodes the difference of out flow and in flow is smaller or equal the supply of the node:

If v is a source the difference of outflow minus inflow must not exceed the supply s(v). In case v is a sink node we do not allow that more than -s(v) can flow into the node than out of the node (for sinks s(v) is negative).

MILP

Additionally, to the continuous variables of the LP formulation, the MILP formulation also contains discreate variables that can only have specific values. Discrete variables allow to restrict the number of used nodes or edges to certain values. It can also be used to introduce fixed costs for using nodes or edges. In this article I show how to add fixed costs. It is important to note that adding discrete decision variables makes it much more difficult to find an optimal solution, hence this formulation should only be used if a LP formulation is not possible.

The objective function is defined as:

With three terms: variable cost of all edges, fixed cost of all edges, and fixed cost of all nodes.

The maximum flow that can be allocated to an edge depends on the edge’s capacity, the edge selection variable, and the origin node selection variable:

This equation ensures that flow can only be assigned to edges if the edge selection variable and the origin node selection variable are 1.

The flow conservation constraints are equivalent to the LP problem.

Implementation

In this section I explain how to implement a MILP optimization in Python. You can find the code in this repo.

Libraries

To build the flow network, I used NetworkX which is an excellent library (https://networkx.org/) for working with graphs. There are many interesting articles that demonstrate how powerful and easy to use NetworkX is to work with graphs, i.a. customizing NetworkX Graphs, NetworkX: Code Demo for Manipulating Subgraphs, Social Network Analysis with NetworkX: A Gentle Introduction.

One important aspect when building an optimization is to make sure that the input is correctly defined. Even one small error can make the problem infeasible or can lead to an unexpected solution. To avoid this, I used Pydantic to validate the user input and raise any issues at the earliest possible stage. This article gives an easy to understand introduction to Pydantic.

To transform the defined network into a mathematical optimization problem I used PuLP. Which allows to define all variables and constraint in an intuitive way. This library also has the advantage that it can use many different solvers in a simple pug-and-play fashion. This article provides good introduction to this library.

Defining nodes and edges

The code below shows how nodes are defined:

from pydantic import BaseModel, model_validator
from typing import Optional

# node and edge definitions
class Node(BaseModel, frozen=True):
    """
    class of network node with attributes:
    name: str - name of node
    demand: float - demand of node (if node is sink)
    supply: float - supply of node (if node is source)
    capacity: float - maximum flow out of node
    type: str - type of node
    x: float - x-coordinate of node
    y: float - y-coordinate of node
    fixed_cost: float - cost of selecting node
    """
    name: str
    demand: Optional[float] = 0.0
    supply: Optional[float] = 0.0
    capacity: Optional[float] = float('inf')
    type: Optional[str] = None
    x: Optional[float] = 0.0
    y: Optional[float] = 0.0
    fixed_cost: Optional[float] = 0.0

    @model_validator(mode='after')
    def validate(self):
        """
        validate if node definition are correct
        """
        # check that demand is non-negative
        if self.demand < 0 or self.demand == float('inf'): raise ValueError('demand must be non-negative and finite')
        # check that supply is non-negative
        if self.supply < 0: raise ValueError('supply must be non-negative')
        # check that capacity is non-negative
        if self.capacity < 0: raise ValueError('capacity must be non-negative')
        # check that fixed_cost is non-negative
        if self.fixed_cost < 0: raise ValueError('fixed_cost must be non-negative')
        return self

Nodes are defined through the Node class which is inherited from Pydantic’s BaseModel. This enables an automatic validation that ensures that all properties are defined with the correct datatype whenever a new object is created. In this case only the name is a required input, all other properties are optional, if they are not provided the specified default value is assigned to them. By setting the “frozen” parameter to True I made all properties immutable, meaning they cannot be changed after the object has been initialized.

The validate method is executed after the object has been initialized and applies more checks to ensure the provided values are as expected. Specifically it checks that demand, supply, capacity, variable cost and fixed cost are not negative. Furthermore, it also does not allow infinite demand as this would lead to an infeasible optimization problem.

These checks look trivial, however their main benefit is that they will trigger an error at the earliest possible stage when an input is incorrect. Thus, they prevent creating a optimization model that is incorrect. Exploring why a model cannot be solved would be much more time consuming as there are many factors that would need to be analyzed, while such “trivial” input error may not be the first aspect to investigate.

Edges are implemented as follows:

class Edge(BaseModel, frozen=True):
"""
class of edge between two nodes with attributes:
origin: 'Node' - origin node of edge
destination: 'Node' - destination node of edge
capacity: float - maximum flow through edge
variable_cost: float - cost per unit flow through edge
fixed_cost: float - cost of selecting edge
"""
origin: Node
destination: Node
capacity: Optional[float] = float('inf')
variable_cost: Optional[float] = 0.0
fixed_cost: Optional[float] = 0.0

@model_validator(mode='after')
def validate(self):
"""
validate of edge definition is correct
"""
# check that node names are different
if self.origin.name == self.destination.name: raise ValueError('origin and destination names must be different')
# check that capacity is non-negative
if self.capacity < 0: raise ValueError('capacity must be non-negative')
# check that variable_cost is non-negative
if self.variable_cost < 0: raise ValueError('variable_cost must be non-negative')
# check that fixed_cost is non-negative
if self.fixed_cost < 0: raise ValueError('fixed_cost must be non-negative')
return self

The required inputs are an origin node and a destination node object. Additionally, capacity, variable cost and fixed cost can be provided. The default value for capacity is infinity which means if no capacity value is provided it is assumed the edge does not have a capacity limitation. The validation ensures that the provided values are non-negative and that origin node name and the destination node name are different.

Initialization of flowgraph object

To define the flowgraph and optimize the flow I created a new class called FlowGraph that is inherited from NetworkX’s DiGraph class. By doing this I can add my own methods that are specific to the flow optimization and at the same time use all methods DiGraph provides:

from networkx import DiGraph
from pulp import LpProblem, LpVariable, LpMinimize, LpStatus

class FlowGraph(DiGraph):
    """
    class to define and solve minimum cost flow problems
    """
    def __init__(self, nodes=[], edges=[]):
        """
        initialize FlowGraph object
        :param nodes: list of nodes
        :param edges: list of edges
        """
        # initialialize digraph
        super().__init__(None)

        # add nodes and edges
        for node in nodes: self.add_node(node)
        for edge in edges: self.add_edge(edge)


    def add_node(self, node):
        """
        add node to graph
        :param node: Node object
        """
        # check if node is a Node object
        if not isinstance(node, Node): raise ValueError('node must be a Node object')
        # add node to graph
        super().add_node(node.name, demand=node.demand, supply=node.supply, capacity=node.capacity, type=node.type, 
                         fixed_cost=node.fixed_cost, x=node.x, y=node.y)
        
    
    def add_edge(self, edge):    
        """
        add edge to graph
        @param edge: Edge object
        """   
        # check if edge is an Edge object
        if not isinstance(edge, Edge): raise ValueError('edge must be an Edge object')
        # check if nodes exist
        if not edge.origin.name in super().nodes: self.add_node(edge.origin)
        if not edge.destination.name in super().nodes: self.add_node(edge.destination)

        # add edge to graph
        super().add_edge(edge.origin.name, edge.destination.name, capacity=edge.capacity, 
                         variable_cost=edge.variable_cost, fixed_cost=edge.fixed_cost)

FlowGraph is initialized by providing a list of nodes and edges. The first step is to initialize the parent class as an empty graph. Next, nodes and edges are added via the methods add_node and add_edge. These methods first check if the provided element is a Node or Edge object. If this is not the case an error will be raised. This ensures that all elements added to the graph have passed the validation of the previous section. Next, the values of these objects are added to the Digraph object. Note that the Digraph class also uses add_node and add_edge methods to do so. By using the same method name I am overwriting these methods to ensure that whenever a new element is added to the graph it must be added through the FlowGraph methods which validate the object type. Thus, it is not possible to build a graph with any element that has not passed the validation tests.

Initializing the optimization problem

The method below converts the network into an optimization model, solves it, and retrieves the optimized values.

  def min_cost_flow(self, verbose=True):
        """
        run minimum cost flow optimization
        @param verbose: bool - print optimization status (default: True)
        @return: status of optimization
        """
        self.verbose = verbose

        # get maximum flow
        self.max_flow = sum(node['demand'] for _, node in super().nodes.data() if node['demand'] > 0)

        start_time = time.time()
        # create LP problem
        self.prob = LpProblem("FlowGraph.min_cost_flow", LpMinimize)
        # assign decision variables
        self._assign_decision_variables()
        # assign objective function
        self._assign_objective_function()
        # assign constraints
        self._assign_constraints()
        if self.verbose: print(f"Model creation time: {time.time() - start_time:.2f} s")

        start_time = time.time()
        # solve LP problem
        self.prob.solve()
        solve_time = time.time() - start_time

        # get status
        status = LpStatus[self.prob.status]

        if verbose:
            # print optimization status
            if status == 'Optimal':
                # get objective value
                objective = self.prob.objective.value()
                print(f"Optimal solution found: {objective:.2f} in {solve_time:.2f} s")
            else:
                print(f"Optimization status: {status} in {solve_time:.2f} s")
        
        # assign variable values
        self._assign_variable_values(status=='Optimal')

        return status

Pulp’s LpProblem is initialized, the constant LpMinimize defines it as a minimization problem — meaning it is supposed to minimize the value of the objective function. In the following lines all decision variables are initialized, the objective function as well as all constraints are defined. These methods will be explained in the following sections.

Next, the problem is solved, in this step the optimal value of all decision variables is determined. Following the status of the optimization is retrieved. When the status is “Optimal” an optimal solution could be found other statuses are “Infeasible” (it is not possible to fulfill all constraints), “Unbounded” (the objective function can have an arbitrary low values), and “Undefined” meaning the problem definition is not complete. In case no optimal solution was found the problem definition needs to be reviewed.

Finally, the optimized values of all variables are retrieved and assigned to the respective nodes and edges.

Defining decision variables

All decision variables are initialized in the method below:

   def _assign_variable_values(self, opt_found):
        """
        assign decision variable values if optimal solution found, otherwise set to None
        @param opt_found: bool - if optimal solution was found
        """
        # assign edge values        
        for _, _, edge in super().edges.data():
            # initialize values
            edge['flow'] = None
            edge['selected'] = None
            # check if optimal solution found
            if opt_found and edge['flow_var'] is not None:                    
                edge['flow'] = edge['flow_var'].varValue                    

                if edge['selection_var'] is not None: 
                    edge['selected'] = edge['selection_var'].varValue

        # assign node values
        for _, node in super().nodes.data():
            # initialize values
            node['selected'] = None
            if opt_found:                
                # check if node has selection variable
                if node['selection_var'] is not None: 
                    node['selected'] = node['selection_var'].varValue

First it iterates through all edges and assigns continuous decision variables if the edge capacity is greater than 0. Furthermore, if fixed costs of the edge are greater than 0 a binary decision variable is defined as well. Next, it iterates through all nodes and assigns binary decision variables to nodes with fixed costs. The total number of continuous and binary decision variables is counted and printed at the end of the method.

Defining objective

After all decision variables have been initialized the objective function can be defined:

    def _assign_objective_function(self):
        """
        define objective function
        """
        objective = 0
 
        # add edge costs
        for _, _, edge in super().edges.data():
            if edge['selection_var'] is not None: objective += edge['selection_var'] * edge['fixed_cost']
            if edge['flow_var'] is not None: objective += edge['flow_var'] * edge['variable_cost']
        
        # add node costs
        for _, node in super().nodes.data():
            # add node selection costs
            if node['selection_var'] is not None: objective += node['selection_var'] * node['fixed_cost']

        self.prob += objective, 'Objective',

The objective is initialized as 0. Then for each edge fixed costs are added if the edge has a selection variable, and variable costs are added if the edge has a flow variable. For all nodes with selection variables fixed costs are added to the objective as well. At the end of the method the objective is added to the LP object.

Defining constraints

All constraints are defined in the method below:

  def _assign_constraints(self):
        """
        define constraints
        """
        # count of contraints
        constr_count = 0
        # add capacity constraints for edges with fixed costs
        for origin_name, destination_name, edge in super().edges.data():
            # get capacity
            capacity = edge['capacity'] if edge['capacity'] < float('inf') else self.max_flow
            rhs = capacity
            if edge['selection_var'] is not None: rhs *= edge['selection_var']
            self.prob += edge['flow_var'] <= rhs, f"capacity_{origin_name}-{destination_name}",
            constr_count += 1
            
            # get origin node
            origin_node = super().nodes[origin_name]
            # check if origin node has a selection variable
            if origin_node['selection_var'] is not None:
                rhs = capacity * origin_node['selection_var'] 
                self.prob += (edge['flow_var'] <= rhs, f"node_selection_{origin_name}-{destination_name}",)
                constr_count += 1

        total_demand = total_supply = 0
        # add flow conservation constraints
        for node_name, node in super().nodes.data():
            # aggregate in and out flows
            in_flow = 0
            for _, _, edge in super().in_edges(node_name, data=True):
                if edge['flow_var'] is not None: in_flow += edge['flow_var']
            
            out_flow = 0
            for _, _, edge in super().out_edges(node_name, data=True):
                if edge['flow_var'] is not None: out_flow += edge['flow_var']

            # add node capacity contraint
            if node['capacity'] < float('inf'):
                self.prob += out_flow = demand - supply
                rhs = node['demand'] - node['supply']
                self.prob += in_flow - out_flow >= rhs, f"flow_balance_{node_name}",
            constr_count += 1

            # update total demand and supply
            total_demand += node['demand']
            total_supply += node['supply']

        if self.verbose:
            print(f"Constraints: {constr_count}")
            print(f"Total supply: {total_supply}, Total demand: {total_demand}")

First, capacity constraints are defined for each edge. If the edge has a selection variable the capacity is multiplied with this variable. In case there is no capacity limitation (capacity is set to infinity) but there is a selection variable, the selection variable is multiplied with the maximum flow that has been calculated by aggregating the demand of all nodes. An additional constraint is added in case the edge’s origin node has a selection variable. This constraint means that flow can only come out of this node if the selection variable is set to 1.

Following, the flow conservation constraints for all nodes are defined. To do so the total in and outflow of the node is calculated. Getting all in and outgoing edges can easily be done by using the in_edges and out_edges methods of the DiGraph class. If the node has a capacity limitation the maximum outflow will be constraint by that value. For the flow conservation it is necessary to check if the node is either a source or sink node or a transshipment node (demand equals supply). In the first case the difference between inflow and outflow must be greater or equal the difference between demand and supply while in the latter case in and outflow must be equal.

The total number of constraints is counted and printed at the end of the method.

Retrieving optimized values

After running the optimization, the optimized variable values can be retrieved with the following method:

    def _assign_variable_values(self, opt_found):
        """
        assign decision variable values if optimal solution found, otherwise set to None
        @param opt_found: bool - if optimal solution was found
        """
        # assign edge values        
        for _, _, edge in super().edges.data():
            # initialize values
            edge['flow'] = None
            edge['selected'] = None
            # check if optimal solution found
            if opt_found and edge['flow_var'] is not None:                    
                edge['flow'] = edge['flow_var'].varValue                    

                if edge['selection_var'] is not None: 
                    edge['selected'] = edge['selection_var'].varValue

        # assign node values
        for _, node in super().nodes.data():
            # initialize values
            node['selected'] = None
            if opt_found:                
                # check if node has selection variable
                if node['selection_var'] is not None: 
                    node['selected'] = node['selection_var'].varValue 

This method iterates through all edges and nodes, checks if decision variables have been assigned and adds the decision variable value via varValue to the respective edge or node.

Demo

To demonstrate how to apply the flow optimization I created a supply chain network consisting of 2 factories, 4 distribution centers (DC), and 15 markets. All goods produced by the factories have to flow through one distribution center until they can be delivered to the markets.

Supply chain problem

Node properties were defined:

Node definitions

Ranges mean that uniformly distributed random numbers were generated to assign these properties. Since Factories and DCs have fixed costs the optimization also needs to decide which of these entities should be selected.

Edges are generated between all Factories and DCs, as well as all DCs and Markets. The variable cost of edges is calculated as the Euclidian distance between origin and destination node. Capacities of edges from Factories to DCs are set to 350 while from DCs to Markets are set to 100.

The code below shows how the network is defined and how the optimization is run:

# Define nodes
factories = [Node(name=f'Factory {i}', supply=700, type='Factory', fixed_cost=100, x=random.uniform(0, 2),
                  y=random.uniform(0, 1)) for i in range(2)]
dcs = [Node(name=f'DC {i}', fixed_cost=25, capacity=500, type='DC', x=random.uniform(0, 2), 
            y=random.uniform(0, 1)) for i in range(4)]
markets = [Node(name=f'Market {i}', demand=random.randint(1, 100), type='Market', x=random.uniform(0, 2), 
                y=random.uniform(0, 1)) for i in range(15)]

# Define edges
edges = []
# Factories to DCs
for factory in factories:
    for dc in dcs:
        distance = ((factory.x - dc.x)**2 + (factory.y - dc.y)**2)**0.5
        edges.append(Edge(origin=factory, destination=dc, capacity=350, variable_cost=distance))

# DCs to Markets
for dc in dcs:
    for market in markets:
        distance = ((dc.x - market.x)**2 + (dc.y - market.y)**2)**0.5
        edges.append(Edge(origin=dc, destination=market, capacity=100, variable_cost=distance))

# Create FlowGraph
G = FlowGraph(edges=edges)

G.min_cost_flow()

The output of flow optimization is as follows:

Variable types: 68 continuous, 6 binary
Constraints: 161
Total supply: 1400.0, Total demand: 909.0
Model creation time: 0.00 s
Optimal solution found: 1334.88 in 0.23 s

The problem consists of 68 continuous variables which are the edges’ flow variables and 6 binary decision variables which are the selection variables of the Factories and DCs. There are 161 constraints in total which consist of edge and node capacity constraints, node selection constraints (edges can only have flow if the origin node is selected), and flow conservation constraints. The next line shows that the total supply is 1400 which is higher than the total demand of 909 (if the demand was higher than the supply the problem would be infeasible). Since this is a small optimization problem, the time to define the optimization model was less than 0.01 seconds. The last line shows that an optimal solution with an objective value of 1335 could be found in 0.23 seconds.

Additionally, to the code I described in this post I also added two methods that visualize the optimized solution. The code of these methods can also be found in the repo.

Flow graph

All nodes are located by their respective x and y coordinates. The node and edge size is relative to the total volume that is flowing through. The edge color refers to its utilization (flow over capacity). Dashed lines show edges without flow allocation.

In the optimal solution both Factories were selected which is inevitable as the maximum supply of one Factory is 700 and the total demand is 909. However, only 3 of the 4 DCs are used (DC 0 has not been selected).

In general the plot shows the Factories are supplying the nearest DCs and DCs the nearest Markets. However, there are a few exceptions to this observation: Factory 0 also supplies DC 3 although Factory 1 is nearer. This is due to the capacity constraints of the edges which only allow to move at most 350 units per edge. However, the closest Markets to DC 3 have a slightly higher demand, hence Factory 0 is moving additional units to DC 3 to meet that demand. Although Market 9 is closest to DC 3 it is supplied by DC 2. This is because DC 3 would require an additional supply from Factory 0 to supply this market and since the total distance from Factory 0 over DC 3 is longer than the distance from Factory 0 through DC 2, Market 9 is supplied via the latter route.

Another way to visualize the results is via a Sankey diagram which focuses on visualizing the flows of the edges:

Sankey flow diagram

The colors represent the edges’ utilizations with lowest utilizations in green changing to yellow and red for the highest utilizations. This diagram shows very well how much flow goes through each node and edge. It highlights the flow from Factory 0 to DC 3 and also that Market 13 is supplied by DC 2 and DC 1.

Summary

Minimum cost flow optimizations can be a very helpful tool in many domains like logistics, transportation, telecommunication, energy sector and many more. To apply this optimization it is important to translate a physical system into a mathematical graph consisting of nodes and edges. This should be done in a way to have as few discrete (e.g. binary) decision variables as necessary as those make it significantly more difficult to find an optimal solution. By combining Python’s NetworkX, Pulp and Pydantic libraries I built an flow optimization class that is intuitive to initialize and at the same time follows a generalized formulation which allows to apply it in many different use cases. Graph and flow diagrams are very helpful to understand the solution found by the optimizer.

If not otherwise stated all images were created by the author.

Shape
Shape
Stay Ahead

Explore More Insights

Stay ahead with more perspectives on cutting-edge power, infrastructure, energy,  bitcoin and AI solutions. Explore these articles to uncover strategies and insights shaping the future of industries.

Shape

AI agents drive up telemetry costs, complicate network observability

“A production agent emits 4-5x more data as telemetry,” said Kamal Hathi, senior vice president and general manager of Splunk at Cisco, in an interview with Network World. Beyond traditional application traces, agents generate telemetry about workflows, tool calls, retrieved context, model interactions, and authentication. As agents interact with other

Read More »

EIA: US crude oil inventories down 3.1 million bbl

US crude oil inventories for the week ended Oct. 16, excluding the Strategic Petroleum Reserve, decreased by 3.1 million bbl from the previous week, according to data from the US Energy Information Administration (EIA). At 412.5 million bbl, US crude oil inventories are 3% below the 5-year average for this time of year, the EIA report indicated. Gasoline inventories decreased 3.0 million bbl, 5% below the 5-year average. Propane-propylene inventories decreased 500,000 bbl, 13% above the 5-year average. Total commercial petroleum inventories decreased by 8.5 million bbl for the week. Distillate inventories increased 1.7 million bbl, 9% below the 5-year average. US crude oil refinery inputs averaged 16.6 million b/d for the week ended Oct. 16, which was 34,000 b/d more than the previous week’s average. Refineries operated at 93.4% of capacity. Gasoline output averaged 9.8 million b/d, and distillate production increased to 5.2 million b/d. Crude oil imports decreased 291,000 b/d to 5.8 million b/d. The 4-week average of 6.1 million b/d is 2.8% above the year-ago level. Gasoline imports averaged 281,000 b/d; distillate imports averaged 117,000 b/d. Over the past four weeks, total product supplied averaged 21.1 million b/d, up 3.2% year over year. The 4-week average for gasoline product supplied increased 1.5% year over year to 8.7 million b/d, while the 4-week average for distillate product supplied decreased 2.4% to 3.9 million b/d. The 4-week average for jet fuel product supplied increased 1.4% year over year.

Read More »

Adura gets NSTA consent to develop Jackdaw North Sea gas field

Adura Energy has received North Sea Transition Authority (NSTA) consent to develop Jackdaw natural gas and condensate field, off the coast of northeast Scotland, following consideration of the company’s environmental statement and agreement to the grant of consent.  NSTA originally granted development consent for Jackdaw to Shell UK in June 2022. But this consent was deemed unlawful and overturned by the Scottish courts in January 2025, following findings that initial environmental approvals had failed to account for the impact of secondary emissions. Estimated reserves at Jackdaw are 72-200 MMboe. The new approval clears the way for Jackdaw to start supplying gas to British homes, power stations, and businesses within weeks, according to Adura, substantially all of the project’s physical infrastructure already having been completed. Alongside Jackdaw’s reapproval, the UK government announced it will launch a £2-billion ($2.7-billion) energy wealth fund fueled by North Sea oil and gas tax revenues to reinvest directly into renewable projects. Adura is a joint venture formed when Shell and Equinor ASA merged their UK offshore oil and gas businesses. The associated Rosebank oil field is following Jackdaw in the regulatory process. An NSTA decision on it is anticipated in the coming weeks. A spokesperson for INEOS Group Ltd. said that “Jackdaw approval is welcome, but the government must stop taxing the North Sea into decline. Approving Jackdaw is the right decision, but this does not stop the damage being done to the North Sea. And it appears Rosebank remains stuck in political limbo.”

Read More »

Energy Department Authorizes Exchange from Northeast Home Heating Oil Reserve

WASHINGTON— The U.S. Department of Energy today announced a Request for Proposal for an exchange of up to 315,000 barrels of ultra-low sulfur distillate (fuel oil) from the Northeast Home Heating Oil Reserve (NEHHOR). This solicitation is structured to mitigate supply chain challenges disrupting fuel oil supply. The announced exchange underscores the Trump Administration’s commitment to reliable energy access and lowering costs. Under the terms of the exchange, borrowing companies must return the same volume of fuel oil plus a premium, ensuring that NEHHOR is refilled ahead of the 2027–2028 heating season. “The Trump Administration is committed to doing everything in our power to lower energy costs for the American people,” said U.S. Secretary of Energy Chris Wright. “After receiving Senators Collins’ and Kings’ letter and extensive discussions with Senator Collins, I have directed the Department to exchange barrels from our Northeast Home Heating Oil Reserve to mitigate heightened home heating oil costs during the upcoming winter. Of course, this is a temporary measure to solve a temporary supply disruption. I encourage the governors of New York and New England to work with the Trump Administration to build the Constitution Pipeline and replace home heating oil with low-cost natural gas. Doing so would save their residents billions of dollars in home heating and electricity costs.” DOE will exchange up to 315,000 barrels of fuel oil from NEHHOR storage sites in South Portland, Maine; Boston, Massachusetts; and New Haven, Connecticut. Fuel transfers or deliveries are scheduled to be completed by November 13, 2026. The minimum offer quantity is 25,000 barrels, but not to exceed 30,000, and the volume available per site shall not exceed 150,000. Offerors may submit multiple offers. This approach ensures a competitive bidding process in which both fuel retailers and terminal holders can participate and that product can

Read More »

Shell plans well intervention, drilling campaign to extract more gas from Ormen Lange

A/S Norske Shell and its license partners are investing in a new drilling and well intervention campaign at Ormen Lange in the Norwegian Sea. An investment figure was not disclosed. The campaign, which follows the 2025 start of subsea compression to compensate for the natural pressure drop in the reservoir, includes two sidetracks from existing wells to access additional gas volumes, as well as an option for modifications to a third well. First production is expected in 2029, the operator said in an early October release. The campaign is expected to increase recovery by about 3.5 billion cu m of gas over the life of the field. “Ormen Lange has been producing for almost 20 years, but there is still room for further resources. This investment will enable us to produce gas volumes that today’s wells cannot reach efficiently, thereby creating additional value from the field while contributing to reliable gas supplies to Europe,” said Claire Richardson-Dissel, asset manager for Ormen Lange at Norske Shell. Ormen Lange  Norway’s second largest developed gas field, Ormen Lange was Norway’s first deepwater field development. The field is developed without a platform, with all production from subsea installations installed at depths of up to 1,100 m. Gas from sandstone at a depth of almost 3,000 m is piped up the Storeggakanten peninsula to the onshore plant at Nyhamna in Aukra municipality, where it is processed before export to the UK and the EU.  Shell is operator of Ormen Lange with 17.8% interest. License partners are Petoro AS (36.5%), Equinor Energy AS (25.4%), Orlen Upstream Norway AS (14%), and Vår Energi AS (6.3%).

Read More »

Saturn Oil & Gas adds light, oil-weighted assets of Corex Resources

Saturn Oil & Gas Inc., Calgary, has agreed to acquire privately held Corex Resources Ltd. for $302 million (Can.) through a plan of arrangement, expanding its light oil position from southeast Saskatchewan into southwest Manitoba. The acquisition adds about 7,000 b/d of 100% light oil-weighted production and increases Saturn’s forecast 2026 exit production rate to 54,000-56,000 boe/d from its previous outlook, the company said Oct. 19. Corex’s assets lie adjacent to Saturn’s existing southeast Saskatchewan operations. The company said the transaction adds 323 gross (279 net) identified drilling locations, including booked and unbooked development opportunities, as well as potential open-hole multilateral targets. The acquired asset base is characterized by an average working interest of about 96% and includes operated production infrastructure, pipelines, and other infrastructure. Saturn said it has identified about $6 million/year in operating and efficiency synergies. The addition of Corex’s production is not expected to affect Saturn’s full-year 2026 average production guidance of 43,000-44,000 boe/d, but, Saturn said, the deal, along with Saturn’s expanded 2026 capital program, positions the company to exit 2026 with production of 54,000-56,000 boe/d, establishing a base for 2027. The transaction is expected to close in December 2026, subject to customary conditions.

Read More »

Energy Department Announces New Investments to Strengthen America’s Power Grid and Lower Electricity Costs

WASHINGTON— The U.S. Department of Energy (DOE) today announced approximately $967 million in additional funding through its Grid Resilience State and Tribal Formula Grant program to modernize critical energy infrastructure, lower electricity costs and strengthen America’s power grid. The funding will support locally driven projects across states, territories, and tribes to upgrade critical infrastructure, prevent power disruptions, and meet growing electricity demand while helping lower costs for American families and businesses. The investment advances President Trump’s American energy dominance agenda. Projects funded through the program will help states, territories, and tribes invest in infrastructure improvements that protect against disruptive events, improve system performance, and ensure communities and businesses have dependable power when they need it most. “Lowering costs and unleashing prosperity are top priorities for President Trump,” said U.S. Secretary of Energy Chris Wright. “These commonsense investments provide resources directly to states, territories, and tribes to lower electricity costs and strengthen grid reliability for American businesses and families.” “A strong and dependable grid is the backbone of American economic prosperity,” said Office of Electricity Assistant Secretary Katie Jereza. “This funding will help Americans across the country, including our tribal partners, optimize their electricity systems and prepare for future growth while strengthening energy security and deploying technologies that can lower the long-term cost of delivering reliable power.” States, tribes, and U.S. territories can view their funding allocations and application instructions here.

Read More »

AI’s Fragmented Regulatory Landscape Becomes a Data Center Design Challenge

Designing for Verifiable Operations For an operator serving tenants across jurisdictions, a claim about where a workload runs must be one that the responsible service provider can substantiate. That means identifying who can administer the workload, how data moves between regions, where backups are maintained, and which records document those arrangements. A tenant promising to run a workload within a particular jurisdiction needs assurance that its data, backups, and access arrangements satisfy the applicable requirements. Workload placement alone cannot establish where a backup resides or from where an administrator can access a system. Those questions must be addressed across compute, storage, network paths, security controls, and third-party access, with responsibilities established during procurement and verified before service begins. Not all of those controls necessarily reside with the data center operator. A colocation provider may be responsible for physical access, facility security, and designated infrastructure services, while a tenant or cloud provider controls the applications, storage configuration, backup locations, and logical access to workloads. The operating agreement must distinguish between what the facility provider can verify directly and what remains within the tenant’s systems. The EU AI Act makes that division of responsibility particularly important. Its requirements for covered high-risk AI systems include logging, documentation, human oversight, robustness, and cybersecurity, subject to the law’s applicable implementation dates. These obligations attach to the relevant providers and deployers of AI systems, rather than automatically to every company hosting them. A data center operator may nevertheless be required by contract to provide physical-access records, security evidence, or information about infrastructure location so that a tenant can substantiate its own compliance. A further distinction concerns data residency. The AI Act is not itself a general requirement to keep all AI workloads or associated data within the European Union. Geographic restrictions may instead arise from data-protection

Read More »

Microsoft exits UK AI data center project over electricity delays

“We remain committed to both the Loughton project and the UK, and we are exploring alternative power sources for the site, as well ​as other expansion sites in the UK,” Nscale added. “This decision relates to a single ​site,” a Microsoft spokesperson said of its termination of an agreement for the data ​center in Loughton, Essex, where Nscale had faced delays, with electricity grid ⁠officials telling the AI company they did not expect to supply power to the site ​until the 2030s. “Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid ​issue has no impact on our other contracts,” a spokesperson for Nscale told Reuters.

Read More »

AI networks drive SONiC boom

Aviz Networks: Aviz, which received early funding help from Cisco, offers a pre-tested, multi-ASIC, hardware agnostic, enterprise-ready SONiC distro with added features such as bug fixes, telemetry and support. Hedgehog Networks: Founded by former Cisco exec Marc Austin in 2022 to bring SONiC-based disaggregated networking to the enterprise, Hedgehog’s mission is to simplify the deployment of private cloud AI networks with automation and orchestration based on Kubernetes. Upscale AI: This startup has raised $500 million with the goal of building a new networking platform from ground up, starting with its own silicon. The company is targeting AI data centers as its sole market and is using SONiC as the NOS. Most recently, Upscale introduced Token Fabric architecture, which combines the company’s own SkyFabriX scale-up silicon, scale-out systems built on Nvidia Spectrum-X Ethernet, and a common software layer for operations. General availability is planned for early 2027. The announcement builds on two earlier milestones. Upscale, based in Santa Clara, Calif., emerged from stealth in September 2025 with a $100 million seed round. In June, it raised an additional $190 million  4. SONiC expands beyond the data center Community support is the lifeblood of any open-source project. Under the Linux Foundation, the SONiC community has grown to more than 4,300 contributors. Heavyweight members include Alibaba, Arista, Broadcom, Cisco, Dell, Google, Microsoft, Nokia, and Nvidia. The SONiC community is currently working to extend the technology from the data center to the network edge. The PoE Edge Networks with SONiC (PENS) workgroup, led by Aviz, Wistron, Cisco and Celestica, is working to adapt SONiC for edge LANs. Specifically, the group is integrating protocols consistent with Wi-Fi networks and IoT devices, such as Power Over Ethernet (PoE) and 802.1x.

Read More »

SONiC momentum continues at OCP Global Summit

This will complete SONiC integration across the Cisco multi-silicon Nexus switching portfolio, according to a blog post by Surbhi Paul, director, product management, for data center AI networking at Cisco.  “For organizations deploying Cisco 8000 Series across WAN backbones and core transport, extending Cisco-validated SONiC to the Nexus switches creates a unified, end-to-end, open network fabric,” Cisco stated. “Customers eliminate vendor silos, leveraging a single supply chain, shared FRR routing tools, and one Technical Assistance Center (TAC) contract from the WAN edge deep into the data center core.” “Built for AI infrastructure providers scaling 8000 to 32,000+ GPU clusters. High-density 400G/800G Cisco Nexus (N9100) switches (NVIDIA Spectrum-X) and Cisco Nexus (Cloud Scale) switches allow architects to tune RoCEv2 congestion algorithms (PFC/ECN) within SONiC, maximizing GPU training efficiency without risking multi-vendor support fragmentation,” Cisco stated.

Read More »

AI’s GPU Refresh Cycle Is Becoming a Stranded-Capital Problem

The AI infrastructure buildout is measured in gigawatts and successive generations of accelerators. But as operators bring new compute capacity online, a less visible question is gaining financial urgency: What happens to GPU systems when their first production assignment ends? For hardware that remains functional but no longer meets the performance or efficiency requirements of a leading-edge AI cluster, retirement need not mean obsolescence. Equipment may be redeployed, resold, harvested for components or processed to recover materials. The outcome depends on decisions made long before a system leaves its rack. That was the central argument advanced by Linda Li, chief strategy officer of Re-Teck and its parent company, Li Tong Group, in the latest onsite installment of the DCF Show podcast, hosted by Data Center Frontier Contributing Editor Doug Black at the DCF Trends Summit 2026 in Northern Virginia. For Li, the acceleration of GPU refresh cycles is making lifecycle management a question of capital preservation, facilities design and executive governance—not merely IT asset disposition. Plan for the Exit Before the Equipment Arrives Li draws on more than two decades of her company’s work in reverse supply chains for consumer electronics and telecommunications equipment. Both sectors have managed rapid generational shifts without assuming that every displaced device had exhausted its useful life. “We are dealing with a totally different organism,” she said, describing the combination of rapid accelerator iterations, rising rack power density and increasingly sophisticated thermal requirements. The response, in her view, has two levels. The first is physical infrastructure: facilities designed to accommodate successive generations of servers without extensive reconstruction. Scalable power distribution, adaptable raceways, modular rack systems and high-capacity air and liquid cooling can create room for hardware transitions that may arrive sooner than originally expected. The second is the network of partners and contracts around the

Read More »

Beyond Colossus: 5C Advances $575M Memphis AI Factory Expansion

Memphis has emerged as a major center of AI infrastructure development, driven largely by the extraordinary scale of xAI’s Colossus supercomputing operations. But the city’s growing AI computing market extends beyond Elon Musk’s flagship project. At the former headquarters and distribution complex of discount retailer Fred’s, 5C Data Centers is developing another substantial AI computing facility, combining industrial adaptive reuse with a phased expansion strategy and plans for behind-the-meter power generation. On October 6, 2026, a $575 million commercial alteration permit application was filed for the fourth phase of 5C’s MEM01 data center at 4300 Getwell Road. The application covers approximately 504,000 square feet of the property’s 1.1 million-square-foot building, representing the largest construction phase yet proposed at the site. MEM01 is already operating. According to September reporting from The Daily Memphian, 5C had established operations in approximately 200,000 square feet of the former Fred’s property, leaving substantial additional space available for conversion. The latest permit application marks a significant escalation in the scope of the development. The expansion also introduces a major new element to 5C’s power strategy. On October 11, 5C Group Chief Revenue Officer Brad Nimri told The Daily Memphian that the company plans to increase available power at MEM01 from approximately 20 MW to 84 MW over the next six months, using fuel cell technology to supply the additional capacity rather than relying on a corresponding increase in electricity from Memphis Light, Gas and Water (MLGW). Like Colossus, which began with the conversion of a former Electrolux manufacturing facility, 5C’s development reflects the growing role of industrial adaptive reuse in AI infrastructure. The projects differ considerably in scale and their approaches to on-site power generation, but both illustrate the challenge of transforming existing industrial properties into high-density computing environments with substantial electrical requirements. As Memphis considers

Read More »

Microsoft will invest $80B in AI data centers in fiscal 2025

And Microsoft isn’t the only one that is ramping up its investments into AI-enabled data centers. Rival cloud service providers are all investing in either upgrading or opening new data centers to capture a larger chunk of business from developers and users of large language models (LLMs).  In a report published in October 2024, Bloomberg Intelligence estimated that demand for generative AI would push Microsoft, AWS, Google, Oracle, Meta, and Apple would between them devote $200 billion to capex in 2025, up from $110 billion in 2023. Microsoft is one of the biggest spenders, followed closely by Google and AWS, Bloomberg Intelligence said. Its estimate of Microsoft’s capital spending on AI, at $62.4 billion for calendar 2025, is lower than Smith’s claim that the company will invest $80 billion in the fiscal year to June 30, 2025. Both figures, though, are way higher than Microsoft’s 2020 capital expenditure of “just” $17.6 billion. The majority of the increased spending is tied to cloud services and the expansion of AI infrastructure needed to provide compute capacity for OpenAI workloads. Separately, last October Amazon CEO Andy Jassy said his company planned total capex spend of $75 billion in 2024 and even more in 2025, with much of it going to AWS, its cloud computing division.

Read More »

John Deere unveils more autonomous farm machines to address skill labor shortage

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More Self-driving tractors might be the path to self-driving cars. John Deere has revealed a new line of autonomous machines and tech across agriculture, construction and commercial landscaping. The Moline, Illinois-based John Deere has been in business for 187 years, yet it’s been a regular as a non-tech company showing off technology at the big tech trade show in Las Vegas and is back at CES 2025 with more autonomous tractors and other vehicles. This is not something we usually cover, but John Deere has a lot of data that is interesting in the big picture of tech. The message from the company is that there aren’t enough skilled farm laborers to do the work that its customers need. It’s been a challenge for most of the last two decades, said Jahmy Hindman, CTO at John Deere, in a briefing. Much of the tech will come this fall and after that. He noted that the average farmer in the U.S. is over 58 and works 12 to 18 hours a day to grow food for us. And he said the American Farm Bureau Federation estimates there are roughly 2.4 million farm jobs that need to be filled annually; and the agricultural work force continues to shrink. (This is my hint to the anti-immigration crowd). John Deere’s autonomous 9RX Tractor. Farmers can oversee it using an app. While each of these industries experiences their own set of challenges, a commonality across all is skilled labor availability. In construction, about 80% percent of contractors struggle to find skilled labor. And in commercial landscaping, 86% of landscaping business owners can’t find labor to fill open positions, he said. “They have to figure out how to do

Read More »

2025 playbook for enterprise AI success, from agents to evals

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More 2025 is poised to be a pivotal year for enterprise AI. The past year has seen rapid innovation, and this year will see the same. This has made it more critical than ever to revisit your AI strategy to stay competitive and create value for your customers. From scaling AI agents to optimizing costs, here are the five critical areas enterprises should prioritize for their AI strategy this year. 1. Agents: the next generation of automation AI agents are no longer theoretical. In 2025, they’re indispensable tools for enterprises looking to streamline operations and enhance customer interactions. Unlike traditional software, agents powered by large language models (LLMs) can make nuanced decisions, navigate complex multi-step tasks, and integrate seamlessly with tools and APIs. At the start of 2024, agents were not ready for prime time, making frustrating mistakes like hallucinating URLs. They started getting better as frontier large language models themselves improved. “Let me put it this way,” said Sam Witteveen, cofounder of Red Dragon, a company that develops agents for companies, and that recently reviewed the 48 agents it built last year. “Interestingly, the ones that we built at the start of the year, a lot of those worked way better at the end of the year just because the models got better.” Witteveen shared this in the video podcast we filmed to discuss these five big trends in detail. Models are getting better and hallucinating less, and they’re also being trained to do agentic tasks. Another feature that the model providers are researching is a way to use the LLM as a judge, and as models get cheaper (something we’ll cover below), companies can use three or more models to

Read More »

OpenAI’s red teaming innovations define new essentials for security leaders in the AI era

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More OpenAI has taken a more aggressive approach to red teaming than its AI competitors, demonstrating its security teams’ advanced capabilities in two areas: multi-step reinforcement and external red teaming. OpenAI recently released two papers that set a new competitive standard for improving the quality, reliability and safety of AI models in these two techniques and more. The first paper, “OpenAI’s Approach to External Red Teaming for AI Models and Systems,” reports that specialized teams outside the company have proven effective in uncovering vulnerabilities that might otherwise have made it into a released model because in-house testing techniques may have missed them. In the second paper, “Diverse and Effective Red Teaming with Auto-Generated Rewards and Multi-Step Reinforcement Learning,” OpenAI introduces an automated framework that relies on iterative reinforcement learning to generate a broad spectrum of novel, wide-ranging attacks. Going all-in on red teaming pays practical, competitive dividends It’s encouraging to see competitive intensity in red teaming growing among AI companies. When Anthropic released its AI red team guidelines in June of last year, it joined AI providers including Google, Microsoft, Nvidia, OpenAI, and even the U.S.’s National Institute of Standards and Technology (NIST), which all had released red teaming frameworks. Investing heavily in red teaming yields tangible benefits for security leaders in any organization. OpenAI’s paper on external red teaming provides a detailed analysis of how the company strives to create specialized external teams that include cybersecurity and subject matter experts. The goal is to see if knowledgeable external teams can defeat models’ security perimeters and find gaps in their security, biases and controls that prompt-based testing couldn’t find. What makes OpenAI’s recent papers noteworthy is how well they define using human-in-the-middle

Read More »

We can do impossible things

I’d wager everyone has a rehearsed response to what’s absolutely one of the world’s worst interview questions: “What’s your biggest weakness?” Whenever I’ve gotten it,

Read More »