Richard Newell, USAEE, November 29 1 Current Topics at EIA U.S. Association for Energy Economics November 2, 29, Washington, DC Richard Newell, Administrator U.S. Energy Information Administration
Richard Newell, USAEE, November 29 2 Overview EIA mission U.S. natural gas developments Energy and Financial Markets Initiative Climate policy analysis
EIA mission, resources, and core functions Mission: Independent Statistics and Analysis EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment. Current resources: $111 million; 375 FTEs EIA Budget by Function 32% Information Collection and Management 53% Analysis and Forecasting 15% Information Dissemination Richard Newell, USAEE, November 29 3
U.S. natural gas shale plays Richard Newell, USAEE, November 29 4
Horizontal shale gas rig counts slowed, but have rebounded Max Count Min Count 3 25 2 Marcellus 15 Barnett 1 Woodford Haynesville 5 Fayetteville Jan-7 Mar-7 May-7 Jul-7 Sep-7 Nov-7 Jan-8 Mar-8 May-8 Jul-8 Sep-8 Nov-8 Jan-9 Mar-9 May-9 Jul-9 Sep-9 Nov-9 Richard Newell, USAEE, November 29 Source: Smith International 5
Production in key gas shale plays is growing rapidly Billion cubic meters 9 8 7 6 5 4 3 2 1 2 21 22 23 24 25 26 27 28 29* Marcellus Haynesville Woodford Fayetteville Barnett Antrim *Estimated Source: Energy Information Administration and Richard Newell, USAEE, November 29 Lippmann Consulting, Inc. 6
Year-end domestic gas reserves increased 3% in 28, despite higher production and lower prices 28 27 26 25 24 23 Dry Natural Gas (Tcf) 22 238 Tcf 1.2 Total Reserves Additions 27.5 1.6 26.7 (3.1).9.2 (2.5) Proved Reserves 27 New Field Discoveries New Reservoirs in Old Fields Extensions 245 Tcf Net Revisions Net of Sales & Acquisitions Adjustments 28 Dry Gas Production Proved Reserves 28 Total Discoveries 29.5 21 Richard Newell, USAEE, November 29 Source: Energy Information Administration 7
Richard Newell, USAEE, November 29 Source: Potential Gas Committee 8 New technologies also force a reassessment of gas resources PGC Resource Estimates (Tcf) 2, 1,8 1,6 1,4 1,2 1, 8 6 4 2 Speculative Possible Probable 1988 199 1992 1994 1996 1998 2 22 24 26 28
Henry Hub spot prices remain highly uncertain Dollars per million Btu 16 14 12 1 8 6 4 2 History Henry Hub spot STEO Henry Hub forecast NYMEX futures prices 68% NYMEX confidence interval 95% NYMEX confidence interval Projections Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Richard Newell, USAEE, November 29 Source: EIA Short-Term Energy Outlook November 29 9
Expected near term WTI oil price is flat, but highly uncertain Dollars per million Btu WTI spot STEO WTI forecast NYMEX futures prices 68% NYMEX confidence interval 95% NYMEX confidence interval 2 18 History Projections 16 14 12 1 8 6 4 2 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Richard Newell, USAEE, November 29 Source: EIA Short-Term Energy Outlook November 29 1
Richard Newell, USAEE, November 29 11 Oil prices relate to many uncertain factors Non-OPEC supply growth Inventories OPEC production decisions Spare production capacity Global Oil Prices Global economic growth Speculation, hedging, investment Geo-political risks Weather Exchange rates and inflation
EIA recently launched the Energy and Financial Markets Initiative to track all the factors affecting energy prices 1. Collection of critical energy information to improve market transparency Nov 2 Federal Register notice initiating additional petroleum storage capacity collection Forthcoming FR notice requesting views on additional data needs, particularly for clarifying relationship among inventories-prices-financials 2. Analysis of energy and financial market dynamics Oct rollout of implied volatility work Improving existing products; special reports on factors affecting prices 3. Outreach to experts and the public Nov 18 workshop; FR notices; Annual conference 4. Coordination with other Federal agencies Richard Newell, USAEE, November 29 12
Richard Newell, USAEE, November 29 13 EIA Analysis of H.R.2454 The American Clean Energy and Security Act of 29
ACESA requires 24.6- billion-metric-ton reduction in covered GHG emissions over 212-23; actual reductions could be smaller or larger depending on the use of offsets and banking behavior CO 2 -equivalent emissions, billion metric tons 9 8 7 Cumulative difference, 212-23 = 24.6 BMT 6 5 4 3 Use of Offsets =? BMT 2 1 Total Greenhouse Gas Emissions, Reference Case Covered Emissions, Reference Case Cap on Covered Emissions 25 21 215 22 225 23 Richard Newell, USAEE, November 29 Source: EIA Analysis of the American Clean Energy and Security Act of 29 14
Main cases in EIA s analysis Basic Case Name Assumptions Integrated analysis of all of the modeled provisions of ACESA. Zero Bank High Offsets High Cost No International No International / Limited Same as Basic but no carryover of allowances beyond 23. Proxy for major low- no-carbon energy technology breakthroughs with significant market impacts after 23 Same as Basic but assumes increased use of international offsets. Same as Basic but assumes that nuclear, fossil with CCS and biomass gasification costs are 5 % higher Same as Basic but assumes international offsets are too expensive or unable to meet the requirements for use Same as Basic but limits additions of nuclear, fossil with CCS and biomass to reference case levels. Also no international offsets. Richard Newell, USAEE, November 29 Source: EIA Analysis of the American Clean Energy and Security Act of 29 15
Energy sector reductions (2 bottom sections) vary with availability of offsets and low-emitting generation options Cumulative compliance, 212-23 (billion metric tons) 4 35 3 25 2 15 1 5 Energy-Related CO2 Non-Energy-CO2 covered emissions Offsets, Noncovered emissions - - - - - Required Abatement - - - - - Carbon Capture and Storage Offsets, Biosequestration Offsets, International Basic Zero Bank High Offsets High Cost No International No Int'l/Lim ited Richard Newell, USAEE, November 29 Source: EIA Analysis of the American Clean Energy and Security Act of 29 16
Projected allowance prices depend on the availability of offsets and low/no carbon electricity generation technologies (27 dollars per metric ton CO 2 -equivalent) 2 18 16 14 12 1 8 6 4 2 Basic Zero Bank High Offsets High Cost No International No Int / Limited 212 215 22 225 23 Richard Newell, USAEE, November 29 Source: EIA Analysis of the American Clean Energy and Security Act of 29 17
The electricity sector dominates projected reductions in energy-related CO 2 emissions (million metric tons CO2) 6, 5, 2433 2639 4, 3, 29 237 2, 23 Electric Pow er Transportation Industrial Buildings 1886 1831 174 1573 384 98 1952 1985 1986 1942 1915 1868 1, 987 955 855 879 88 847 815 779 561 576 534 543 543 527 519 494 27 Reference Basic Zero Bank High Offsets High Cost No International No Int / Limited Richard Newell, USAEE, November 29 Source: EIA Analysis of the American Clean Energy and Security Act of 29 18
23 generation shifts from conventional coal to nuclear, renewables, and fossil+ccs; natural gas use grows dramatically if other options are limited (billion kilowatthours) Coal Coal w /CCS Oil Natural Gas Natural Gas w /CCS Nuclear Renew able 5, 4, 3, 2, 1, 352 86 892 221 798 89 976 15 2296 121 1548 636 513 841 979 987 1147 1151 78 713 262 34 165 1593 27 Reference Basic Zero Bank High Offsets 974 923 88 293 1281 1399 1863 592 1315 89 1638 44 15 1 285 High Cost No Interational No Int / Limited Richard Newell, USAEE, November 29 Source: EIA Analysis of the American Clean Energy and Security Act of 29 19
Electricity capacity additions dominated by mix of nuclear, renewables, fossil+ccs, but natural gas is larger if those options are limited (thousand megawatts) 6 Renewable Nuclear 5 Natural Gas with CCS Natural Gas 4 Coal with CCS 219 Coal 3 2 81 119 96 93 95 116 135 25 1 125 42 69 44 45 55 53 82 46 35 41 39 6 112 Reference Basic Zero Bank High Offsets High Cost No International No Int / Limited Richard Newell, USAEE, November 29 Source: EIA Analysis of the American Clean Energy and Security Act of 29 2
Efficiency programs and higher electricity prices reduce electricity demand growth Annual percent growth in electricity use 3.% 2.5% 2.39% 2.% 27 to 23 Growth 1.5% 1.% 1.15%.9%.5%.64%.72%.72%.57%.56%.% 199 to 2 2 to 27 Reference Basic Zero Bank High Offsets High Cost No International.21% No Int / Limited Richard Newell, USAEE, November 29 Source: EIA Analysis of the American Clean Energy and Security Act of 29 21
Electricity prices stay near baseline through 225 in all but one case, then rise to higher levels through 23 2 18 16 14 12 1 (27 cents per kilowatthour, all sectors average) 8 6 4 2 Reference Basic Zero Bank High Offsets High Cost No International No Int / Limited 25 21 215 22 225 23 Richard Newell, USAEE, November 29 Source: EIA Analysis of the American Clean Energy and Security Act of 29 22
Present-value GDP losses over 212-23 range from.2% to.4%; consumption losses range from.1% to.3% in 5 analysis cases. Impacts are much higher in the No International/Limited Alternatives case. Richard Newell, USAEE, November 29 23-5 -1-15 -2-25 -3-35 -896 Cumulative Change in Real GDP -736 Undiscounted Present Value @ 4% -829-1249 Basic Zero Bank High Offset High Cost No International No Int/Limited -1179-324 Cumulative Change in Real Consumption -566-432 -523-781 Undiscounted Present Value @ 4% -717-1897 25 2 15 1 5 2 15398 15348 1538 15373 15328 Real GDP 15365 Reference Basic Zero Bank High Offset High Cost No International No Int/Limited 15286 19875 19714 19771 19755 22 23 Real Consumption 19661 19649 19422-25 -5-75 -1-125 -15-175 -415-323 -392-6 Basic Zero Bank High Offset High Cost No International No Int/Limited -496-1521 -273-196 -252-384 -323-988 15 1 5 1817 1796 181 186 1787 182 Reference Basic Zero Bank High Offset High Cost No International No Int/Limited 1753 1469 146 1433 1419 22 23 13972 14 13889
Richard Newell, USAEE, November 29 24 For more information Energy Information Administration home page www.eia.doe.gov Short-Term Energy Outlook Annual Energy Outlook International Energy Outlook Monthly Energy Review www.eia.doe.gov/emeu/steo/pub/contents.html www.eia.doe.gov/oiaf/aeo/index.html www.eia.doe.gov/oiaf/ieo/index.html www.eia.doe.gov/emeu/mer/contents.html U.S. Energy Information Administration www.eia.doe.gov