U.S. oil and natural gas outlook New York, NY By Adam Sieminski, EIA Administrator U.S. Energy Information Administration Independent Statistics & Analysis www.eia.go v
The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources Sources: EIA derived from state administrative data collected by DrillingInfo Inc. Data are through April 2014 and represent EIA s official tight oil & shale gas estimates, but are not survey data. State abbreviations indicate primary state(s). 2
U.S. is the largest producer of petroleum and natural gas in the world estimated U.S., Russia, and Saudi Arabia petroleum and natural gas production quadrillion Btu million barrels per day of oil equivalent United States Russia Saudi Arabia natural gas petroleum 2008 2009 2010 2011 2012 2013 2014e Source: U.S. Energy Information Administration Note: Petroleum production includes crude oil, natural gas liquids, condensates, refinery processing gain, and other liquids, including biofuels; barrels per day oil equivalent were calculated using a conversion factor of 1 barrel oil equivalent=5.55 million British thermal units (Btu) 3
Growing tight oil and offshore crude oil production drive U.S. output close to historical high U.S. crude oil production million barrels per day History 2012 Projections U.S. maximum production level of 9.6 million barrels per day in 1970 Tight oil Lower 48 offshore Alaska Other lower 48 onshore Source: EIA, Annual Energy Outlook 2014 Reference case 4
U.S. transportation sector motor gasoline demand declines, while diesel fuel accounts for a growing portion of the market transportation energy consumption by fuel quadrillion Btu History 2012 Projections 2030 2040 59% Motor gasoline 47% 44% Other* 5% 5% Ethanol 4% 31% Diesel 30% 22% CNG/LNG 1% 12% Jet fuel 13% 13% 3% 3% 4% 3% Source: EIA, Annual Energy Outlook 2014 Reference case *Includes aviation gasoline, propane, residual fuel oil, lubricants, electricity, and liquid hydrogen 5
U.S. is now a major net exporter of petroleum products U.S. petroleum product net exports million barrels per day 2015 Source: EIA, Annual Energy Outlook 2014 Reference case and Short Term Energy Outlook 6
Although oil use is slightly increased in the High Resource case due to lower prices, net import dependence declines rapidly U.S. liquid fuel supply million barrels per day History 2005 Projections 2012 2016 2040 High Resource Consumption Net imports 60% 25% 40% 32% Domestic supply Source: EIA, Annual Energy Outlook 2014 Reference case and High Resource case 7
U.S. shale gas leads growth in total gas production through 2040 to reach half of U.S. output U.S. dry natural gas production trillion cubic feet billion cubic feet per day History 2012 Projections Shale gas Non-associated onshore Tight gas Non-associated offshore Associated with oil Coalbed methane Alaska Source: EIA, Annual Energy Outlook 2014 Reference case 8
U.S. natural gas consumption growth is driven by electric power, industrial, and transportation use U.S. dry gas consumption trillion cubic feet History Projections 11.0 Electric power 8.5 9.1 0.7 2.9 4.2 11.2 1.7 3.6 4.1 Industrial* Transportation** Commercial Residential Source: EIA, Annual Energy Outlook 2014 Reference case *Includes combined heat-and-power and lease and plant fuel **Includes pipeline fuel 9
U.S. manufacturing output and natural gas use grows with low natural gas prices, particularly in the near term manufacturing natural gas consumption quadrillion Btu billion cubic feet per day Refining and related Bulk chemicals Food Iron and steel Metal based durables Paper Other manufacturing Glass Aluminum Source: EIA, Annual Energy Outlook 2014 Reference case 10
U.S. natural gas use in the transportation sector grows rapidly with the largest share in freight trucks natural gas use by mode trillion Btu billion cubic feet per day Approximate crude oil equivalent, (thousand barrels per day) 2040 Freight trucks Freight rail and marine Buses Light-duty vehicles 290 71 38 9 Freight trucks 22% Light-duty vehicles Freight rail and marine Buses Source: EIA, Annual Energy Outlook 2014 Reference case 11
U.S. becomes a net exporter of natural gas in the near future U.S. dry natural gas trillion cubic feet per year History 2012 billion cubic feet per day Projections 100 Consumption 75 Domestic supply 50 Net exports 25 0-25 Source: EIA, Annual Energy Outlook 2014 Reference case 12
U.S. natural gas trade U.S. natural gas imports and exports trillion cubic feet per year History 2012 5.4 tcf of exports (14.8 bcf/day) Projections 2025 billion cubic feet per day 25 20 Pipeline imports from Canada 2.0 tcf of imports (5.4 bcf/day) Pipeline exports to Mexico Pipeline exports to Canada Lower 48 states LNG exports Alaska LNG exports LNG imports 15 10 5 0-5 -10-15 Source: EIA, Annual Energy Outlook 2014 Reference case 13
Liquefaction and regasification projects in the Americas Liquefaction, operating Liquefaction, construction Liquefaction, engineering Regasification, operating Regasification, construction Source: IHS EDIN Note: Displays larger import/export facilities only Liquefaction (bcf/d) Country Operating Construction Engineering Peru 0.6 Trinidad and Tobago 2.0 Colombia 0.1 United States 1.2 13.1 Brazil 0.4 Canada 3.3 Total 2.6 1.3 16.8 Country Argentina 0.9 Regasification (bcf/d) Operating Construction Engineering Brazil 1.2 0.8 Canada 1.0 Chile 0.6 Dominican Republic 0.2 Mexico 2.3 Puerto Rico 0.4 United States 10.2 Total 16.8 0.8 0 14
EIA / ARI assessed shale oil and shale gas resources 2013 Source: United States basins from EIA and United States Geological Survey, other basins from ARI based on data from various published studies 15
Top ten countries with technically recoverable shale resources Monterey downgrade will lower this to 45 Shale gas Rank Country Trillion cubic feet 1 China 1,115 2 Argentina 802 3 Algeria 707 4 United States 665 5 Canada 573 6 Mexico 545 7 Australia 437 8 South Africa 390 9 Russia 285 10 Brazil 245 World total 7,299 Shale oil Rank Country Billion barrels 1 Russia 75 2 United States 58 3 China 32 4 Argentina 27 5 Libya 26 6 Australia 18 7 Venezuela 13 8 Mexico 13 9 Pakistan 9 10 Canada 9 World total 345 Source: United States: EIA and USGS; Other basins: ARI. Note: ARI estimates U.S. shale gas resources at 1,161 trillion cubic feet and U.S. shale oil resources at 48 billion barrels. 16
Geopolitical implications of shale resources Shale oil is both light and sweet the rapid growth in its supply has implications for crude oil pricing relationships, the value of different refinery configurations, refinery output slates, transportation logistics, exports, and SPR operations High volumes of shale oil production, with other drivers, could diminish the market share and pricing power of key OPEC producers Russia s share of Europe s gas market could be reduced by increased European shale production China s success in shale development and its future LNG imports (and coal use) are inversely related Shorter lead times for the manufacturing model of production from shale resources may reduce price volatility (over an extended period) compared to the conventional exploration/development model 17
EIA is engaging in significant statistical analysis to determine petroleum product prices U.S. crude quality analysis (completed 5/29/14) analyzed crude quality (API gravity and sulfur) by field and STEO forecast out to 2015; working on 2016-2020 data in a modeling update Summary of outside studies comparing external studies assumptions, conclusions, and critiques Crude import analysis tool ability to better analyze company-level data, determining changes to U.S. crude import quality U.S. refinery condensate report examining refineries technical investment options to accommodate changes in U.S. crude quality IEO 2014 crude export report modeling crude exports to project the impacts on U.S. refineries, and crude oil/gasoline/diesel prices Crude export analysis study external study directed by EIA addressing major assumptions and scenarios Statistical analysis of gasoline/crude price relations analyzing the relationship between U.S. gasoline prices and domestic/international crude prices Product arbitrage study Analyzing arbitrage between international product pricing hubs September workshop: What determines petroleum product prices? - Opportunity to peer review EIA s own work, along with leading academics and market practitioners 18
For more information U.S. Energy Information Administration home page www.eia.gov Annual Energy Outlook www.eia.gov/aeo Short-Term Energy Outlook www.eia.gov/steo International Energy Outlook www.eia.gov/ieo Monthly Energy Review www.eia.gov/mer Today in Energy www.eia.gov/todayinenergy State Energy Portal www.eia.gov/state Drilling Productivity Report www.eia.gov/petroleum/drilling/ 19