Current Topics at EIA€¦ · Richard Newell, USAEE, November 2009 10 0 20 40 60 80 100 120 140 160 180 200 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 WTI spot STEO WTI forecast

Richard Newell, USAEE, November 2009 1

U.S. Association for Energy Economics November 20, 2009, Washington, DC

Richard Newell, Administrator U.S. Energy Information Administration

Current Topics at EIA


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 FTEsEIA Budget by Function

53%

32%

15%

Information Collectionand Management

Analysis andForecasting

InformationDissemination


U.S. natural gas shale plays


Horizontal shale gas rig counts slowed, but have rebounded

0

50

100

150

200

250

300

Jan-

07

Mar

-07

May

-07

Jul-0

7

Sep-

07

Nov

-07

Jan-

08

Mar

-08

May

-08

Jul-0

8

Sep-

08

Nov

-08

Jan-

09

Mar

-09

May

-09

Jul-0

9

Sep-

09

Nov

-09

Barnett

Woodford

Fayetteville

Haynesville

Marcellus

Max Count Min Count

Source: Smith International


0102030405060708090

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009*

MarcellusHaynesvilleWoodfordFayettevilleBarnettAntrim

*Estimated

Billion cubic meters

Production in key gas shale plays is growing rapidly

Source: Energy Information Administration and Lippmann Consulting, Inc.


Year-end domestic gas reserves increased 3% in 2008, despite higher production and lower prices

210

220

230

240

250

260

270

280

Dry

Nat

ural

Gas

(Tcf

)

New

Fie

ldD

isco

verie

s

New

Res

ervo

irsin

Old

Fie

lds

Exte

nsio

ns

2008

Dry

Gas

Prod

uctio

n

Net

Rev

isio

ns

Adj

ustm

ents

238Tcf

245Tcf1.2

1.6 26.7

(3.1) 0.9

Net

of S

ales

& A

cqui

sitio

ns

0.2

(20.5)Prov

ed R

eser

ves

2007

Prov

ed R

eser

ves

2008

Total Discoveries 29.5

Total Reserves Additions 27.5

210

220

230

240

250

260

270

280

Dry

Nat

ural

Gas

(Tcf

)

New

Fie

ldD

isco

verie

s

New

Res

ervo

irsin

Old

Fie

lds

Exte

nsio

ns

2008

Dry

Gas

Prod

uctio

n

Net

Rev

isio

ns

Adj

ustm

ents

238Tcf

245Tcf1.2

1.6 26.7

(3.1) 0.9

Net

of S

ales

& A

cqui

sitio

ns

0.2

(20.5)Prov

ed R

eser

ves

2007

Prov

ed R

eser

ves

2008

Total Discoveries 29.5

Total Reserves Additions 27.5

Source: Energy Information Administration


New technologies also force a reassessment of gas resources

0200400600800

1,0001,2001,4001,6001,8002,000

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

PG

C R

esou

rce

Est

imat

es (T

cf)

SpeculativePossibleProbable

Source: Potential Gas Committee


02468

10121416

Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11

Henry Hub spotSTEO Henry Hub forecastNYMEX futures prices68% NYMEX confidence interval95% NYMEX confidence interval

Dollars per million Btu

Source: EIA Short-Term Energy Outlook November 2009

History Projections

Henry Hub spot prices remain highly uncertain


020406080

100120140160180200

Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11

WTI spotSTEO WTI forecastNYMEX futures prices68% NYMEX confidence interval95% NYMEX confidence interval

Dollars per million Btu

Source: EIA Short-Term Energy Outlook November 2009

History Projections

Expected near term WTI oil price is flat, but highly uncertain


Oil prices relate to many uncertain factors

Speculation, hedging, investment

Speculation, hedging, investment

Global economic growth

Global economic growth

OPEC production decisions

OPEC production decisions

Exchange rates and inflation

Exchange rates and inflation

Spare production capacity

Spare production capacity

Global Oil Prices

Global Oil Prices

Non-OPEC supply growth

Non-OPEC supply growth InventoriesInventories

Geo-political risksGeo-political risks

WeatherWeather


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


EIA Analysis of H.R.2454 The American Clean Energy and Security

Act of 2009


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1

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4

5

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8

9

2005 2010 2015 2020 2025 2030

Total Greenhouse Gas Emissions, Reference CaseCovered Emissions, Reference CaseCap on Covered Emissions

Cumulative difference, 2012-2030 = 24.6 BMT

CO2 -equivalent emissions, billion metric tons

Use of Offsets = ? BMT

ACESA requires 24.6- billion-metric-ton reduction in covered GHG emissions over 2012-2030; actual reductions could be smaller or larger

depending on the use of offsets and banking behavior

Source: EIA Analysis of the American Clean Energy and Security Act of 2009


Main cases in EIA’s analysis

Case Name Assumptions

Basic Integrated analysis of all of the modeled provisions of ACESA.

Zero BankSame as Basic but no carryover of allowances beyond 2030. Proxy for major low- no-carbon energy technology breakthroughs with significant market impacts after 2030

High Offsets Same as Basic but assumes increased use of international offsets.

High Cost Same as Basic but assumes that nuclear, fossil with CCS and biomass gasification costs are 50 % higher

No International Same as Basic but assumes international offsets are too expensive or unable to meet the requirements for use

No International / LimitedSame as Basic but limits additions of nuclear, fossil with CCS and biomass to reference case levels. Also no international offsets.



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40

Basic Zero Bank High Offsets High Cost NoInternational

NoInt'l/Limited

Energy-Related CO2 Carbon Capture and StorageNon-Energy-CO2 covered emissions Offsets, BiosequestrationOffsets, Noncovered emissions Offsets, International - - - - - Required Abatement - - - - -

Energy sector reductions (2 bottom sections) vary with availability of offsets and low-emitting generation options


Cumulative compliance, 2012-2030 (billion metric tons)


0

20

40

60

80

100

120

140

160

180

200

2012 2015 2020 2025 2030

Basic Zero Bank High Offsets

High Cost No International No Int / Limited

Projected allowance prices depend on the availability of offsets and low/no carbon electricity generation technologies


(2007 dollars per metric ton CO2 -equivalent)


561 576 534 543 543 527 519 494

987 955 855 879 880 847 815 779

2009 2037 1952 1985 1986 1942 1915 1868

2433 2639

10741886 1831 1573

384 908

0

1,000

2,000

3,000

4,000

5,000

6,000

2007 Reference Basic Zero Bank High Offsets High Cost NoInternational

No Int /Limited

Electric Pow erTransportationIndustrialBuildings

2030

The electricity sector dominates projected reductions in energy-related CO2 emissions


(million metric tons CO2)


2021 2296

8411650 1593 1281

100 285

015

513

262 304293

440 15

892976

636

708 713880

5921638

806890

15481147 1151 923

1863 890

352

798

1021 979 987974

13991315

0

1,000

2,000

3,000

4,000

5,000

2007 Reference Basic Zero Bank HighOffsets

High Cost NoInterational

No Int /Limited

Coal Coal w /CCS Oil Natural Gas Natural Gas w /CCS Nuclear Renew able

2030 generation shifts from conventional coal to nuclear, renewables, and fossil+CCS; natural gas use grows

dramatically if other options are limited


(billion kilowatthours)


Electricity capacity additions dominated by mix of nuclear, renewables, fossil+CCS, but natural gas is larger if those options are limited

(thousand megawatts)

69 35 39

125 4255 53 82 46

112

96

44 45

13581

119

93 95116

219

250

60410

100

200

300

400

500

600

Reference Basic Zero Bank High Offsets High Cost NoInternational

No Int /Limited

RenewableNuclearNatural Gas with CCSNatural Gas

Coal with CCSCoal



0.90%

0.64% 0.72% 0.72%0.57% 0.56%

0.21%

2.39%

1.15%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1990 to 2000 2000 to 2007 Reference Basic Zero Bank High Offsets High Cost NoInternational

No Int /Limited

2007 to 2030 Growth

Efficiency programs and higher electricity prices reduce electricity demand growth

Annual percent growth in electricity use



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18

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2005 2010 2015 2020 2025 2030

Reference Basic Zero Bank

High Offsets High Cost No International

No Int / Limited

Electricity prices stay near baseline through 2025 in all but one case, then rise to higher levels through 2030


(2007 cents per kilowatthour, all sectors average)


-415

-273

-323

-196

-392

-252

-600

-384-496

-323

-1521

-988

-1750

-1500

-1250

-1000

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-250

0Undiscounted Present Value @ 4%

BasicZero BankHigh OffsetHigh CostNo InternationalNo Int/Limited

Cumulative Change in Real GDP Real GDP

15398

19875

15348

19714

15380

19771

15373

19755

15328

19661

15365

19649

15286

19422

0

5000

10000

15000

20000

25000

2020 2030

ReferenceBasicZero BankHigh OffsetHigh CostNo InternationalNo Int/Limited

Cumulative Change in Real Consumption Real Consumption

-896

-566-736

-432

-829

-523

-1249

-781

-1179

-717

-3024

-1897

-3500

-3000

-2500

-2000

-1500

-1000

-500

0Undiscounted Present Value @ 4%

BasicZero BankHigh OffsetHigh CostNo InternationalNo Int/Limited

10817

14069

10796

14006

10810

14033

10806

14019

10787

13972

10802

14000

10753

13889

0

5000

10000

15000

20000

2020 2030

ReferenceBasicZero BankHigh OffsetHigh CostNo InternationalNo Int/Limited

Present-value GDP losses over 2012-2030 range from 0.2% to 0.4%; consumption losses range from 0.1% to 0.3% in 5 analysis cases. Impacts are

much higher in the No International/Limited Alternatives case.


For more information

Energy Information Administration home page www.eia.doe.gov

Short-Term Energy Outlook www.eia.doe.gov/emeu/steo/pub/contents.html

Annual Energy Outlook www.eia.doe.gov/oiaf/aeo/index.html

International Energy Outlook www.eia.doe.gov/oiaf/ieo/index.html

Monthly Energy Review www.eia.doe.gov/emeu/mer/contents.html

U.S. Energy Information Administrationwww.eia.doe.gov

Current Topics at EIA€¦ · Richard Newell, USAEE, November 2009 10 0 20 40 60 80 100 120 140 160 180 200 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 WTI spot STEO WTI forecast

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