Prospects for U.S. Oil & Natural Gas

www.eia.govU.S. Energy Information Administration Independent Statistics & Analysis

Prospects for U.S. Oil & Natural Gas

for

The Aspen Institute: Global Energy Forum

July 20, 2012| Aspen, CO

by

Adam Sieminski, Administrator

Primary energy use by fuel, 1980-2035…in absolute terms, all fuels grow except petroleum liquids

2

U.S. energy consumption

quadrillion Btu

Source: EIA, Annual Energy Outlook 2012

ProjectionsHistory 2010

Renewables (excluding biofuels)

Liquid biofuels

Petroleum and other liquids

Coal

Nuclear

Natural gas

21%

37%

9%

25%

7%1%

20%

32%

9%

26%

11%4%

Share of total U.S. energy use

Adam Sieminski July 20, 2012

U.S. shale gas production comprised over 30 percent of total U.S. dry production in 2011

Adam Sieminski July 20, 2012 3

shale gas production (dry)

billion cubic feet per day

Sources: Lippman Consulting, Inc. gross withdrawal estimates as of May 2012 and converted to dry production estimates with EIA-calculated average gross-to-dry shrinkage factors by state and/or shale play.

Shale gas grows from under a quarter to about half of U.S. gas production from 2010-2035

4

U.S. dry natural gas production

trillion cubic feet


Lower 48 offshore

ProjectionsHistory

Coalbed methane

Lower 48 onshore conventional

Shale gas

2010

Alaska

Tight gas


1%

12%

6%10%

22%

49%

U.S. production of shale gas in four cases, 2000-2035

5

dry natural gas production

trillion cubic feet



High EUR

Reference

Low EUR

High TRR

2010History Projections

Technically Recoverable Resource (TRR)Estimated Ultimate Recovery (EUR)


Lower 48 oil and gas shale plays and federal lands

Source: EIA

7

U.S. dry natural gas

trillion cubic feet



Consumption

Domestic production


U.S. becomes a net natural gas exporter in 2022

5%

11%Net imports, 2010

Net exports, 2035

U.S. natural gas spot prices are very low compared to prices in other regions and oil prices


Sources: EIA, Bloomberg, as of July 17, 2012

8

global spot natural gas and crude oil pricesU.S. dollars per million British thermal unit

Non-hydro renewable sources grow nearly three-fold by 2035; growth climbs nearly five-fold with a price on CO2

9

non-hydropower renewable generation

billion kilowatthours


2025 2035

Wind

Biomass

Geothermal

Solar

Municipalwaste

CoalCost

GasPrice

EconomicGrowth

CoalCost

GasPrice

EconomicGrowth


2005 2020 2035

Energy-related CO2 emissions

6.00 5.43 5.76

% change from 2005 - - -9.4% -4.0%

Energy-related CO2 emissions never get back to pre-recession levels in the AEO2012 Reference case

10

energy carbon dioxide emissions

billion metric tons




U.S. natural gas prices separate from crude oil price equivalency

11

spot market prices

2010 dollars per million Btu

Source: EIA, Bloomberg

Crude oil (West Texas Intermediate)

Natural gas (Henry Hub)


Non-OECD liquid fuels use is expected to surpasses almost flat OECD liquid fuels use in the near futuretotal liquids consumptionmillion barrels per day



Other non-OECD

OECD Americas

OECD

62

48

40%

19%

35%

41

Non-OECD

46

12Adam Sieminski July 20, 2012

Tight oil production for selected plays approaches 900,000 barrels per day in March 2012


thousand barrels of oil per day

Source: HPDI, Texas RRC, North Dakota department of mineral resources, and EIA, through March, 2012.

U.S. leads the league table for non-OPEC crude oil and liquid fuels growth 2011-13


Tight oil resource potential and production remain highly uncertain


tight oil production

million barrels per day


High TRR

Reference

High EUR

Low EUR

Technically Recoverable Resource (TRR)Estimated Ultimate Recovery (EUR)

U.S. imports of liquid fuels fall due to increased domestic production – including biofuels – and greater efficiency

16

U.S. liquid fuels consumption



EUR TRR

2025 2035

49%

5%

36%

10%

Natural gasplant liquids

Other non-petroleum

petroleumsupply

Biofuels

Net petroleumimports

Domestic

includingimports

EUREUR TRREURsupplyReference Reference


U.S. dependence on imported petroleum declines…moves even lower in various “side case” scenariosU.S. liquid fuel supply



Consumption

Domestic supply

Net petroleum imports49%

36%

60%

2005



14%Extended Policies

High TRR

Heavy-duty vehicle natural gas consumption grows substantially in an AEO2012 side case

18

heavy-duty vehicle fuel consumptionquadrillion Btu

Source: EIA, Annual Energy Outlook 2012 (heavy-duty natural gas vehicle case)

Motor Gasoline

ProjectionsHistory

Natural Gas

Diesel

2010

92%

8%

5%

64%

31%


AEO2012 scenarios show wide range of outcomes


• Reference case

• High and low economic growth

• High and low oil price

• High and low estimated ultimate recovery cases and high technically recoverable resources

• Integrated high and low technology (demand, renewables, electric power, refining, nuclear)

• Policy related: Extended Policy, No Sunset, No Greenhouse Gas Concern, carbon dioxide allowance fee ($15 and $25), and 5-year investment recovery with reference and with low natural gas prices

• Proposed light-duty vehicle CAFE standards; advanced battery technology; heavy-duty truck natural gas potential

Independence does not eliminate interdependence


“…quasi oil self-sufficiency will neither insulate the United States from the rest of the global oil market (and world oil prices), nor diminish the critical importance of the Middle East to its foreign policy.”

Source: Harvard Kennedy School, Oil: the Next Revolution, June 2012

For more information


U.S. Energy Information Administration home page | www.eia.gov

Short-Term Energy Outlook | www.eia.gov/steo

Annual Energy Outlook | www.eia.gov/aeo

International Energy Outlook | www.eia.gov/ieo

Monthly Energy Review | www.eia.gov/mer

Prospects for U.S. Oil & Natural Gas

Documents

energy useadam sieminski

primary energy use

petroleum liquids

share of total

absolute terms