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U.S. Energy Outlook

This article discusses the projections for U.S. energy production and consumption until 2040, highlighting the rise in crude oil production, more stringent fuel economy standards for motor gasoline consumption, and the U.S. becoming a net exporter of natural gas in the early 2020s. It also mentions the slow growth of energy consumption, reflecting improving energy efficiency and a slow economic recovery.

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U.S. Energy Outlook

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  1. U.S. Energy Outlook For Baltimore Chartered Financial Analyst Society April 08, 2013 | Baltimore, MD By Adam Sieminski, Administrator

  2. Annual Energy Outlook 2013 projections to 2040 • Growth in energy production outstrips consumption growth • Crude oil production rises sharply over the next decade • Motor gasoline consumption reflects more stringent fuel economy standards • The U.S. becomes a net exporter of natural gas in the early 2020s • U.S. energy-related carbon dioxide emissions remain below their 2005 level through 2040 Adam Sieminski, Baltimore CFA Society April 08, 2013

  3. U.S. energy use grows slowly over the projection reflecting improving energy efficiency and slow, extended economic recovery Source: EIA, Annual Energy Outlook 2013 Early Release U.S. primary energy consumption quadrillion Btu Shares of total U.S. energy History Projections 2000 2011 28% Natural gas 24% 26% 11% 6% 8% Renewables (excluding liquid biofuels) 8% 9% 8% Nuclear 2% 1% 23% Liquid biofuels 19% 20% Coal 39% 36% 32% Oil and other liquids Adam Sieminski, Baltimore CFA Society April 08, 2013

  4. U.S. Shale Gas Adam Sieminski, Baltimore CFA Society April 08, 2013

  5. An average well in shale gas and other continuous resource plays can also have steep decline curves, which require continued drilling to grow production million cubic feet per year Source: EIA, Annual Energy Outlook 2012 1 Adam Sieminski, Baltimore CFA Society April 08, 2013

  6. For example: Oil production by monthly vintage of wells in the Williston Basin Source: DrillingInfo history through August 2012, EIA Short-Term Energy Outlook, February 2013 forecast Adam Sieminski, Baltimore CFA Society April 08, 2013

  7. Domestic production of shale gas has grown dramatically over the past few years shale gas production (dry) billion cubic feet per day Sources: LCI Energy Insight gross withdrawal estimates as of January 2013 and converted to dry production estimates with EIA-calculated average gross-to-dry shrinkage factors by state and/or shale play. Adam Sieminski, Baltimore CFA Society April 08, 2013

  8. Shale gas leads growth in total gas production through 2040 U.S. dry natural gas production trillion cubic feet Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 2011 Shale gas Tight gas Non-associated offshore Alaska Coalbed methane Associated with oil Non-associated onshore Adam Sieminski, Baltimore CFA Society April 08, 2013

  9. Natural gas consumption is quite dispersed with electric power, industrial, and transportation use driving future demand growth U.S. dry gas consumption trillion cubic feet Source: EIA, Annual Energy Outlook 2013 Early Release History Projections *Includes combined heat-and-power and lease and plant fuel. **Includes pipeline fuel. Electric power 32% 31% Industrial* 33% 33% 2% Gas to liquids 6% 3% Transportation** 13% 12% Commercial 19% 14% Residential Adam Sieminski, Baltimore CFA Society April 08, 2013

  10. Growth of natural gas in transportation led by heavy duty trucks (LNG) and gas to liquids (diesel)… marine and rail to come? U.S. natural gas consumption quadrillion Btu Note: Gas to liquids includes heat, power, and losses. Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 2011 28% Gas to liquids Freight trucks 38% 1% Buses 1% 3% 1% Light-duty vehicles 3% Pipeline fuel (for transporting natural gas) 31% 95% Adam Sieminski, Baltimore CFA Society April 08, 2013

  11. The U.S. is projected to be both an exporter and importer of natural gas U.S. natural gas imports and exports trillion cubic feet Source: EIA, Annual Energy Outlook 2013 Early Release Exports to Mexico Exports to Canada Lower 48 states LNG exports Alaska LNG exports Imports from Canada LNG imports Adam Sieminski, Baltimore CFA Society April 08, 2013

  12. Domestic natural gas production grows faster than consumption and the U.S. becomes a net exporter of natural gas around 2020 U.S. dry gas trillion cubic feet Source: EIA, Annual Energy Outlook 2013 Early Release 2011 History Projections Consumption Domestic supply Net imports Adam Sieminski, Baltimore CFA Society April 08, 2013

  13. U.S. Tight Oil Adam Sieminski, Baltimore CFA Society April 08, 2013

  14. Domestic production of tight oil has grown dramatically over the past few years tight oil production for select plays million barrels per day Source: Drilling Info (formerly HPDI), Texas RRC, North Dakota department of mineral resources, and EIA, through October 2012. Adam Sieminski, Baltimore CFA Society April 08, 2013

  15. U.S. tight oil production leads a growth in domestic production of 2.6 million barrels per day between 2008 and 2019 U.S. crude oil production million barrels per day Source: EIA, Annual Energy Outlook 2013 Early Release and Short-Term Energy Outlook, March 2013 2011 History Projections STEO March 2013 U.S. crude oil projection Tight oil Other lower 48 states onshore Lower 48 states offshore Alaska Adam Sieminski, Baltimore CFA Society April 08, 2013

  16. U.S. petroleum product exports exceeded imports in 2011 for first time in over six decades annual U.S. net exports of total petroleum products, 1949 – 2011 million barrels per day Source: EIA, Petroleum Supply Monthly net product exporter Adam Sieminski, Baltimore CFA Society April 08, 2013

  17. U.S. dependence on imported liquids depends on both supply and demand U.S. liquid fuel supply million barrels per day Source: EIA, Annual Energy Outlook 2013 Early Release and Short-Term Energy Outlook, March 2013 History Projections 2014 2012 Consumption 32% STEO forecast for 2014 37% 40% Net imports Domestic supply Adam Sieminski, Baltimore CFA Society April 08, 2013

  18. Light-duty vehicle liquids consumption is lower primarily due to more stringent CAFE standards light-duty vehicle liquids consumption million barrels per day Source: EIA, Annual Energy Outlook 2013 Early Release AEO2012 AEO2013 Adam Sieminski, Baltimore CFA Society April 08, 2013

  19. Global tight oil production comparisons IEO2013 DRAFT BP Energy Outlook 2030 million barrels per day Source: Preliminary International Energy Outlook 2013 and BP Energy Outlook 2030, www.bp.com/energyoutlook Adam Sieminski, Baltimore CFA Society April 08, 2013

  20. U.S. Coal and Electricity Adam Sieminski, Baltimore CFA Society April 08, 2013

  21. Over time the electricity mix shifts toward natural gas and renewables, but coal remains the largest fuel source U.S. electricity net generation trillion kilowatthours Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 1993 2011 30% Natural gas 25% 16% Renewables 13% 13% 11% 19% 17% Nuclear 19% 35% 42% 53% Coal Oil and other liquids 4% 1% 1% Adam Sieminski, Baltimore CFA Society April 08, 2013

  22. Changing electricity generation mix in AEO2012 reference case and carbon fee allowance side cases U.S. electricity net generation trillion kilowatthours Source: EIA, Annual Energy Outlook 2012 2012 Reference Case $15 Carbon Fee $25 Carbon Fee 2010 24% Natural gas 28% Natural gas 34% Natural gas 34% 10% Renewables 15% 23% Renewables 22% 20% Nuclear 18% Renewables Nuclear 27% 38% Nuclear 45% Coal 38% Coal 16% Coal 4% Adam Sieminski, Baltimore CFA Society April 08, 2013

  23. Coal regains some competitive advantage relative to natural gas over time on a national average basis ratio of natural gas price to steam coal price Source: EIA, Annual Energy Outlook 2013 Early Release Energy prices to the electric power sector 2011 dollars per Btu 2011 History 2011 Projections Natural gas Coal Competitive parity Projections History Adam Sieminski, Baltimore CFA Society April 08, 2013

  24. U. S. electricity use and economic growth, 1950-2040 Percent growth (3-year compounded annual growth rate) Source: EIA, Annual Energy Outlook 2013 Early Release 2011 History Projections Electricity Use 2011 – 2040 average 2.4% GDP 0.9% Adam Sieminski, Baltimore CFA Society April 08, 2013

  25. U.S. Renewables and Biofuels Adam Sieminski, Baltimore CFA Society April 08, 2013

  26. Non-hydro renewable generation more than doubles between 2011 and 2040 non-hydropower renewable generation billion kilowatthours per year Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 2011 Advanced biofuels cogeneration (not visible) Wind Biomass Power sector Industrial CHP Solar Geothermal Waste Adam Sieminski, Baltimore CFA Society April 08, 2013

  27. Despite recent growth, ethanol and biodiesel provide a modest share of U.S. motor fuels biofuel consumption Source: EIA, Short-Term Energy Outlook, November 2012 Ethanol share of gasoline Biodiesel share of distillate Adam Sieminski, Baltimore CFA Society April 08, 2013

  28. Biofuels grow at a slow rate due to lower near-term crude oil prices and slow growth in sales of high-percentage ethanol blends such as E85 renewable fuel standard credits billions ethanol-equivalent gallons Sources: EIA, Annual Energy Outlook 2013 Early Release and EIA, Annual Energy Outlook 2012 Legislated RFS in 2022 RFS with adjustments under CAA Sec.211(o)(7) Biodiesel Net imports Other Advanced Cellulosic biofuels Corn ethanol Adam Sieminski, Baltimore CFA Society April 08, 2013

  29. In the AEO2013 Reference case, energy-related CO2 emissions never get back to their 2005 level carbon dioxide emissions billion metric tons Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 2005 2011 AEO2013 Adam Sieminski, Baltimore CFA Society April 08, 2013

  30. 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 Today in Energy | www.eia.gov/todayinenergy For more information Adam Sieminski, Baltimore CFA Society April 08, 2013

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