Annual Energy Outlook 2013 Future of U.S. Domestic Oil and Gas Production

1. Annual Energy Outlook 2013Future of U.S. Domestic Oil and Gas Production For International Energy Forum January 21, 2013 | Riyadh, KSA 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 January 21, 2013

3. Growth in energy production outstrips growth in consumption leading to reduction in net imports U.S. energy production and consumption quadrillion Btu Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 2035 2011 Consumption 9% 10% 19% Net imports Production Adam Sieminski January 21, 2013

4. Petroleum Adam Sieminski January 21, 2013

5. Reference case oil price initially drops and then rises steadily, but there is uncertainty about the future trajectory Annual average spot price of Brent crude oil 2011 dollars per barrel Source: EIA, Annual Energy Outlook 2013 Early Release 2011 History Projections High Oil Price Reference Low Oil Price Adam Sieminski January 21, 2013

6. 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 History Projections 2011 Tight oil Other lower 48 onshore Lower 48 offshore Alaska Adam Sieminski January 21, 2013

7. New light-duty vehicle fuel economy approaches 50 mpg by 2040 New LDV fuel efficiency miles per gallon Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 2011 Adam Sieminski January 21, 2013

8. 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 January 21, 2013

9. Transportation sector motor gasoline demand declines Transportation energy consumption by fuel quadrillion Btu Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 2011 22% Diesel 29% CNG/LNG 11% 4% 4% Jet fuel 13% 2% E85 Other 1% 4% 3% Pipeline fuel 60% Motor gasoline 47% Adam Sieminski January 21, 2013

10. 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 January 21, 2013

11. U.S. dependence on imported liquids declines U.S. liquid fuel supply million barrels per day Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 2011 2005 Consumption 37% 45% 60% Net imports Domestic supply Adam Sieminski January 21, 2013

12. Global liquids supply increases 26 percent with regional market shares relatively stable Global liquids supply million barrels per day Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 2011 44% OPEC 40% 31% Other non-OECD 34% 25% OECD 26% Adam Sieminski January 21, 2013

13. Natural Gas Adam Sieminski January 21, 2013

14. Shale gas production leads growth in 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 January 21, 2013

15. 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 January 21, 2013

16. 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% 3% Buses 1% 1% Light-duty vehicles 3% Pipeline fuel 31% 95% Adam Sieminski January 21, 2013

17. 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 History Projections 2011 Consumption Domestic supply Net imports Adam Sieminski January 21, 2013

18. Total natural gas exports nearly quadruple by 2040 in the AEO2013 Reference case U.S. natural gas exports trillion cubic feet Source: EIA, Annual Energy Outlook 2013 Early Release Exports to Mexico Exports to Canada Lower 48 LNG exports Alaska LNG exports Adam Sieminski January 21, 2013

19. Coal and Electricity Adam Sieminski January 21, 2013

20. Growth in electricity use slows, but still increases by 28% from 2012 to 2040 Period Annual Growth 1950s 9.8 1960s 7.3 1970s 4.7 1980s 2.9 1990s 2.4 2000-2011 0.9 2012-2040 0.9 U.S. electricity use percent growth (3-year rolling average) Source: EIA, Annual Energy Outlook 2013 Early Release History 2011 Projections Structural Change in Economy - Higher prices - Standards - Improved efficiency Adam Sieminski January 21, 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 January 21, 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 January 21, 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 January 21, 2013

24. U.S. continues to be a net exporter of coal million short tons Source: EIA, Annual Energy Outlook 2013 Early Release History Projections 2011 Domestic Supply Consumption Net imports Adam Sieminski January 21, 2013

25. 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 January 21, 2013

26. Energy and CO2 per dollar of GDP continue to decline; per-capita energy use also declines Energy and emission intensity index, 2005=1 Source: EIA, Annual Energy Outlook 2013 Early Release 2005 2011 History Projections Energy use per capita Energy use per 2005 dollar of GDP Carbon dioxide emissions per 2005 dollar of GDP Adam Sieminski January 21, 2013

27. 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 January 21, 2013

28. For more information U.S. Energy Information Administration home page | www.eia.gov Annual Energy Outlook | www.eia.gov/forecasts/aeo Short-Term Energy Outlook | www.eia.gov/forecasts/steo International Energy Outlook | www.eia.gov/forecasts/ieo Today In Energy | www.eia.gov/todayinenergy Monthly Energy Review | www.eia.gov/totalenergy/data/monthly Annual Energy Review | www.eia.gov/totalenergy/data/annual Adam Sieminski January 21, 2013