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Prospects for U.S. Oil & Natural Gas

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. U.S. energy consumption quadrillion Btu.

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Prospects for U.S. Oil & Natural Gas

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  1. Prospects for U.S. Oil & Natural Gas for The Aspen Institute: Global Energy Forum July 20, 2012| Aspen, CO by Adam Sieminski, Administrator

  2. Primary energy use by fuel, 1980-2035…in absolute terms, all fuels grow except petroleum liquids U.S. energy consumption quadrillion Btu Source: EIA, Annual Energy Outlook 2012 History Projections 2010 Renewables (excluding biofuels) 11% 7% 4% 1% Liquid biofuels 26% Natural gas 25% 9% 9% Nuclear 21% 20% Coal Petroleum and other liquids 37% 32% Share of total U.S. energy use Adam Sieminski July 20, 2012

  3. U.S. shale gas production comprised over 30 percent of total U.S. dry production in 2011 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. Adam Sieminski July 20, 2012

  4. Shale gas grows from under a quarter to about half of U.S. gas production from 2010-2035 U.S. dry natural gas production trillion cubic feet Source: EIA, Annual Energy Outlook 2012 History Projections 2010 49% Shale gas Tight gas 22% Lower 48 onshore conventional 12% 10% Lower 48 offshore 6% Alaska Coalbed methane 1% Adam Sieminski July 20, 2012

  5. U.S. production of shale gas in four cases, 2000-2035 dry natural gas production trillion cubic feet Source: EIA, Annual Energy Outlook 2012 History Projections 2010 High TRR High EUR Reference Low EUR Technically Recoverable Resource (TRR) Estimated Ultimate Recovery (EUR) Adam Sieminski July 20, 2012

  6. Lower 48 oil and gas shale plays and federal lands Source: EIA Adam Sieminski July 20, 2012

  7. U.S. becomes a net natural gas exporter in 2022 U.S. dry natural gas trillion cubic feet Source: EIA, Annual Energy Outlook 2012 History Projections 2010 Net exports, 2035 5% Net imports, 2010 11% Consumption Domestic production Adam Sieminski July 20, 2012

  8. 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 global spot natural gas and crude oil prices U.S. dollars per million British thermal unit Adam Sieminski July 20, 2012

  9. Non-hydro renewable sources grow nearly three-fold by 2035; growth climbs nearly five-fold with a price on CO2 non-hydropower renewable generation billion kilowatthours Source: EIA, Annual Energy Outlook 2012 2025 2035 Wind Biomass Geothermal Solar Municipal waste Coal Cost Gas Price Economic Growth Coal Cost Gas Price Economic Growth Adam Sieminski July 20, 2012

  10. Energy-related CO2 emissions never get back to pre-recession levels in the AEO2012 Reference case energy carbon dioxide emissions billion metric tons Source: EIA, Annual Energy Outlook 2012 History Projections 2005 2010 Adam Sieminski July 20, 2012

  11. U.S. natural gas prices separate from crude oil price equivalency spot market prices 2010 dollars per million Btu Source: EIA, Bloomberg Crude oil (West Texas Intermediate) Natural gas (Henry Hub) Adam Sieminski July 20, 2012

  12. Non-OECD liquid fuels use is expected to surpasses almost flat OECD liquid fuels use in the near future total liquids consumptionmillion barrels per day Source: EIA, Annual Energy Outlook 2012 2010 Projections History 62 Non-OECD 48 46 OECD 40% 41 Other non-OECD 35% 19% OECD Americas Adam Sieminski July 20, 2012

  13. 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. Adam Sieminski July 20, 2012

  14. U.S. leads the league table for non-OPEC crude oil and liquid fuels growth 2011-13 Adam Sieminski July 20, 2012

  15. Tight oil resource potential and production remain highly uncertain tight oil production million barrels per day Source: EIA, Annual Energy Outlook 2012 Technically Recoverable Resource (TRR) Estimated Ultimate Recovery (EUR) High TRR High EUR Reference Low EUR Adam Sieminski July 20, 2012

  16. U.S. imports of liquid fuels fall due to increased domestic production – including biofuels – and greater efficiency petroleum U.S. liquid fuels consumption million barrels per day Source: EIA, Annual Energy Outlook 2012 EUR TRR 2025 2035 Natural gas plant liquids Other non- Reference supply petroleum Net petroleum Reference supply EUR Biofuels EUR TRR imports including Domestic imports EUR 49% 36% 10% 5% Adam Sieminski July 20, 2012

  17. U.S. dependence on imported petroleum declines…moves even lower in various “side case” scenarios U.S. liquid fuel supply million barrels per day Source: EIA, Annual Energy Outlook 2012 History Projections 2005 2010 Consumption Extended Policies 14% 36% High TRR 60% 49% Net petroleum imports Domestic supply Adam Sieminski July 20, 2012

  18. Heavy-duty vehicle natural gas consumption grows substantially in an AEO2012 side case heavy-duty vehicle fuel consumptionquadrillion Btu Source: EIA, Annual Energy Outlook 2012 (heavy-duty natural gas vehicle case) History Projections 2010 Motor Gasoline 8% Natural Gas 31% 5% Diesel 92% 64% Adam Sieminski July 20, 2012

  19. 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 Adam Sieminski July 20, 2012

  20. 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 Adam Sieminski July 20, 2012

  21. 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 For more information EIA Information Center InfoCtr@eia.gov Our average response time is within three business days. (202) 586-8800 24-hour automated information line about EIA and frequently asked questions. Adam Sieminski July 20, 2012

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