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The U.S. Oil and Natural Gas Production Outlook

The U.S. Oil and Natural Gas Production Outlook. for PRG Energy Outlook Conference September 22, 2014 by Adam Sieminski, Administrator. U.S. energy use grows slowly over the projection reflecting steady growth in GDP offset by improving energy efficiency. U.S. primary energy consumption

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The U.S. Oil and Natural Gas Production Outlook

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  1. The U.S. Oil and Natural Gas Production Outlook for PRG Energy Outlook Conference September 22, 2014 by Adam Sieminski, Administrator

  2. U.S. energy use grows slowly over the projection reflecting steady growth in GDP offset by improving energy efficiency U.S. primary energy consumption quadrillion Btu Source: EIA, Annual Energy Outlook 2014 Early Release Shares of total U.S. energy 2012 history projections renewables (excluding liquid biofuels) 28% 27% natural gas 8% 9% 19% 18% coal 8% 8% nuclear 2% 1% liquid biofuels 34% 37% oil and other liquids PRG Energy Conference September 22, 2014

  3. The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources Sources: EIA derived from state administrative data collected by DrillingInfo Inc. Data are through July 2014 and represent EIA’s official tight oil & shale gas estimates, but are not survey data. State abbreviations indicate primary state(s). PRG Energy Conference September 22, 2014

  4. Onshore natural gas production continues to grow, outpacing declines in offshore and causing net imports to shrink Source: Short-Term Energy Outlook, September 2014 PRG Energy Conference September 22, 2014

  5. U.S. becomes a net exporter of natural gas in the near future Source: EIA, Annual Energy Outlook 2014 Reference case billion cubic feet per day U.S. dry natural gas trillion cubic feet per year 2012 history projections 100 75 consumption 50 domestic supply 25 0 net exports -25 PRG Energy Conference September 22, 2014

  6. Projected U.S. natural gas trade depends on assumptions regarding resources and future technology advances Source: EIA, Annual Energy Outlook 2014 Reference case and High Oil and Gas Resource case Reference case trillion cubic feet per year High Oil and Gas Resource case trillion cubic feet per year billion cubic feet per day 20 exports to Mexico 15 exports to Canada 10 lower 48 LNG exports 5 0 imports from Canada -5 LNG imports -10 PRG Energy Conference September 22, 2014

  7. Coal generation is reduced in a high gas availability case, but it does not gain much in a low gas availability case U.S. electricity net generation, Reference case trillion kilowatthours Source: EIA, Annual Energy Outlook 2014 Reference case and High Oil and Gas Resource case U.S. electricity net generation, High Resource case trillion kilowatthours 2012 2012 history projections history projections 30% 34% Natural gas Natural gas 30% 15% 12% 15% Renewables Renewables 17% 19% Nuclear 17% Nuclear Coal 37% 37% 33% Coal Petroleum and other Petroleum and other PRG Energy Conference September 22, 2014

  8. Production of crude oil and liquids is projected to grow by over 1.2 million barrels per day in both 2014 and 2015 Source: Short-Term Energy Outlook, September 2014 PRG Energy Conference September 22, 2014

  9. Source: EIA, Annual Energy Outlook 2014 Reference case and High Oil and Gas Resource case; Short Term Energy Outlook, September 2014 Resource and technology assumptions have major implications for projected U.S. crude oil production beyond the next few years High Oil and Gas Resource case million barrels per day Reference case million barrels per day 2012 2012 history projections history projections STEO September 2014 U.S. crude oil projection tight oil tight oil other lower 48 states onshore other lower 48 states onshore lower 48 states offshore lower 48 states offshore Alaska Alaska PRG Energy Conference September 22, 2014

  10. U.S. oil production growth helping to offset unplanned outages estimated unplanned crude oil production outages million barrels per day Source: EIA, Short-Term Energy Outlook, September 2014 *monthly production delta versus Jan. 2011 production level U.S. Production growth* Non- OPEC OPEC PRG Energy Conference September 22, 2014

  11. Growing U.S. oil production and rising demand in China have together made China the world’s largest net oil importer net imports for China and the United States million barrels per day Note: Net oil imports are defined as total liquid fuels consumption less domestic production Source: EIA, Short-Term Energy Outlook, September 2014 Jul-14 history projections PRG Energy Conference September 22, 2014

  12. Tight oil production will spread to nations outside of the United States and Canada over the projection tight oil production, Reference case million barrels per day Source: EIA, International Energy Outlook 2014 AEO2014 High Resource case 5.0 MMbbl/d in 2015 (STEO) 3.9 MMbbl/d in 2014 (STEO) 2.9 MMbbl/d in 2013 PRG Energy Conference September 22, 2014

  13. EIA Reference scenario shows world tight oil production increasing to almost 8 million b/d in 2025 tight oil production million barrels per day Source: EIA, Annual Energy Outlook 2014 and International Energy Outlook 2014 history projections 2012 World (IEO2014 Reference case) U.S. (AEO2014 & IEO2014 Reference case) PRG Energy Conference September 22, 2014

  14. U.S. is already a major net exporter of petroleum products U.S. petroleum product net exports million barrels per day Source: EIA, Annual Energy Outlook 2014 Reference case and Short Term Energy Outlook 2015(e) PRG Energy Conference September 22, 2014

  15. Most of the growth in production between 2011 and 2015 consists of sweet grades with API gravity of 40 or above U.S. crude oil production by type million barrels of oil per day Source: EIA, DrillingInfo, Colorado DNR, Texas RRC. http://www.eia.gov/analysis/petroleum/crudetypes/ forecast history PRG Energy Conference September 22, 2014

  16. Distillation processes and resulting products processed products for domestic use or exportable without license processed condensate finished petroleum products and other processed hydrocarbon liquids EIA Refinery Survey plant condensate other processed gas liquids complex distillation splitter stabilizer finished product streams gas processing plant fractionator separator separation via temperature gradients dry gas (exportable with order/authorization) wet gas crude oil / lease condensate (exportable under limited conditions) heater treater flash drum water field / lease separator separation via pressure changes mixed hydrocarbon wells (gas, condensate, oil) PRG Energy Conference September 22, 2014

  17. U.S. Energy Information Administration home page | www.eia.gov Annual Energy Outlook | www.eia.gov/aeo Short-Term Energy Outlook | www.eia.gov/steo International Energy Outlook | www.eia.gov/ieo Monthly Energy Review | www.eia.gov/mer Today in Energy | www.eia.gov/todayinenergy Drilling Productivity Report | www.eia.gov/petroleum/drilling/ For more information PRG Energy Conference September 22, 2014

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