Annual Energy Outlook 2013 Early Release Reference Case

www.eia.gov U.S. Energy Information Administration Independent Statistics & Analysis

Annual Energy Outlook 2014 Early Release Reference Case

for Center on Global Energy Policy Columbia University December 18, 2013 | New York, N.Y. by Howard Gruenspecht, Deputy Administrator

Key results from the AEO2014 Reference case

2

• Growing domestic production of natural gas and oil continues to reshape the U.S. energy economy, with crude oil approaching the 1970 all-time high of 9.6 million barrels per day

• Light-duty vehicle energy use declines sharply reflecting slowing growth in vehicle miles traveled and accelerated improvement in vehicle efficiency

• With continued growth in shale gas production, natural gas becomes the largest source of U.S. electric power generation, surpassing coal by 2035, and boosting production and natural gas consumption in manufacturing

• Strong growth in domestic natural gas production supports increased exports of both pipeline and liquefied natural gas

• With strong growth in domestic oil and gas production, U.S. dependence on imported fuels falls sharply

• Improved efficiency of energy use and a shift away from carbon-intensive fuels keep U.S. energy-related carbon dioxide emissions below their 2005 level through 2040

Howard Gruenspecht, December 18, 2013

0

25

50

75

100

125

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Growth in U.S. energy production outstrips growth in consumption leading to a reduction in net imports

3

U.S. energy production and consumption quadrillion Btu

Source: EIA, Annual Energy Outlook 2014 Early Release

History Projections 2012

4% Consumption

Production

Net imports 16%


3%

2034 2040

Growing tight oil and offshore crude oil production drive U.S. output close to historical high in the near future

4

U.S. crude oil production million barrels per day


0

2

4

6

8

10

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Tight oil

Alaska

Other lower 48 onshore

Lower 48 offshore

Projections History 2012


U.S. maximum production level of 9.6 million barrels per day in 1970

0

5

10

15

20

25

30

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Transportation sector motor gasoline demand declines, while diesel fuel accounts for a growing portion of the market

5

transportation energy consumption by fuel quadrillion Btu




59% Motor gasoline

Jet fuel

CNG/LNG

12% 13% 3%

44%

31%

3% 4% Other

Diesel 22%

2030

47%

13% 3%

30%

1%

2040

Ethanol 4% 5%

5%

Shale gas leads U.S. production growth

6

U.S. dry natural gas production trillion cubic feet


0

10

20

30

40

50

60

70

80

90

100

0

5

10

15

20

25

30

35

40

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Associated with oil Coalbed methane

Tight gas

Shale gas

Alaska Non-associated offshore

Non-associated onshore


Adam Sieminski, December 16, 2013

billion cubic feet per day

Electricity generation from natural gas surpasses coal

0

500

1,000

1,500

2,000

2,500

2005 2010 2015 2020 2025 2030 2035 2040

electricity generation by fuel billion kilowatthours

7

History Projections

Coal

Natural gas


2012


Manufacturing output and natural gas use grow with low natural gas prices, particularly in the near term

8

manufacturing natural gas consumption quadrillion Btu



0

4

8

12

16

20

24

0

1

2

3

4

5

6

7

8

9

2010 2025 2040Aluminum Glass

Iron and steel

Paper

Food

Refining and related

Bulk chemicals

Other

Metal based


durables

manufacturing

U.S. natural gas imports and exports trillion cubic feet per year

-6

-4

-2

0

2

4

6

8

10

2000 2005 2010 2015 2020 2025 2030 2035 2040

Alaska LNG exports

Pipeline exports to Mexico

Pipeline exports to Canada

Lower 48 states LNG exports

Pipeline imports from Canada

LNG imports


Howard Gruenspecht, December 18, 2013 9

-15

-10

-5

0

5

10

15

20

25


5.4 tcf of exports (14.8 bcf/day)

2.0 tcf of imports (5.4 bcf/day)

U.S. natural gas gross exports exceed 5 tcf in 2025

Projections History 2012 2025

U.S. petroleum product imports and exports million barrels per day

-4

-3

-2

-1

0

1

2

3

4

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040

Other petroleum product imports

Distillate exports

Motor gasoline exports

Other petroleum product exports

Distillate imports

Motor gasoline imports


Howard Gruenspecht, December 18, 2013 10

The United States remains a net exporter of petroleum products


Total petroleum product net exports

Energy-related CO2 emissions remain below the 2005 level over the projection period

11

carbon dioxide emissions billion metric tons


0

1

2

3

4

5

6

7

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040



Energy-related carbon dioxide emissions are 9% below the 2005 level in 2020 and 7% below the

2005 level in 2040.

Petroleum, other liquids, and natural gas – additional perspective

12 Howard Gruenspecht, December 18, 2013

U.S. dependence on imported liquids declines, particularly in the near term

13

U.S. liquid fuel supply million barrels per day


0

5

10

15

20

25

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Consumption

Domestic supply

Net imports 40%

32%


60%


25%

2016 2040

Increased production of tight oil and greater fuel efficiency drive decline in petroleum and other liquids imports

14

0

5

10

15

20

25

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040Note: “Other” includes refinery gain, biofuels production, all stock withdrawals, and other domestic sources of liquid fuels Source: EIA, Annual Energy Outlook 2014 Early Release

Projections History

Natural gas plant liquids

Crude oil production (excluding tight)

Net petroleum and biofuel imports

32%

17%

12%

23%

12%

13%

40%

2012

Other

23%

Tight oil production

16%

12%

U.S. liquid fuels supply million barrels per day


14%

25%

2016

25%

12%

24%

2040

0.0

0.5

1.0

1.5

2.0

2.5

0

100

200

300

400

500

600

700

800

900

2010 2015 2020 2025 2030 2035 2040

Natural gas use in the transportation sector grows rapidly with the largest share in freight trucks

15

natural gas use by mode trillion Btu



Freight trucks

Buses

Freight rail and marine Light-duty vehicles

22%


Approximate crude oil equivalent, (thousand barrels per day) 2040

Freight trucks Freight rail and marine Buses Light-duty vehicles

290 71 38

9

U.S. natural gas prices remain well below crude oil prices

16

0

5

10

15

20

25

30

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

energy spot prices 2012 dollars per million Btu



Henry Hub spot price


Brent crude oil spot price

2018 2040

Ratio: 7.1

Oil to gas price ratio:

3.4

Ratio: 3.2

U.S. becomes a net exporter of natural gas in the near future

17

U.S. dry natural gas trillion cubic feet per year



-10

0

10

20

30

40

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040


Consumption

Domestic supply

Net exports

100

75

50

25

0

-25


18

0

5

10

15

20

25

30

35

2005 2012 2020 2025 2030 2035 2040

U.S. dry gas consumption trillion cubic feet


Projections History

Industrial*

Electric power

Commercial

Residential

Transportation**

11.2

4.1

1.7

11.0

3.6

9.1

4.2

0.7

8.5

2.9

*Includes combined heat-and-power and lease and plant fuel **Includes pipeline fuel

Natural gas consumption growth is driven by electric power, industrial, and transportation use


Electricity


0

2

4

6

8

10

12

14

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040

Growth in electricity use slows, but still increases by 28% from 2012 to 2040

20

U.S. electricity use percent growth (3-year rolling average)


Projections

History 2012

Period Annual Growth__ Electricity use GDP 1950s 9.8 4.1 1960s 7.3 4.4 1970s 4.7 3.2 1980s 2.9 3.0 1990s 2.4 3.2 2000-2012 0.7 1.8 2013-2040 0.9 2.4


Gross domestic product

Electricity use

Over time the electricity mix gradually shifts to lower-carbon options, led by growth in natural gas and renewable generation

21

electricity net generation trillion kilowatthours per year


0

1

2

3

4

5

6

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

13%

30%

19%

37%

12%

1% Nuclear Oil and other liquids

Natural gas

Coal

Renewables

2012 Projections History

16%

16%

32%

35%

<1%


1993

11% 13%

19%

53%

4%

30%

17%

37%

15%

1%

2025 2040

Non-hydro renewable generation more than doubles between 2012 and 2040

22

non-hydropower renewable generation billion kilowatthours per year


0

100

200

300

400

500

600

2001 2005 2010 2015 2020 2025 2030 2035 2040

Wind

Solar

Geothermal Municipal waste

Biomass

Industrial CHP

Power sector

2012 Projections History


For more information

23

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

State Energy Portal | www.eia.gov/state


http://www.eia.gov/

http://www.eia.gov/forecasts/aeo

http://www.eia.gov/forecasts/steo

http://www.eia.gov/forecasts/ieo

http://www.eia.gov/todayinenergy

http://www.eia.gov/totalenergy/data/monthly

http://www.eia.gov/state

Supplemental slides


U.S. production grows rapidly, particularly natural gas, renewables, and liquids in the near term

25

0

20

40

60

80

100

120

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

U.S. energy production quadrillion Btu



26%

21%

31%

11%

10%

22%

38%

20%

12%

8% Nuclear

Crude oil and natural gas plant liquids

Natural gas

Coal

Renewables


2025

23%

24%

34%

11%

8%

2040

U.S. energy use grows slowly over the projection reflecting steady growth in GDP offset by improving energy efficiency

26

0

20

40

60

80

100

120

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

U.S. primary energy consumption quadrillion Btu



37%

18%

27%

8%

8%

1%

32%

10%

18%

30%

8% 2%

Nuclear

Oil and other liquids

Natural gas

Coal

Renewables (excluding liquid biofuels)


2025

34%

19%

27%

8%

9%

2% Liquid biofuels

2040

CO2 per dollar of GDP declines faster than energy use per dollar of GDP reflecting the shift to lower carbon fuels

27

0.0

0.5

1.0

1.5

2.0

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

energy and emission intensity index, 2005=1



Carbon dioxide emissions per 2005 dollar GDP

Energy use per 2005 dollar of GDP

Energy use per capita

2005


Coal regains some competitive advantage relative to natural gas over time on a national average basis

28

0

2

4

6

8

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

ratio of natural gas price to steam coal price


0

2

4

6

8

10

12

1990 2000 2010 2020 2030 2040

History Projections

2012 2012 dollars per Btu


Competitive parity

Energy prices to the electric power sector

Coal

Natural gas


Light-duty vehicle travel is lower in AEO2014 than in AEO2013

29

light-duty vehicle miles traveled billion miles



0

1,000

2,000

3,000

4,000

1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

AEO2013

AEO2014


Light-duty vehicle liquids consumption is lower primarily due to lower growth in vehicle miles traveled

30

light-duty vehicle liquids consumption quadrillion Btu


0

5

10

15

20

2010 2015 2020 2025 2030 2035 2040

AEO2013

AEO2014


VMT per licensed driver decreases until 2024 in AEO2014 and is much lower than in AEO2013 due to consideration of age cohorts

31

vehicle miles traveled per licensed driver thousand miles



0

2

4

6

8

10

12

14

1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

AEO2014

AEO2013

History Projection 2012

Global liquids supply increases by almost one-third with OPEC’s share relatively stable

32

0

25

50

75

100

125

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

global liquids supply million barrels per day



OPEC

Other non-OECD

OECD

44%

22%

34%

41%

25%

34%


2025

41%

25%

35%

2040

Why long-term projections might/could/will be wrong

33

• Different relative fuel prices

• Faster / slower economic and energy demand growth

• Changing policies and regulations

• Changing consumer preferences

• Faster / slower technology progress

• Technology breakthroughs


Documents

Annual Energy Outlook 2013 Early Release Reference Case