Energy outlook - Bank of Canada · Energy outlook . For . Government of Canada . ... 2025. 2030. 2035. 2040. History . 2012 . ... significantly diminish the market share and pricing

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

Energy outlook

For Government of Canada July 21, 2014 | Ottawa, Ontario, Canada By Adam Sieminski, EIA Administrator

The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources

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0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0Eagle Ford (TX)Bakken (MT & ND)Spraberry (TX & NM Permian)Bonespring (TX & NM Permian)Wolfcamp (TX & NM Permian)Delaware (TX & NM Permian)Yeso-Glorieta (TX & NM Permian)Niobrara-Codell (CO, WY)HaynesvilleMarcellusWoodford (OK)Granite Wash (OK & TX)Austin Chalk (LA & TX)Monterey (CA)

U.S. tight oil production million barrels of oil per day

0

5

10

15

20

25

30

35

40Marcellus (PA & WV)Haynesville (LA & TX)Eagle Ford (TX)Fayetteville (AR)Barnett (TX)Woodford (OK)Bakken (ND)Antrim (MI, IN, & OH)Rest of US 'shale'

U.S. dry shale gas production billion cubic feet per day

Sources: EIA derived from state administrative data collected by DrillingInfo Inc. Data are through June 2014 and represent EIA’s official tight oil & shale gas estimates, but are not survey data. State abbreviations indicate primary state(s).

Government of Canada July 21, 2014

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0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Jan-2012 Jul-2012 Jan-2013 Jul-2013 Jan-2014 Jul-2014

Other Non-OPEC

Syria

Sudan / S. Sudan

Iraq

Nigeria

Libya

Iran

U.S. oil production growth helping to offset unplanned outages

3

estimated unplanned crude oil production outages million barrels per day

Source: EIA, Short-Term Energy Outlook, July 2014 *Monthly production delta versus Jan. 2011 production level

Non- OPEC

OPEC


U.S. Production growth*

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30

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50.0

60.0

U.S. is the largest producer of petroleum and natural gas in the world

Government of Canada July 21, 2014 4

estimated U.S., Russia, and Saudi Arabia petroleum and natural gas production quadrillion Btu million barrels per day of oil equivalent

United States

Russia

Saudi Arabia

petro-leum

natural gas

2008 2009 2010 2011 2012 2013 2014e Source: U.S. Energy Information Administration Note: Petroleum production includes crude oil, natural gas liquids, condensates, refinery processing gain, and other liquids, including biofuels; barrels per day oil equivalent were calculated using a conversion factor of 1 barrel oil equivalent=5.55 million British thermal units (Btu)

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

5

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

Source: EIA, Annual Energy Outlook 2014 Reference case


-10

0

10

20

30

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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Projections History 2012

Consumption

Domestic supply

Net exports

100

75

50

25

0

-25

billion cubic feet per day

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2

4

6

8

10

12

14

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1960 1970 1980 1990 2000 2010 2020 2030 2040

High Oil and Gas Resource

U.S. crude oil production exceeds 13 million b/d in High Oil and Gas Resource case


U.S. crude oil production in three cases million barrels per day

2012 History Projections

Reference

Low Oil and Gas Resource

U.S. maximum production level: 9.6 million barrels/day (1970)

Source: EIA, Annual Energy Outlook 2014 Reference case, High Oil and Gas Resource case, and Low Oil and Gas Resource case

Consequences of increased domestic oil production

• Additional production of light oil over the past several years has for the most part been absorbed by reducing imports of similar grades oils

• Other responses include: – Increased crude oil exports (244,000 b/d in first quarter 2014)

– Increased average API gravity of crude inputs to domestic refining

– Increased refinery runs – and product exports

• Future options include: – Continued shifts in the refinery input mix

– Added splitters to convert light crude into a mix of heavier fractions to feed domestic refineries and light products valued in other markets

– Continued increases in crude oil exports

7 Government of Canada July 21, 2014

Imports of light crude fell from 1.7 million b/d in 2011 to 0.6 million b/d during first two months of 2014 U.S. crude oil imports million barrels of oil per day


• Of the total 1.5 million b/d decline in crude oil imports between 2011 and 2013, nearly 50% was light crude (API gravity 35+)

• API 40+ imports fell from 0.6 million b/d in 2011 to 0.2 million b/d in 2013, and averaged only 0.1 million b/d during the first two months of 2014

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2010 2011 2012 2013 2014*

Light (≥ 35 API) Heavy (< 35 API)

Note: 2014 data is January and February only. Source: U.S. Energy Information Administration, Petroleum Supply Monthly


U.S. crude exports rise to highest level in 15 years

Source: U.S. Energy Information Administration, Petroleum Supply Monthly Note: 2014 regional data are through March. PADD denotes Petroleum Administration for Defense District

http://www.eia.gov/todayinenergy/detail.cfm?id=4890

Roughly 96% of the growth in production between 2011 and 2013 consisted of sweet grades with API gravity of 40 or above

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2011 2012 2013 2014 2015

API 50+API 40-50API 35-40API 27-35API below 27

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

http://www.eia.gov/analysis/petroleum/crudetypes/

U.S. petroleum product net exports million barrels per day

-3

-2

-1

0

1

2

3

1950 1960 1970 1980 1990 2000 2010

Source: EIA, Annual Energy Outlook 2014 Reference case and Short Term Energy Outlook


U.S. is now a major net exporter of petroleum products

2015

Rail car loadings of crude oil and petroleum products in the U.S. and Canada have significantly increased since 2010


Note: Data are weekly average originations for each month, are not seasonally adjusted and reflect revisions to the original reporting Source: AAR

U.S. and Canadian crude oil and petroleum products average weekly carloads

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4000

8000

12000

16000

U.S.

Canada

Existing crude-by-rail infrastructure in the United States


Source: U.S. Energy Information Administration Note: Data as of March 2014. PADD denotes Petroleum Administration for Defense District.

Bakken rail outflow capacity totaled 965,000 barrels per day (b/d) at the end of 2013, compared to 515,000 b/d of pipeline capacity. Eagle Ford rail outflow is over 200,000 b/d.


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200

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1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

North American net imports of oil and natural gas

North American net imports, 1965-2013 million metric tons

net oil imports

net gas imports

Source: BP Statistical Review of World Energy 2014

Shale oil and gas in a world energy context


EIA / ARI assessed shale oil and shale gas resources 2013


Source: United States basins from EIA and United States Geological Survey, other basins from ARI based on data from various published studies

Top ten countries with technically recoverable shale resources

Shale oil rank country billion barrels

1 Russia 75

2 United States 58

3 China 32

4 Argentina 27

5 Libya 26

6 Venezuela 13

7 Mexico 13

8 Pakistan 9

9 Canada 9

10 Indonesia 8

World total 345

Shale gas rank country trillion cubic feet

1 China 1,115

2 Argentina 802

3 Algeria 707

4 United States 665

5 Canada 573

6 Mexico 545

7 Australia 437

8 South Africa 390

9 Russia 285

10 Brazil 245

World total 7,299

Note: ARI estimates U.S. shale oil resources at 48 billion barrels and U.S. shale gas resources at 1,161 trillion cubic feet. Source: United States: EIA and USGS; Other basins: ARI.


Geopolitical implications of shale resources • Shale oil is both light and sweet — the rapid growth in its supply has

implications for crude oil pricing relationships, the value of different refinery configurations, refinery output slates, and the correspondence between SPR holdings and U.S. crude imports

• China’s success in shale development and its future LNG imports (and coal use) are inversely related

• Russia’s share of Europe’s gas market could be reduced by increased European shale production

• High volumes of shale oil production, with other drivers, could significantly diminish the market share and pricing power of key OPEC producers

• Shorter lead times for the ‘manufacturing’ model of production from shale resources may reduce price volatility (over an extended period) compared to the historical ‘exploration/development’ model for conventional resources


Natural gas infrastructure in the northeastern U.S. and eastern Canada


Source: EIA and Ventyx

Liquefied natural gas marine terminals in the Northeast

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Source: EIA; Canada-Nova Scotia Offshore Petroleum Board; Ventyx; company websites


Everett Year in service: 1971 Storage capacity: 3.5 Bcf Sendout capacity: 0.9 Bcf/d 2013 average total sendout: 0.2 Bcf/d

Canaport Year in service: 2009 Storage capacity: 10.5 Bcf Sendout capacity: 1.2 Bcf/d 2013 average total sendout: 0.1 Bcf/d

http://www.cnsopb.ns.ca/offshore-activity/offshore-projects/sable-offshore-energy-project

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Source: Ventyx, and Canada-Nova Scotia Offshore Petroleum Board


LNG imports are decreasing at Canaport and Everett terminals million cubic feet per day

http://www.cnsopb.ns.ca/offshore-activity/offshore-projects/sable-offshore-energy-project

LNG export projects in eastern Canada

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Source: Company websites


Goldboro LNG Terminal H-Energy LNG Terminal

Planned year in service 2019 2020 Liquefaction capacity 1.3 Bcf/d 0.6 Bcf/d Storage capacity 14.6 Bcf N/A Contract 20 year supply deal with E. On AG N/A

Supply sources Marcellus, eastern Canada N/A

NEB approval Under review N/A

Maine

World energy markets


Renewable energy and nuclear power are the fastest growing sources of world energy consumption out to 2040 world energy consumption by fuel quadrillion Btu

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150

200

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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

liquids (including biofuels)

renewables (excluding biofuels)

natural gas

coal

nuclear

History Projections 2010

34%

28%

22%

11%

5%

28% 27%

23%

7%

15%

share of world total


Source: EIA, International Energy Outlook 2013

By 2040, China’s energy use will be double the U.S. level; India’s a little more than half despite its faster GDP growth energy consumption by selected country quadrillion Btu


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150

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250

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

China

United States

India


107

55

220


Non-OECD Europe/Eurasia, Middle East, and the United States account for the largest increases in natural gas production

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Other OECD

Canada

Australia/New Zealand

Non-OECD Central and South America

Africa

Non-OECD Asia

United States

Middle East

Non-OECD Europe/Eurasia

Change in natural gas production, 2010-2040 trillion cubic feet



Non-OPEC oil supply growth is concentrated in five countries


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Brazil Canada Kazakhstan UnitedStates

Russia OECDEurope

Mexico/Chile

2010 2040

non-OPEC petroleum production million barrels per day


OPEC market share grows after 2025

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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Non-OPEC petroleum liquids

OPEC petroleum liquids

Non-petroleum


world liquids production million barrels per day


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49

5

50

35

2

European energy overview


Europe production (including Norway)

52%

Directly from Russia

9%

via Ukraine 16%

via Belarus 6%

LNG 9%

Algeria 5%

Libya 1% Other

2%

Imports from Russia

31%

Sources: U.S. Energy Information Administration estimates based on Eastern Bloc Research, Cedigaz, Gas LNG Europe, Lloyd's List Marine Intelligence, Argus FSU

Europe production

26%

Russia (via

pipeline) 9%

Russia (seaborne)

19% Middle East 15%

West Africa 13%

North Africa 10%

Caspian 4%

Americas 4%

European crude oil supply mix, 2013

European natural gas supply mix, 2013

Context for U.S. CO2 emissions


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

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

U.S. energy production quadrillion Btu

Source: EIA, Annual Energy Outlook 2014 Early Release


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


Role of natural gas and renewable electricity in the U.S. generation mix


Net generation by fuel source in the AEO2014 Reference case billion kilowatthours

Source: EIA, Annual Energy Outlook

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2012 2040

12%

16%

37%

30%

19%

32%

35%

16%

non-hydro renewables hydropower petroleum and other nuclear natural gas coal

U.S. energy-related CO2 emissions remain below the 2005 level throughout the projection period

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carbon dioxide emissions billion metric tons

Source: EIA, Annual Energy Outlook 2014 Early Release

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1

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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Projections History 2012 2005


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

2005 level in 2040.

EPA 111(d) proposed rule


• The proposed rule issued by EPA on June 2 establishes state-level targets to reduce CO2 emissions from existing generating plants that burn fossil fuels to produce electricity. The targets for each state, applied over 2020-2030, reflect four “building blocks”:

– heat rate improvement at existing coal units

– increased dispatch of existing natural gas plants

– expanded use of renewable resources

– load reduction through energy efficiency programs

• These building blocks comprise EPA’s proposed ‘Best System of Emission Reductions’ (BSER) under the Clean Air Act Section 111(d), but the states have broad flexibility in their specific compliance measures, including the option to engage in regional compliance partnerships

Another possible option for carbon reduction involves combining advanced technology assumptions with a $10 CO2 fee, which reduces emissions synergistically


3000

3500

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6000

2010 2015 2020 2025 2030 2035 2040

613 969

2028

million tonnes Energy-related CO2 emissions

Reference

Adv. Tech. case

$10 Fee case

Adv. Tech. and $10 Fee

Combining advanced technology with a CO2 fee induces more coal retirements and more new, low-carbon power sources


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Reference Reference Adv. Tech. Fee $10 Fee $10 +Adv. Tech.

Reference Adv. Tech. Fee $10 Fee $10 +Adv. Tech.

Reference Adv. Tech. Fee $10 Fee $10 +Adv. Tech.

2012 2020 2030 2040

Generation by source

other

renewables

nuclear

natural gas

petroleum

coal

billion kWh

For more information


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

State Energy Portal | www.eia.gov/state

Drilling Productivity Report | www.eia.gov/petroleum/drilling/

http://www.eia.gov/

http://www.eia.gov/aeo

http://www.eia.gov/steo

http://www.eia.gov/ieo

http://www.eia.gov/mer

http://www.eia.gov/todayinenergy

http://www.eia.gov/state

http://www.eia.gov/petroleum/drilling/

Documents

Energy outlook - Bank of Canada · Energy outlook . For . Government of Canada . ... 2025. 2030. 2035. 2040. History . 2012 . ... significantly diminish the market share and pricing