EIA energy outlook projects growing
reliance on natural gas from shale, reduced energy import shares,
and increased electricity generation from renewables and natural
gas

The Annual Energy Outlook 2011
released earlier this month by the U.S. Energy Information
Administration project a major expasion of shale gas production and
increased imports of oil from Alberta’s tar sands.

The reference gas predicts a world oil
price of $125 per barrel in 2009 dollars, a gradual increase in GHG
emissions - but not reaching 2005 levels until 2027, and continued
dominance of coal as the basis for U.S. electricity
production. 

“Our Reference case projection shows the
growing importance of natural gas from domestic shale gas resources
in meeting U.S. energy demand and lowering natural gas prices,”
said EIA Administrator Richard Newell.

“Energy efficiency improvements and the
increased use of renewables are other key factors that moderate the
projected growth in energy-related greenhouse gas emissions,” said
Newell.

 

The EIA forecast notes that with the
economic viability of Canada’s oil sands supported by rising world
oil prices and advances in production technology, Canadian oil
sands production reaches 5.1 million barrels per day in 2035, up
significantly from 1.8 million barrels per day today.

Significantly, despite this increase, net
imports of energy meet a major, but declining, share of total U.S.
energy demand in the AEO2011 Reference case. The projected growth
in energy imports is moderated by increased use of biofuels (much
of which are produced domestically), demand reductions resulting
from the adoption of new efficiency standards, and rising energy
prices.

 Rising fuel prices also spur
domestic energy production across all fuels, particularly natural
gas from plentiful shale gas resources, and temper the growth of
energy imports. The net import share of total U.S. energy
consumption in 2035 is 18 percent, compared with 24 percent in
2009.

Some other key findings from the 2035 Reference Case
include:

Higher domestic shale gas production at lower prices
than last year:

• The technically recoverable unproved shale gas resource is 827
  trillion cubic feet, 480 trillion cubic feet larger than the
  AEO2010 Reference case, reflecting a doubling
  of shale gas production, with lower natural gas prices.

Imports meet a major but declining share of total U.S.
energy demand:

• Projected demand for energy imports is moderated by increased
  use of domestically produced biofuels, demand reductions resulting
  from the adoption of efficiency standards, and rising energy
  prices. Rising fuel prices also spur domestic energy production
  across all fuels, which moderates growth in energy imports. The net
  import share of total U.S. energy consumption in 2035 is 18
  percent, compared with 24 percent in 2009.

Non-hydro renewables and natural gas are the fastest
growing fuels used to generate electricity, but coal remains the
dominant fuel because of the large amount of existing
capacity:

• Coal remains the dominant energy source for electricity
  generation (href=”http://www.eia.gov/neic/press/images/2010_13_figure2.jpg”>
  Figure 2) because of continued reliance on existing
  coal-fired plants. EIA is not projecting any new central
  station coal-fired power plants, however, beyond those already
  under construction or supported by clean coal incentives. Natural
  gas will play a growing role due to lower prices and relatively low
  capital construction costs.

 

Industrial natural gas demand recovers, reversing recent
trend: I

• ndustrial natural gas demand grows sharply in the near term
  from 7.3 trillion cubic feet in 2009 to 9.4 trillion cubic feet in
  2020. This growth reverses the recent downward trend, as a result
  of a strong recovery in near-term industrial production, growth in
  combined heat and power, and relatively low natural gas
  prices.

Assuming no changes in policy related to greenhouse
gases, carbon dioxide emissions grow slowly, but do not again reach
2005 levels until 2027:

• After falling 3 percent in 2008 and nearly 7 percent in 2009,
  largely driven by the economic downturn, energy-related CO2
  emissions do not return to 2005 levels (5,980 million metric tons)
  until 2027. CO2 emissions then rise by an additional 5 percent from
  2027 to 2035, reaching 6,315 million metric tons in 2035.

Other highlights of the AEO2011 Reference case
projections:

• World oil prices rise in the Reference case (href=”http://www.eia.gov/neic/press/images/2010_13_figure4.jpg”>
  Figure 4), as the world economy recovers and pressure
  from growth in global demand continues. In 2035, the average real
  price of crude oil in the Reference case is $125 per barrel in 2009
  dollars.
  
  
  
  



• In the AEO2011 Reference case, U.S. natural gas
  consumption rises 16 percent from 22.7 trillion cubic feet in 2009
  to 26.5 trillion cubic feet in 2035. The total in 2035 is about 1.6
  trillion cubic feet higher than in the AEO2010 Reference
  case (24.9 trillion cubic feet).
  
  
  
  



• U.S. crude oil production increases from 5.4 million barrels
  per day in 2009 to 6.1 million barrels per day in 2019 and declines
  slightly from that level through 2035. Production increases come
  from onshore enhanced oil recovery projects and shale oil
  plays.

The Annual Energy Outlook  reports are considered
to be one of the most accurate forecasts of trends in the U.S. and
global energy market, and are of particular importance
to canada given the extent to which our energy systems are
inter-linked. 

The full AEO2011 report, including projections with
differing assumptions on the price of oil, the rate of economic
growth, and the characteristics of new technologies, will be
released in Spring 2011, along with regional projections.

Full details of the Annual Energy Outlook 2011 report
are available href=”http://www.eia.gov/forecasts/aeo/index.cfm?featureclicked=1&”
target=”_blank”>here.