Total US energy production increases by 31% from 2017 through 2050 in the reference case, led by increases in the production of renewables other than hydropower, natural gas, and crude oil, the US Energy Information Administration’s latest annual energy outlook suggested.
The reference case projection assumes trend improvement in known technologies along with a view of economic and demographic trends reflecting the current views of leading economic forecasts and demographers.
In the reference case, from 2017-50, projected gross domestic product rises at a rate of 2%/year, while projected energy consumption increases at 0.4%/year and surpasses its 2007 peak by 2033.
Crude oil, NGLs
In the reference case, US crude oil production in 2018 is projected to surpass the record of 9.6 million b/d set in 1970 and will continue to rise as producers increase output because of the combined effects of rising prices and production cost reductions.
Despite rising oil prices, reference case US crude oil production levels off at 11-12 million b/d as tight oil development moves into less productive areas and as well productivity declines.
Previously announced deepwater discoveries in the Gulf of Mexico lead to increases in Lower 48 offshore production through 2021. In the reference case, offshore production then declines through 2035 and remains flat through 2050 as discoveries offset production declines in legacy fields.
Lower 48 onshore tight oil development continues to be the main driver of total US crude oil production, accounting for about 65% of cumulative production in the reference case over the 2017-50 projection period.
Growth in Lower 48 onshore crude oil production occurs mainly in the Permian basin in the US Southwest. This basin includes many prolific tight oil plays with multiple layers, including Bone Spring, Spraberry, and Wolfcamp, making it one of the lower-cost areas to develop.
Production growth in the Dakotas and Rocky Mountains region is driven by increases in production from the Bakken and Niobrara tight oil plays.
Production in the Gulf Coast region increases through 2025 before flattening out as drilling in the Eagle Ford becomes less productive.
With continued development of tight oil and shale gas resources, natural gas plant liquids production reaches 5 million b/d in 2023, nearly 35% above the 2017 level.
The shares of NGL components in the reference case are relatively stable over the entire projection period, with ethane and propane contributing about 44% and 30%, respectively, to the total volume. By 2050, the East and Southwest account for more than 60% of total US NGL production.
Natural gas
Natural gas production in the reference case rises 6%/year during 2017-20, which is greater than the 4%/year average growth rate during 2005-15. However, after 2020, it slows to less than 1%/year for the remainder of the projection period.
Natural gas production from shale gas and tight oil plays as a share of total US gas production is projected to continue to rise in both share and absolute volume because of the large size of the associated resources, which extend over more than 500,000 sq miles.
Offshore natural gas production in the US stays nearly flat over the projection period as production from discoveries generally offsets declines in legacy fields.
Production of coalbed methane gas generally continues to decline through 2050 because of unfavorable economic conditions for producing that resource.
The industrial sector is the largest consumer of gas in the reference case. Major gas consumers in this sector include the chemical industry (where gas is used as a feedstock in the production of methanol and ammonia), industrial heat and power, and LNG export facilities.
Gas used for electric power generation generally increases over the projection period but at a slower rate than in the industrial sector. This growth is supported by the scheduled expiration of renewable tax credits in the mid-2020s.
Gas consumption in the residential and commercial sectors remains largely flat because of efficiency gains and population shifts that counterbalance demand growth.
Although gas use rises in the transportation sector, particularly for freight and marine shipping, it remains a small share of total natural gas consumption, and gas remains a small share of transportation fuel demand.
Net energy exporter
The US could become a net energy exporter by 2020 as domestic oil and gas production remains strong and demand stays relatively flat. Increased production from high oil prices and better-than-expected technology could bring about the change sooner, new US EIA Administrator Linda A. Capuano said.
“The transition is expected to occur more from an increase in energy exports than a decrease in imports,” she said during a Feb. 6 discussion of the 2018 AEO at Johns Hopkins University’s School for Advanced International Studies. “The US could become a globally significant merchant refiner as it imports more crude and exports more products.”
The AEO is more a projection of trends than a forecast because its reference case traditionally reflects existing laws and policies, she noted. In this case, the report’s October 2017 cutoff date meant that impacts from possible production of crude from leases on the Arctic National Wildlife Refuge’s coastal plain were not considered because Congress authorized sales there later in the year as part of the broader tax reform bill.
“We intentionally push limits on some cases to show what could happen under different policies,” Capuano said.
The 2018 AEO predicted that most of the growth in domestic crude production through 2050 will occur mostly as a result of improvements in technology to recover oil from more tight shale formations. It also suggested that the US will become a net gas exporter before 2020, although liquefied natural gas exports levels appear uncertain.
“Relatively large increases in LNG exports are not expected to have much impact on domestic gas prices. Resource and technology assumptions could have a bigger effect,” Capuano said.
Contact Nick Snow at [email protected] and Conglin Xu at [email protected].
