EIA projects higher US crude output, much more gas output through 2050

Jan. 30, 2020
US energy production should continue to outgrow energy consumption through 2050, according to the Energy Information Administration (EIA) in its Annual Energy Outlook 2020, released Jan. 29.

US energy production should continue to outgrow energy consumption through 2050, according to the Energy Information Administration (EIA) in its Annual Energy Outlook 2020, released Jan. 29.

Domestic crude oil production in the EIA’s reference or baseline case reaches 14 million b/d by 2022—up from more than 12.6 million b/d in late 2019—then remains near that level through 2045, then a decline to 2050.

The leveling off is expected to occur as tight oil development—in shale and tight sandstone—moves out of the best locations into less productive areas.

US natural gas production is projected to grow at a faster rate than consumption through 2050, leading to an increase in gas exports throughout the period, with the lion’s share of the exports occurring as liquefied natural gas (LNG).

The US will be a net energy exporter from 2020 through 2050, EIA estimated.

The agency cautions that its projections are not predictions, and it limits its reference case to conservative assumptions. But it offers a variety of “side cases” reflecting the different assumptions that can be made.

More crude, especially tight oil

In terms of crude oil prices, for example, the base case is a forecast of $105/bbl for Brent crude in 2050, as measured in 2019 dollars. The high price case is Brent at $183/bbl by 2050, and the low price case is Brent at $46/bbl. The variations make a big difference in terms of what is economic to produce.

Onshore tight oil development in the Lower 48, where oil is freed from shale and tight sandstone, continues to be the main driver of total US crude oil production, accounting for about 70% of cumulative domestic production in the reference case through 2050.

Offshore production in the Lower 48 is projected to reach 2.4 million b/d in 2026. Offshore production is expected to increase through 2035 before generally falling through 2050 as a result of new discoveries only partially offsetting declines in legacy fields.

Alaska crude oil production generally increases through 2041, driven primarily by the development of fields in the National Petroleum Reserve-Alaska before 2030, and then by fields in the coastal plain of the Arctic National Wildlife Refuge (ANWR). Exploration and development of fields in ANWR is not economical in the low price case for crude oil.

More dry gas, especially associated gas

Dry gas production in the reference case grows 1.9%/year from 2020 to 2025, slower than the 5.1% average annual growth rate from 2015 to 2020.

The percentage of dry natural gas production from oil formations increased from 8% in 2013 to 15% in 2018 and is projected to remain near 15% through 2050 in the reference case. Increased drilling in the Southwest, particularly in the Wolfcamp formation in the Permian basin, is the main driver of growth in natural gas production from tight oil formations.

Natural gas prices in the reference case remain below $4/MMbtu through 2050 because of an abundance of lower-cost resources, primarily associated gas in the Permian basin. These lower-cost resources allow higher production levels at lower prices during the projection period.

Natural gas consumption in the reference case slows after 2020 and remains relatively flat through 2030 because of slower industrial sector growth. Consumption also declines in the electric power sector during this period. After 2030, consumption growth rises almost 1%/year on average as gas use in the electric power and industrial sectors increases.

Gas exports are expected to grow until about 2030 and then level off. The fastest growth, by far, is projected for LNG, but pipeline gas exports to Mexico also are seen growing until about 2030, after which Mexico’s domestic gas production restrains imports from the US.

The continued development of tight oil and gas resources supports growth in production of natural gas plant liquids (NGPLs), which are projected to reach 6.6 million b/d by 2028 in the reference case. The NGPLs especially feed the global petrochemical industry.