The US Energy Information Administration has ratcheted up its estimate of US energy demand in 2020.
The agency now projects US energy demand will rise to 127 quadrillion btu (quads) in 2020 from 96 quads in 1999. That's an increase of 5% from its forecast a year ago.
EIA cited a boost in its estimate of US economic growth to an average 3%/year through 2020 vs. its forecast of 2.1%/year for the period made a year ago.
EIA said that although part of the upward revision was due to definitional changes, the projections reflect a more optimistic view of long-run economic growth in the US.
"Higher projected growth means that energy demand in 2020 is projected to be 6 [quads] higher than last year's forecast of 121 [quads]," EIA said. It said 1 quad is equivalent to the annual energy consumption of 10 million US households.
The agency said that world oil prices, which increased in both 1999 and 2000, are projected to begin falling in 2001. Natural gas prices also increased in 2000 and are expected to decline within 2 years.
"In the longer term, technology improvements in the exploration and production of oil and natural gas are expected to moderate price increases even as demand for these fuels grows."
EIA forecast a world oil price of $22.41/bbl (1999 dollars) in 2020, similar to last year's projection. The average wellhead price of gas is expected to reach $3.13/Mcf in 2020, 10% higher than forecast last year due to higher expected demand for gas, primarily for electricity generation.
Oil, gas demand growth
US oil demand is projected to grow at a rate of 1.3%/year-to 25.8 million b/d in 2020 from 19.5 million b/d in 1999-led by growth in the transportation sector, which accounts for about 70% of US petroleum consumption.
That's an increase of 730,000 b/d from EIA's forecast last year, mainly because of a higher projection for transportation fuel use.
US crude oil production is projected in the agency's forecast to decline at an average rate of 0.7%/year during 1999-2020, to 5.1 million b/d. That's a drop of 200,000 b/d from its forecast a year ago.
Net US petroleum imports are projected to provide 64% of US demand in 2020, up from 51% in 1999. Growth in petroleum demand is led by transportation, where efficiency improvements are more than offset by growing travel demand.
While US oil output slides, US natural gas production is projected to jump to 29.0 tcf in 2020 from 18.7 tcf in 1999, averaging 2.1%/year growth. That's a gain of 2.6 tcf from the agency's previous forecast.
Net US imports of natural gas, primarily from Canada, are projected to increase to 5.8 tcf in 2020 from 3.4 tcf in 1999. That will include a big gain in net imports of LNG to 700 bcf/year by 2020, as two US LNG regasification terminals-Elba Island, Ga., and Cove Point, Md.-are expected to reopen in 2003.
Total US natural gas demand is projected to increase by 62% during 1999-2020, rising to 34.7 tcf from 21.4 tcf. Natural gas demand for electricity generation, excluding cogeneration, is projected to triple over that period, as 89% of the generation capacity built over the next 2 decades is expected to be gas-fired.
Power demand growth
EIA said that US electricity demand is projected to grow at an average rate of 1.8%/year during 1999-2020, compared with the 1.3%/year rate forecast last year for the same period. Higher projected economic growth and a reevaluation of the growth in demand for some residential and commercial equipment led to the higher projection.
Average US electricity prices are projected to generally decline to 6.0¢/kw-hr from 6.7¢ from 1999 to 2020 because of increasing competition in the electricity industry and declining coal prices due to improved productivity in coal mining and growing production from lower-cost mines in the West. Projected electricity prices increase slightly at the end of the forecast period due to rising natural gas prices.
Coal remains the primary fuel for US electricity generation, although its share is projected to decline to 44% from 51% by 2020, because electricity industry restructuring favors the less capital-intensive, more-efficient gas generation technologies. Generation from renewable sources is projected to increase slowly due to relatively low prices of fossil fuel-fired generation.
In 2020, US nuclear power generation is projected to be 34% higher than forecast last year, due to lower estimated costs for extending the life of current nuclear plants and higher projected gas prices, although total nuclear generation still declines as some existing plants retire.
Rising CO2 emissions
EIA also said growth in energy demand is expected to lead to rising carbon dioxide emissions from energy combustion.
US CO2 emissions are projected to reach 1.809 and 2.041 billion tonnes of carbon equivalent (tce) in 2010 and 2020, respectively, 34% and 51% higher than the level of 1.349 billion tce in 1990, based on current laws and regulations.
However, CO2 emissions per unit of gross domestic product are projected to continue to decline.
EIA said CO2 emissions in 2020 are projected to be 3% higher than the level of 1.979 billion tce in last year's forecast. Higher CO2 emissions are partly offset by higher nuclear generation in the forecast.