‹ Analysis & Projections

AEO2014 Early Release Overview

Release Date: December 16, 2013   |  Full Report Release Date: Early Spring 2014   |  correction   |   Report Number: DOE/EIA-0383ER(2014)

Energy Productions and Imports


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Net imports of energy decline both in absolute terms and as a share of total U.S. energy consumption in the AEO2014 Reference case (Figure 10). The decline in energy imports reflects increased domestic production of petroleum and natural gas, along with demand reductions resulting from rising energy prices and gradual improvement in vehicle efficiency. At the same time, natural gas exports increase (as domestic supplies increase and it becomes attractive to liquefy the natural gas for export), along with exports of motor gasoline (as demand declines and refiners are left with more than they can sell domestically) and exports of crude oil (as lighter domestic crude oil is swapped for the heavier crudes more commonly run in modern refineries). The net import share of total U.S. energy consumption is 4% in 2040, compared with 16% in 2012 and about 30% in 2005.

Petroleum and other liquids


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U.S. production of crude oil (including lease condensate) in the AEO2014 Reference case increases from 6.5 MMbbl/d in 2012 to 9.6 MMbbl/d in 2019, 22% higher than in AEO2013 (Figure 11). Despite a decline after 2019, U.S. crude oil production remains at or above about 7.5 MMbbl/d through 2040. Higher production volumes result mainly from increased onshore oil production, predominantly from tight (very-low-permeability) formations. Offshore crude oil provides a steady supply of domestic crude oil production, ranging between 1.6 and 2.0 MMbbl/d from 2015 through 2040, as the pace of development activity quickens and new, large development projects, predominantly in the deepwater and ultra-deepwater portions of the Gulf of Mexico, are brought into production.

The faster growth of tight oil production through 2020 in the AEO2014 Reference case results in higher domestic crude oil production than in AEO2013 throughout the projection. The pace of oil-directed drilling in the near term is much stronger than in AEO2013, as producers locate and target the sweet spots of plays currently under development and find additional tight formations that can be developed with the latest technologies. In the AEO2014 Reference case, tight oil production increases from 2.3 MMbbl/d in 2012 (35% of total U.S. crude oil production) to 4.8 MMbbl/d in 2021 (51% of the total). As in AEO2013, tight oil production declines in AEO2014 after 2021, as more development moves into less-productive areas.


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U.S. use of imported petroleum and other liquid fuels continues to decline in AEO2014 mainly as a result of increased domestic oil production. Imported petroleum and other liquid fuels as a share of total U.S. use reached 60% in 2005 before dipping below 50% in 2010 and falling further to 40% in 2012. The import share continues to decline to 25% in 2016 and then rises to about 32% in 2040 in the AEO2014 reference case, as domestic production of tight oil begins to decline in 2022 (Figure 12).

Natural Gas

Cumulative production of dry natural gas from 2012 to 2040 in the AEO2014 Reference case is about 11% higher than in AEO2013, primarily reflecting continued growth in shale gas production resulting from the dual application of horizontal drilling and hydraulic fracturing. Another contributing factor is ongoing drilling in shale and other plays with high concentrations of NGL and crude oil, which in energy-equivalent terms have a higher value than dry natural gas. Cumulative production levels for tight gas and onshore associated-dissolved gas from oil formations exceed those in AEO2013 through 2040 by 9% and 36%, respectively, making material contributions to the overall increase in production. Natural gas prices above $6/MMBtu toward the end of the projection period encourage drilling in less-productive but still-profitable areas in tight oil, shale oil, and natural gas formations. Lower 48 offshore natural gas production fluctuates between 1.7 Tcf and 2.9 Tcf per year, similar to the pattern in AEO2013. The multiyear decline in offshore natural gas production was reversed in 2012, with 15 new deepwater projects coming on line during the year.

In the AEO2014 Reference case, the United States becomes a net exporter of LNG in 2016, and it becomes an overall net exporter of natural gas in 2018, two years earlier than in AEO2013. U.S. exports of LNG from new liquefaction capacity are expected to surpass 2 Tcf by 2020 and increase to 3.5 Tcf in 2029. Net pipeline imports from Canada fall steadily until 2033, and then increase through 2040. Net pipeline exports to Mexico grow by more than 400% in the Reference case, with additional pipeline infrastructure added to enable the Mexican market to receive more pipeline natural gas from the United States.

U.S. cumulative net LNG exports from 2012 to 2040 are up by 160% in AEO2014 compared with AEO2013, supported by increased use of LNG in markets outside North America, strong domestic production, and low U.S. natural gas prices relative to other global markets.

Coal

Total U.S. coal production grows at an average rate of 0.3% per year in the AEO2014 Reference case, from 20.6 quadrillion Btu (1,016 MMst) in 2012 to 22.6 quadrillion Btu (1,121 MMst) in 2040. U.S. electricity generation accounted for 91% of total U.S. coal consumption (in Btu) in 2012. Coal production declined by more than 7% in 2012, from 1,096 MMst in 2011, mostly in response to gas-on-coal competition. In the Reference case, production recovers to 1,062 MMst by 2015, in response to a rise in natural gas prices along with a moderate increase in electricity demand. A wave of coal-fired generating capacity retirements in response to MATS requirements coincides with a secondary drop in coal production to 1,022 MMst in 2016. Total production then increases gradually to 1,127 MMst in 2030 before stabilizing as a result of limits on achievable long-term capacity utilization rates for available coal units compared to AEO2013.

Coal production from the Eastern Interior region in the AEO2014 Reference case increases at a faster rate than projected in AEO2013, because of an improved productivity outlook, with 2020 production 27 MMst (18%) higher and 2040 production 58 MMst (34%) higher than projected in AEO2013. Lower overall coal consumption and improved competitiveness of coal produced in the Eastern Interior region compared to AEO2013 lead to lower outlooks for Northern Appalachian and Powder River Basin coal production, as well as an accelerated decline in Central Appalachian production in AEO2014. As a result of changes to CTL cost assumptions, no CTL coal consumption or related production is projected in AEO2014, compared with 0.3 quadrillion Btu in 2040 in AEO2013. Expectations for total U.S. coal exports in AEO2014 are generally similar to those in AEO2013, with an increase from 126 MMst in 2012 to 161 MMst by 2040.