We project U.S. consumption and production of petroleum and other liquids to grow through 2050. Domestic consumption and production levels of petroleum and other liquids remain relatively close to one another through most of the projection period in the Reference case. Consumption increases by 15%, and production increases by 17% from 2021 to 2050. However, consumption and production of specific petroleum products vary. We also project consumption and production of natural gas to grow through 2050. During the projection period, natural gas production grows by almost 24%, approximately twice as fast as consumption. Much of this growth in natural gas production is exported as liquefied natural gas (LNG). By 2050, we project that approximately 25% more natural gas will be produced than consumed in the United States. Together, these Reference case trends highlight the continued growth in demand for U.S. natural gas and petroleum products.
In the Reference case, U.S. natural gas production increases through 2050, and more than 35% of gross additions are exported. U.S. natural gas production increases in all cases except in the Low Oil and Gas Supply case. Projected U.S. natural gas exports rise through 2050, primarily driven by increased LNG capacity and growing global natural gas consumption.3 Increases in pipeline exports to Mexico and Canada also contribute to the increase in U.S. natural gas exports.
In 2021, U.S. natural gas exports reached a record high. We project continued growth in natural gas exports through 2025 because of increases in LNG capacity from facilities currently under construction. LNG export facilities at Sabine Pass, Calcasieu Pass, and Golden Pass will likely enter service much earlier than we had anticipated in the AEO2021, increasing the amount of infrastructure available for converting natural gas to LNG for export. Additional completed natural gas pipeline infrastructure will also increase takeaway capacity into Mexico.
Beyond 2025, we project that natural gas production will ramp up to meet growing export demand, the majority of which will be LNG. We project global demand for U.S. natural gas to exceed current and announced LNG export capacity; therefore, additional LNG export facilities will be economical to build. These LNG capacity expansions, coupled with high demand for natural gas abroad, result in our projection of an increase in LNG exports to 5.86 trillion cubic feet (16.1 Bcf/d) by 2033 in the Reference case, prompting natural gas production growth in the medium and long term.
The oil and gas supply cases illustrate the relationship between LNG exports and production. The Low Oil and Gas Supply case assumes higher costs and less resource availability, which increases natural gas prices, so LNG exports begin to decline in the mid-2030s. In the High Oil and Gas Supply case, which assumes lower natural gas prices, LNG exports grow twice as fast as in the Reference case, leveling off during the mid-2040s.
Shale gas and associated natural gas from tight oil plays are the primary contributors to the long-term growth of U.S. natural gas production through 2050. In the Reference case, more than half of the growth in natural gas production between 2020 and 2050 is associated natural gas from tight oil plays, primarily the Wolfcamp play in the Permian Basin (Southwest region). For shale gas production during this same period, the Marcellus and Utica shale gas plays in the Appalachia Basin (East region) and the Haynesville play in the Mississippi-Louisiana Salt Basins (Gulf Coast region) account for the majority of growth.
The amount of associated gas that will be available from tight oil plays in our projection is particularly sensitive to world oil price assumptions. Higher world oil prices, such as those in the High Oil Price case, increase the incentive to target oil plays, increasing the projected amount of associated natural gas. The opposite occurs in the Low Oil Price case: LNG exports are largest in the High Oil Price case, which is prompted by growth in production in the Southwest.
We project growth in natural gas production from the Wolfcamp and Haynesville plays, in part, because of these production regions’ proximity to LNG export terminals. Natural gas from the Marcellus and Utica plays also reach export markets, but pipeline infrastructure constrains the Appalachia region’s access to export terminals. So, natural gas production growth in the Appalachia region is predominantly driven by the region’s relatively low production costs.
Amid growth in LNG exports, the natural gas spot price at the Henry Hub faces upward pressure from the mid-2020s through the early 2040s across all cases except the High Oil and Gas Supply case. Steady growth in natural gas demand in the industrial sector and growing electric power sector demand for natural gas after 2035 also put upward pressure on the Henry Hub price during this time.
The oil and gas supply cases indicate that the natural gas spot price at Henry Hub is very sensitive to reduced supply and somewhat less sensitive to increased supply. In 2050, the projected natural gas price is almost twice as high in the Low Oil and Gas Supply case as in the Reference case, while in the High Oil and Gas Supply case, the price is approximately 29% lower than in the Reference case.
3According the our International Energy Outlook 2021, we project global natural gas consumption to continue growing through 2050 in absolute terms (and as a share of the world energy mix) because of its economics and lower carbon emissions relative to other sources of energy..
U.S. natural gas production increases in all cases except in the Low Oil and Gas Supply case.