HOME PAGE SUBSCRIPTIONS, Print Editions, Newsletter PRODUCTS READ THE PETROLEUM NEWS ARCHIVE! ADVERTISING INFORMATION EVENTS PETROLEUM NEWS BAKKEN MINING NEWS

Providing coverage of Alaska and northern Canada's oil and gas industry
December 2008

Vol. 13, No. 51 Week of December 21, 2008

EIA forecast for slowed energy growth

Kristen Nelson

Petroleum News

U.S. oil consumption will be flat to 2030, with slower growth in energy use and carbon dioxide emissions and reduced import dependence, the U.S. Energy Information Administration said Dec. 17 in its “Annual Energy Outlook 2009.”

The EIA said that for the first time in more than 20 years, its new Annual Energy Outlook reference case “projects virtually no growth in U.S. oil consumption, reflecting the combined effect of recently enacted CAFÉ standards, requirements for increased use of renewable fuels and an assumed rebound in oil prices as the world economy recovers.”

Liquid fuel use in the U.S. is projected to grow by only 1 million barrels per day between 2007 and 2030, the agency said. And with more domestically produced biofuels “and rising domestic oil production spurred by higher prices,” net import of liquid fuels, including biofuels, is expected to decline from 58 percent in 2007 to less than 40 percent in 2025 and to increase to only 41 percent by 2030.

Natural gas use to rise

EIA, is, however, projecting more U.S. production and use of natural gas, based on increasing availability and higher demand for electric power generation. The agency said growing production from unconventional onshore sources, the outer continental shelf and Alaska will result in a decline in net imports of natural gas, from 16 percent of gas used to less than 3 percent in 2030. The EIA showed Alaska gas becoming available in the Lower 48 before 2020.

Domestic production of natural gas is expected to reach 23.7 trillion cubic feet by 2030 and while “exploration and production costs rise over time, higher natural gas prices support the projected level of production,” the agency said. Onshore unconventional natural gas production — including shale gas — is expected to increase from 9.2 tcf in 2007 to 13.2 tcf in 2030.

Total primary energy use and energy-related carbon dioxide emissions are expected to slow due to efficiency policies and higher energy prices. EIA said it expects U.S. energy use to grow from 101.9 quadrillion Btu in 2007 to 113.3 quadrillion Btu in 2030. That growth rate, combined with increased use of renewables and a reduction in new coal-fired conventional power plants, slows growth in energy-related greenhouse gas emissions.

Energy-related CO2 emissions are expected to grow at a rate of 0.3 percent per year from 2007 to 2030 in the 2009 reference case, reaching 6,410 million metric tons in 2030, compared with a projection of 6,851 metric tons by 2030 in the 2008 reference case.

Oil price projected to be higher

Higher world oil prices in the 2009 reference case reflect “tighter constraints on access to low-cost oil supplies” and a continuing assumption of long-term demand growth in non-Organization for Economic Cooperation and Development countries, the EIA said.

“In 2007 dollars, the world crude oil price, averaging near $60 in 2009, rises as the global economy rebounds and global demand once again grows more rapidly than non-OPEC liquids supply,” and reaches $130 per barrel in 2007 dollars ($189 per barrel in nominal dollars) in 2030.

2008 price forecast $51

In its short-term energy outlook, issued Dec. 9, EIA said the global economic slowdown is expected to be more severe and longer than the agency projected in November, “leading to further reductions of global energy demand and additional declines in crude oil and other energy prices.”

The annual average West Texas Intermediate price is now estimated to be $100 per barrel this year and $51 in 2009.

The Henry Hub natural gas spot price is projected to decline from an average of $9.17 per thousand cubic feet in 2008 to $6.25 per mcf in 2009.

Global crude oil demand, driven by the status of the global economy, is projected to decline by 50,000 barrels per day in 2008 and by 450,000 bpd in 2009, the first time in three decades that consumption declined in two consecutive years, the agency said.

EIA said that in both 2008 and 2009 growth in demand is focused in non-OECD countries, “especially China, the Middle East and Latin America,” but the drop in demand in OECD countries is expected to more than offset any non-OECD oil consumption growth.

The agency noted the upcoming Organization of Petroleum Exporting Countries meeting set for Dec. 17 and said that while the level of compliance with the cartel’s last production cuts is uncertain, it “believes that the continued weak market conditions will prompt higher-than-usual compliance among OPEC members.” EIA is projecting a drop in OPEC production from 32.6 million bpd in the third quarter of 2008 to 30.6 million bpd in the first quarter of 2009. Lower demand combined with capacity expansions in several OPEC countries would produce a surplus production capacity averaging 4 million bpd in 2009.





OPEC cuts 2.2M barrels a day

OPEC said Dec. 17 it is cutting 2.2 million barrels a day from its output to stem crude prices that have plummeted more than 70 percent from summer highs approaching $150.

An OPEC statement says the group is taking 4.2 million barrels a day off the market, compared with September levels. Members under production quotas among the 13-nation organization were officially producing a daily 29.045 million barrels in September.

The 4.2 million figure thus includes more than 500,000 barrels of overproduction that OPEC said in September it would eliminate, and a formal cut of 1.5 million barrels a day that it agreed on in November.

That amounts to a new reduction of 2.2 million barrels — the largest-ever OPEC cutback at one time.

—The Associated Press


Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] --- http://www.petroleumnews.com ---
S U B S C R I B E

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©2013 All rights reserved. The content of this article and web site may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.