Caruso: EIA forecast hinges on gas line, ANWR oil

Rose Ragsdale

For Petroleum News

Crude oil and natural gas from Alaska figure prominently in America’s energy outlook for at least the next 25 years, according to a top U.S. official who testified at a hearing Feb. 16 on Capitol Hill. (See related story on page 11 of this issue.)

Guy Caruso, administrator of the Energy Information Administration, told members of the U.S. Senate Energy and Natural Resources Committee that delay in completion of the 4.5-billion-cubic-feet-a-day Alaska natural gas pipeline would result in significantly higher gas prices than the EIA has projected in its Annual Energy Outlook 2006, released Feb. 14.

In response to a question from Sen. Lisa Murkowski, R-Alaska, Caruso said: “All things being equal, gas prices will be higher. It means we would have to import that 4.5 bcf per day of gas from say, Qatar, until the gas line comes on board and that would mean higher prices.”

The EIA forecast gas prices decreasing from current levels of about $7 per thousand cubic feet to about $4.46 per mcf in 2016 shortly after completion of the Alaska gas pipeline. Gas prices will then gradually rebound to about $6 per mcf in 2030, the EIA said.

Murkowski also pressed Caruso to describe the impact that oil production from the Arctic National Wildlife Refuge had on the EIA’s current projections and how that changes if ANWR oil development fails to become reality.

“We estimate it will take 10 years for ANWR oil to come on line and seven years to ramp up to 800,000 barrels a day,” Caruso responded. “Without ANWR oil, we’d certainly feel a price impact. Our rough estimate is it would cause oil prices to go up about $1 a barrel, and we consume 27 million barrels per day.

Though EIA projects oil prices to decrease from current levels of about $60 per barrel to $45 per barrel by 2014 and then rebound to $57 in 2030, Caruso said the outlook is shrouded in uncertainty. The EIA prepared a low-high range projection, based on 2004 dollars, for oil prices in 2030 of $34 to 96 per barrel.

Murkowski also questioned Caruso about possible disruption of oil supplies from Venezuela and potential problems with anticipated liquefied natural gas imports.

The EIA administrator said his agency is reasonably confident about its LNG import projections, but acknowledged that U.S. oil supply channels are especially vulnerable to a sudden loss of oil imports from Venezuela.

To review Caruso’s full statement to the Senate Energy and Natural Resources committee Feb. 16, visit http://energy.senate.gov/public/index.cfm?FuseAction=Hearings.Testimony&Hearing_ID=1525&Witness_ID=3055