The U.S. Energy Information Administration “Annual Energy Outlook” predicts that production from eight major tight oil plays in the U.S. will more than double to 1.23 million barrels of oil per day by 2035 — a far more conservative estimate than projections by oil companies and industry groups, which put the Bakken play alone at 1-to-2 million barrels a day in the next two decades.
In April, preliminary figures show that the Bakken and Eagle Ford plays have already reached 1.23 million barrels of oil per day, with the Bakken producing 609,371 bpd and the Eagle Ford 520,000 bpd.
The supporting data used in EIA’s annual report released June 25 is from no later than 2011, but most from 2010 or earlier, including the U.S. Geological Survey’s most recent assessment of the Bakken petroleum system in 2008, which considered the only Bakken member being actively exploited at the time.
The report’s key results include continued modest growth in demand for energy over the next 25 years and increased domestic oil and natural gas production, largely driven by rising output from tight oil and shale resources.
As a result, EIA says, U.S. reliance on imported oil is reduced; domestic production of natural gas exceeds consumption, allowing for net exports; a growing share of U.S. electric power generation is met with natural gas and renewables; and energy-related carbon dioxide emissions remain below their 2005 level from 2010 to 2035, even in the absence of new federal policies designed to mitigate greenhouse gas, or GHG, emissions.
EIA’s projections are based generally on federal, state and local laws and regulations in effect as of the end of December 2011.
Best case scenario: 2.8 million bpd
The EIA estimates quoted above are based on a “reference” case, which assumes current technological and demographic trends will continue.
The reference estimate is the second-lowest among four case scenarios EIA considered in its report.
The agency’s best case scenario predicts tight oil production will increase to 2.24 million bpd in 2020 and 2.8 million bpd in 2035 — that’s assuming an average of eight wells are drilled per each square mile of tight oil acreage.
The report says that more than 630,000 new wells would be needed to bring total U.S. shale gas and tight oil resources into production. In 2010, roughly 37,500 total oil and gas wells were drilled in the U.S.
In the EIA report’s reference case, oil prices (WTI) rise from $79 per barrel in 2010 to about $117 in 2015 and $127 per barrel in 2020 (see table 23). From the 2020 level, prices increase slowly to $145 per barrel in 2035.
Market volatility and different assumptions about the future of the world economy are reflected in the range of price projections for both the short and the long term; however, most projections show prices rising over the entire course of the projection period, ranging from $82 to $117 per barrel in 2015 (span of $35 per barrel) and from $98 to $145 per barrel in 2035 (span of $47 per barrel). The wide range underscores the uncertainty inherent in the projections.
—Kay Cashman
