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EIA’s ’19 outlook: US net exporter in 2020
Large increases in oil, natural gas, natural gas plant liquids production through 2050 and slow growth in US energy consumption Kristen Nelson Petroleum News
The U.S. Energy Information Administration is projecting that the U.S. will become a net energy exporter in 2020 and remain so through 2050, the end of the projection period. In its “Annual Energy Outlook 2019,” released Jan. 24, the agency based that projection on large increases in crude oil, natural gas and natural gas plant liquids, coupled with slow domestic consumption growth.
The outlook includes a reference case and six side cases which “systematically vary important underlying assumptions,” the agency said.
EIA said the reference case represents its best assessment of how U.S. and world energy markets will operate through 2050. Among the assumptions, the agency said, the reference case “assumes improvement in known energy production, delivery and consumption technology trends.”
The six side cases include: high and low oil price cases; high and low oil and gas resource and technology cases; and high and low economic growth cases.
Net imports since 1953 EIA said the U.S. has been a net energy importer since 1953 but said in all its cases continued growth in petroleum and natural gas results result in the country becoming a net energy exporter by 2020. The U.S. became a net natural gas exporter in 2017, including exports by pipeline from and to Canada and to Mexico as well as exports of liquefied natural gas.
U.S. crude oil and natural gas plant liquids continue to increase through 2025 in the reference case with natural gas plant liquids comprising nearly one-third of cumulative 2019-50 liquids production.
EIA said natural gas plant liquids “are light hydrocarbons predominantly found in natural gas wells and diverted from the natural gas stream by natural gas processing plants.” NGPLs include ethane, propane, normal butane, isobutane and natural gasoline.
14 million bpd EIA said U.S. crude oil production is projected to continue to set annual records through 2027 in the reference case and remains more than 14 million barrels per day through 2040. “Lower 48 onshore tight oil development continues to be the main source of growth in total U.S. crude oil production,” the agency said. Continued development of tight oil and shale gas resources supports growth in NGPLs, which peak at 6 million bpd in 2029 in the reference case.
The U.S. “continues to produce large volumes of natural gas from oil formations, even with relatively low oil prices - putting downward pressure on natural gas prices,” EIA said.
LNG EIA said the U.S. will continue to produce large volumes of natural gas, putting downward pressure on natural gas prices, with the percentage of dry natural gas from oil formations increasing from 8 percent in 2013 to 17 percent in 2018 and expected to remain at that level through to 2050 in the reference case.
EIA said net exports of natural gas continue in the reference case with LNG becoming “an increasingly significant export.”
LNG exports and pipeline exports to Canada and to Mexico are expected to increase until 2030 and then flatten through 2050, EIA said, “as relatively low, stable natural gas prices make U.S. natural gas competitive in North American and global markets.”
There are additional U.S. LNG export facilities which will be completed by 2022, the agency said, increasing LNG export capacity, with Asian demand allowing U.S. LNG to remain competitive there.
“After 2030, U.S. LNG is no longer as competitive because additional suppliers enter the global LNG market, reducing LNG prices and making additional U.S. LNG export capacity uneconomic,” EIA said.
Prices EIA said prices are affected by assumptions about international supply and demand - and development of U.S. shale resources.
“Crude oil prices are influenced more by international markets than by assumptions about domestic resources and technological advances,” the agency said. “Natural gas prices are highly sensitive to factors that drive supply, such as domestic resource and technology assumptions, and less dependent on the international conditions that drive oil prices.”
ANWR, NPR-A EIA said development of the Arctic National Wildlife Refuge would increase Alaska oil production, “but only after 2030 because of the time needed to acquire leases and development infrastructure.”
Alaska crude oil production is 90 percent higher from 2031 to 2050 than forecast last year, the agency said, an additional 3.2 billion barrels, from 2031 to 2050.
“The ANWR projections are highly uncertain because of several factors that affect the timing and cost of development, little direct knowledge of the resource size and quality that exists in ANWR, and inherent uncertainty about market dynamics.”
EIA said Lower 48 onshore tight oil production is the main driver of total U.S. crude oil production, some 68 percent of cumulative domestic production in 2019-50.
Alaska crude oil production is projected to increase through 2030, “driven primarily by the development of fields in the National Petroleum Reserve-Alaska … and after 2030, the development of fields in the 1002 Section of the Arctic National Wildlife Refuge,” the agency said, but noted that in the low oil price case, ANWR exploration and development is not economic.
Gas production outpaces consumption The largest fossil fuel production increase during the 2019-50 period is from natural gas, EIA said, with continued development of lower-cost shale gas and light oil resources.
In all cases the agency considered, natural gas production outpaces consumption.
In the reference case the growth in natural gas production is 7 percent per year from 2018-20, more than the 4 percent per-year average from 2005-15. Growth slows to 1 percent per year after 2020, EIA said, “as growth in both domestic consumption and demand for U.S. natural gas exports slows.”
Transportation The agency said that in the reference case transportation energy consumption peaks in 2019 “because rising fuel efficiency more than offsets the effects of increases in total travel and freight movements, but this trend reverses toward the end of the projection period.”
Alternative and electric vehicles gain market share, “but gasoline vehicles remain the dominant vehicle type through 2050” in the reference case. Considerable growth of transportation fuels occurs between 2018 and 2050 “because of increased use of electricity and natural gas.”
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