Post on 22-Jul-2020
www.eia.gov U.S. Energy Information Administration Independent Statistics & Analysis
Outlook for U.S. shale oil and gas
National Capital Area Chapter U.S. Association for Energy Economics January 23, 2014 | Washington, DC By Adam Sieminski, EIA Administrator
Six key plays account for nearly all recent growth in oil and natural gas production
National Capital Area Chapter - USAEE January 23, 2014 2
Source: EIA, Drilling Productivity Report
Key insights on U.S. drilling productivity and production trends
National Capital Area Chapter - USAEE January 23, 2014 3
• The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources
• The number of wells drilled nationwide that produce both oil and natural gas increased from 37% in 2007 to 56% in 2012
• Higher drilling efficiency and new well productivity, rather than an increase in the rig count, have been the main drivers of recent production growth
• Steep legacy production decline rates are being offset by growing production from new wells
• Six shale plays account for nearly 90% of domestic oil production growth and virtually all domestic natural gas production growth over the last few years
• The Bakken and Eagle Ford plays account for about two-thirds of oil production growth; the Marcellus play accounts for about three-quarters of natural gas production growth
The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources
4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2000 2002 2004 2006 2008 2010 2012
Eagle Ford (TX) Bakken (MT & ND) Spraberry (TX & NM Permian) Bonespring (TX & NM Permian) Wolfcamp (TX & NM Permian) Yeso-Glorieta (TX & NM Permian) Niobrara-Codell (CO, WY) Haynesville (LA & TX) Marcellus (PA & WV) Woodford (OK) Granite Wash (OK & TX) Austin Chalk (LA & TX) Monterey (CA)
U.S. tight oil production million barrels of oil per day
0
5
10
15
20
25
30
35
2000 2002 2004 2006 2008 2010 2012
Marcellus (PA & WV) Eagle Ford (TX) Haynesville (LA & TX) Barnett (TX) Fayetteville (AR) Woodford (OK) Bakken (ND) Antrim (MI, IN, & OH) Rest of US 'shale'
U.S. dry shale gas production billion cubic feet per day
Sources: EIA derived from state administrative data collected by DrillingInfo Inc. Data are through December 2013 and represent EIA’s official tight oil & shale gas estimates, but are not survey data. State abbreviations indicate primary state(s).
National Capital Area Chapter - USAEE January 23, 2014
U.S. crude oil and natural gas production is up dramatically since 2010 and will continue to grow rapidly; this has strategic implications for the United States
• Refinery operations/investment
• Logistics infrastructure investment
• Exports of petroleum products
• Exports of crude oil and natural gas (LNG)
• Operation of the Strategic Petroleum Reserve
5 National Capital Area Chapter - USAEE January 23, 2014
U.S. natural gas prices remain well below crude oil prices
6
0
5
10
15
20
25
30
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
energy spot prices 2012 dollars per million Btu
Source: EIA, Annual Energy Outlook 2014 Early Release
History Projections 2012
Henry Hub spot price
National Capital Area Chapter - USAEE January 23, 2014
Brent crude oil spot price
2018 2040
Ratio: 7.1
Oil to gas price ratio:
3.4
Ratio: 3.2
U.S. shale gas leads growth in total gas production through 2040 to reach half of U.S. output
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U.S. dry natural gas production trillion cubic feet
Source: EIA, Annual Energy Outlook 2014 Early Release
0
10
20
30
40
50
60
70
80
90
100
0
5
10
15
20
25
30
35
40
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Associated with oil Coalbed methane
Tight gas
Shale gas
Alaska Non-associated offshore
Non-associated onshore
Projections History 2012
National Capital Area Chapter - USAEE January 23, 2014
billion cubic feet per day
8
0
5
10
15
20
25
30
35
2005 2012 2020 2025 2030 2035 2040
U.S. dry gas consumption trillion cubic feet
Source: EIA, Annual Energy Outlook 2014 Early Release
Projections History
Industrial*
Electric power
Commercial
Residential
Transportation**
11.2
4.1
1.7
11.0
3.6
9.1
4.2
0.7
8.5
2.9
*Includes combined heat-and-power and lease and plant fuel **Includes pipeline fuel
U.S. natural gas consumption growth is driven by electric power, industrial, and transportation use
National Capital Area Chapter - USAEE January 23, 2014
U.S. manufacturing output and natural gas use grows with low natural gas prices, particularly in the near term
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manufacturing natural gas consumption quadrillion Btu
Source: EIA, Annual Energy Outlook 2014 Early Release
National Capital Area Chapter - USAEE January 23, 2014
0
4
8
12
16
20
24
0
1
2
3
4
5
6
7
8
9
2010 2025 2040 Aluminum Glass
Iron and steel
Paper
Food
Refining and related
Bulk chemicals
Other
Metal based
billion cubic feet per day
durables
manufacturing
0.0
0.5
1.0
1.5
2.0
2.5
0
100
200
300
400
500
600
700
800
900
2010 2015 2020 2025 2030 2035 2040
U.S. natural gas use in the transportation sector grows rapidly with the largest share in freight trucks
10
natural gas use by mode trillion Btu
Source: EIA, Annual Energy Outlook 2014 Early Release
National Capital Area Chapter - USAEE January 23, 2014
Freight trucks
Buses
Freight rail and marine Light-duty vehicles
22%
billion cubic feet per day
Approximate crude oil equivalent, (thousand barrels per day) 2040
Freight trucks Freight rail and marine Buses Light-duty vehicles
290 71 38
9
U.S. natural gas imports and exports trillion cubic feet per year
-6
-4
-2
0
2
4
6
8
10
2000 2005 2010 2015 2020 2025 2030 2035 2040
Alaska LNG exports
Pipeline exports to Mexico
Pipeline exports to Canada
Lower 48 states LNG exports
Pipeline imports from Canada
LNG imports
Source: EIA, Annual Energy Outlook 2014 Early Release
11
-15
-10
-5
0
5
10
15
20
25
billion cubic feet per day
5.4 tcf of exports (14.8 bcf/day)
2.0 tcf of imports (5.4 bcf/day)
U.S. natural gas gross exports exceed 5 tcf in 2025
Projections History 2012 2025
National Capital Area Chapter - USAEE January 23, 2014
U.S. becomes a net exporter of natural gas in the near future
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U.S. dry natural gas trillion cubic feet per year
Source: EIA, Annual Energy Outlook 2014 Early Release
National Capital Area Chapter - USAEE January 23, 2014
-10
0
10
20
30
40
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Projections History 2012
Consumption
Domestic supply
Net exports
100
75
50
25
0
-25
billion cubic feet per day
Growing tight oil and offshore crude oil production drive U.S. output close to historical high
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U.S. crude oil production million barrels per day
Source: EIA, Annual Energy Outlook 2014 Early Release
0
2
4
6
8
10
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Tight oil
Alaska
Other lower 48 onshore
Lower 48 offshore
Projections History 2012
National Capital Area Chapter - USAEE January 23, 2014
U.S. maximum production level of 9.6 million barrels per day in 1970
0
5
10
15
20
25
30
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
U.S. transportation sector motor gasoline demand declines, while diesel fuel accounts for a growing portion of the market
14
transportation energy consumption by fuel quadrillion Btu
Source: EIA, Annual Energy Outlook 2014 Early Release
National Capital Area Chapter - USAEE January 23, 2014
Projections History 2012
59% Motor gasoline
Jet fuel
CNG/LNG
12% 13% 3%
44%
31%
3% 4% Other*
Diesel 22%
2030
47%
13% 3%
30%
1%
2040
Ethanol 4% 5%
5%
*Includes aviation gasoline, propane, residual fuel oil, lubricants, electricity, and liquid hydrogen
U.S. petroleum product imports and exports million barrels per day
-4
-3
-2
-1
0
1
2
3
4
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040
Other petroleum product imports
Distillate exports
Motor gasoline exports
Other petroleum product exports
Distillate imports
Motor gasoline imports
Source: EIA, Annual Energy Outlook 2014 Early Release
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U.S. maintains status as a net exporter of petroleum products
Projections History 2012
Total petroleum product net exports
U.S. dependence on imported liquids declines, particularly in the near term
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U.S. liquid fuel supply million barrels per day
Source: EIA, Annual Energy Outlook 2014 Early Release
0
5
10
15
20
25
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Consumption
Domestic supply
Net imports 40%
32%
Projections History 2012 2005
60%
National Capital Area Chapter - USAEE January 23, 2014
25%
2016 2040
U.S. energy-related CO2 emissions remain below the 2005 level throughout the projection period
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carbon dioxide emissions billion metric tons
Source: EIA, Annual Energy Outlook 2014 Early Release
0
1
2
3
4
5
6
7
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Projections History 2012 2005
National Capital Area Chapter - USAEE January 23, 2014
Energy-related carbon dioxide emissions are 9% below the 2005 level in 2020 and 7% below the
2005 level in 2040.
Top ten countries with technically recoverable shale resources
Shale oil rank country billion barrels
1 Russia 75
2 United States 58
3 China 32
4 Argentina 27
5 Libya 26
6 Venezuela 13
7 Mexico 13
8 Pakistan 9
9 Canada 9
10 Indonesia 8
World total 345
Shale gas rank country trillion cubic feet
1 China 1,115
2 Argentina 802
3 Algeria 707
4 United States 665
5 Canada 573
6 Mexico 545
7 Australia 437
8 South Africa 390
9 Russia 285
10 Brazil 245
World total 7,299
Note: ARI estimates U.S. shale oil resources at 48 billion barrels and U.S. shale gas resources at 1,161 trillion cubic feet. Source: United States: EIA and USGS; Other basins: ARI.
18 National Capital Area Chapter - USAEE January 23, 2014
Reproducibility of shale development may have limits
Many factors support production from U.S. shale resources that do not exist in many other countries:
• Resource quality and geologic distribution details matter • Major private ownership of subsurface mineral rights, often by
surface owners, provides a strong incentive for development • Availability of many independent operators and supporting
contractors with critical expertise and advanced technology • Pre-existing gathering and pipeline infrastructure • Public acceptance of hydraulic fracturing as well as related
activities, including transportation of material, and availability and disposal of water/wastewater; population density
19 National Capital Area Chapter - USAEE January 23, 2014
Geopolitical implications of shale resources
• Shale oil is both light and sweet — the rapid growth in its supply has implications for crude oil pricing relationships, the value of different refinery configurations, refinery output slates, and the correspondence between SPR holdings and U.S. crude imports
• China’s success in shale development and its future LNG imports (and coal use) are inversely related
• Russia’s share of Europe’s gas market could be reduced by increased European shale production
• High volumes of shale oil production, with other drivers, could significantly diminish the market share and pricing power of OPEC producers
• Shorter lead times for the ‘manufacturing’ model of production from shale resources may reduce price volatility (over an extended period) compared to the historical ‘exploration/development’ model for conventional resources National Capital Area Chapter - USAEE January 23, 2014 20
OPEC countries now account for most unplanned outages
National Capital Area Chapter - USAEE January 23, 2014 21
estimated unplanned crude oil production outages thousand barrels per day
Source: EIA, Short-Term Energy Outlook, January 2014
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Jan 2012 Jul 2012 Jan 2013 Jul 2013
Other Non-OPEC
Syria
Sudan/S. Sudan
Iraq
Nigeria
Libya
Iran
Non- OPEC
OPEC
China is now the world’s largest net oil importer
National Capital Area Chapter - USAEE January 23, 2014 22
net imports for China and the United States millions of barrels per day
Note: Net oil imports are defined as total liquid fuels consumption less domestic production. Source: EIA, Short-Term Energy Outlook, January 2014
0
2
4
6
8
10
Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
Forecast History
China net imports
United States net imports
Jan-14
U.S. liquids (petroleum) production projected to outpace both Saudi Arabia and Russia in 2014
Liquids (petroleum) production, 2014 (million barrels per day)
United States Saudi Arabia Russia
Crude oil 8.5 10.0 10.3
NGLs 2.5 1.8 0.8
Biofuels + 1.0 0 0
Refinery gain 1.1 0.1 0.1
Total (mmbl/d) 13.1 11.9 11.2
Source: EIA, Short-Term Energy Outlook; International Energy Outlook
23 National Capital Area Chapter - USAEE January 23, 2014
There are many issues that cause uncertainty…
• Unresolved long-term effects of economic issues in the United States, Europe, and China, and their impacts on demand
• Social unrest in the Middle East and North Africa, and the potential for unrest elsewhere, and its impacts on supply
• The timing of Japan’s full recovery from the impacts of the 2011 nuclear disaster at Fukushima
• Global shale gas and shale oil production potential and OPEC market share decisions
• Changing policies and regulations
• Changing consumer preferences and technological breakthroughs
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National Capital Area Chapter - USAEE January 23, 2014
For more information
National Capital Area Chapter - USAEE January 23, 2014 25
U.S. Energy Information Administration home page | www.eia.gov
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International Energy Outlook | www.eia.gov/ieo
Monthly Energy Review | www.eia.gov/mer
Today in Energy | www.eia.gov/todayinenergy
State Energy Profiles | http://www.eia.gov/state
Drilling Productivity Report | http://www.eia.gov/petroleum/drilling/