Outlook for Natural Gas - National Conference of State ... · Outlook for Natural Gas ......

www.eia.gov U.S. Energy Information Administration Independent Statistics & Analysis

Outlook for Natural Gas

for National Conference of State Legislatures (NCSL) Hydraulic fracturing webinar John Staub, Team Lead for Exploration and Production Analysis December 19, 2012

States pages include EIA datasets and analysis on all fuels and energy infrastructure included in EIA data collection

3 John Staub NCSL webinar, December 19, 2012

EIA updates state level data sets with mapping features and energy infrastructure datasets

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Interactive map links to state level energy data

John Staub NCSL webinar, December 19, 2012

Multiple layers of user selected options are available such as shale gas plays, power plants, pipelines, and transmission lines


John Staub NCSL webinar, December 19, 2012 6

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Jan 2011 Jul 2011 Jan 2012 Jul 2012 Jan 2013 Jul 2013

Henry Hub Natural Gas Price dollars per million btu

Historical spot price STEO forecast price NYMEX futures price 95% NYMEX futures upper confidence interval 95% NYMEX futures lower confidence interval

Source: Short-Term Energy Outlook, December 2012

Note: Confidence interval derived from options market information for the 5 trading days ending December 6, 2012. Intervals not calculated for months with sparse trading in near-the-money options contracts.


Forecast

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5

10

15

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25

Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013

U.S. Natural Gas Prices dollars per thousand cubic feet

Residential price Henry Hub spot price Composite wellhead price



-2 -1 0 1 2 3 4 5 6 7 8 9

2010 2011 2012 2013 50 52 54 56 58 60 62 64 66 68 70 72

U.S. Natural Gas Production and Imports billion cubic feet per day (bcf/d)

Federal Gulf of Mexico production (right axis) U.S. non-Gulf of Mexico production (right axis)

U.S. net imports (right axis) Total marketed production (left axis)

Marketed production forecast (left axis)

annual change (bcf/d)


Natural gas prices increase over the outlook


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2

4

6

8

10

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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Henry Hub Spot Price 2011 dollars per million Btu

Source: EIA, Annual Energy Outlook 2013 Early Release

2011 History Projections

Coal regains some competitive advantage relative to natural gas over time on a national average basis

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4

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8

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

ratio of natural gas price to steam coal price


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2

4

6

8

10

1990 2000 2010 2020 2030 2040

History Projections

2011 2011 dollars per Btu

History Projections 2011

Competitive parity

Energy prices to the electric power sector

Coal

Natural gas


Currently, U.S. shale gas production comprises about 35% of total U.S. dry production

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0.0

3.7

7.3

11.0

0

10

20

30

2000 2002 2004 2006 2008 2010 2012

Other U.S. shale gas Bakken (ND and MT) Eagle Ford (TX) Marcellus (PA and WV) Haynesville (LA and TX) Woodford (OK) Fayetteville (AR) Barnett (TX) Antrim (MI, IN, and OH)

Shale gas production (dry) billion cubic feet per day

Sources: LCI Energy Insight gross withdrawal estimates as of November 2012 that are converted to dry production estimates with EIA-calculated average gross-to-dry shrinkage factors by state and/or shale play.


Shale gas production (dry) trillion cubic feet per year

Domestic production grows rapidly over projection period, particularly natural gas and renewables, and liquids in the near term

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0

20

40

60

80

100

120

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

U.S. energy production quadrillion Btu



28%

19%

30%

12%

11%

24%

35%

17%

14%

10%

Shares of total U.S. production

Nuclear

Crude oil and natural gas plant liquids

Natural gas

Coal

Renewables


U.S. energy use grows slowly over the projection reflecting improving energy efficiency and a slow and extended economic recovery

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0

20

40

60

80

100

120

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

U.S. primary energy consumption quadrillion Btu



36%

20%

26%

8% 8%

1%

32%

28%

19%

11%

9% 2%

Shares of total U.S. energy

Nuclear

Oil and other liquids

Liquid biofuels

Natural gas

Coal

Renewables (excluding liquid biofuels)

2000

23%

39%

24%

6% 8%


Domestic natural gas production grows faster than consumption and the U.S. becomes a net exporter of natural gas around 2020

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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

U.S. dry gas trillion cubic feet


Projections History 2011

Consumption

Domestic supply

Net imports


Total natural gas exports nearly quadruple by 2040 in the AEO2013 Reference case

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U.S. natural gas exports trillion cubic feet


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2010 2015 2020 2025 2030 2035 2040

Alaska LNG exports

Exports to Mexico

Exports to Canada

Lower 48 LNG exports


Shale gas production leads growth in production through 2040

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U.S. dry natural gas production trillion cubic feet


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10

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30

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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Associated with oil Coalbed methane

Tight gas

Shale gas

Alaska

Non-associated onshore

Non-associated offshore

Projections History 2011


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2005 2011 2020 2025 2030 2035 2040

U.S. dry gas consumption trillion cubic feet


Projections History

Industrial*

Electric power

Commercial

Residential

Transportation**

33%

14%

6%

32%

12%

33%

19%

3%

31%

13%

*Includes combined heat-and-power and lease and plant fuel. **Includes pipeline fuel.

Gas to liquids 2%

Natural gas consumption is quite dispersed with electric power, industrial, and transportation use driving future demand growth


There are three main drivers of natural gas production


Technology Geology

Economics

Theory Experiment Practice

Three drivers impact resource estimation metrics differently


Geology

Technology

Economics

Gas in Place (GIP)

Technically Recoverable Resources (TRR)

Economically Recoverable Resources (e.g. proved reserves)

Well-level data, incl. estimated ultimate recovery (EUR)

Thermal maturity Pressure Formation depth

Drilling costs Recompletions

Price of gas

P

Q

Technically recoverable natural gas resources continue long-term rise

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U.S. dry gas resources trillion cubic feet

Source: EIA, Annual Energy Outlook 2013 Early Release AEO Edition

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500

1,000

1,500

2,000

2,500

3,000

2000 2005 2006 2007 2008 2009 2010 2011 2012 2013

2,327

304

543

1,479

*Alaska resource estimates prior to AEO2009 reflect resources from the North Slope that were not included in previously published documentation.

Unproved shale gas Unproved other gas (including Alaska* and offshore) Proved reserves (all types and locations)


Steep decline curves for shale gas plays make the market more responsive to price

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500

1,000

1,500

2,000

0 5 10 15 20

Haynesville Eagle Ford Woodford Marcellus Fayetteville

million cubic feet per year

Source: EIA, Annual Energy Outlook 2012

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50%

100%

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Cumulative production


Estimated ultimate recovery (EUR) calculated from historical individual natural gas well data shows most wells are concentrated around mean. Fort Worth Basin – natural gas

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bcf/well

Number of wells

Average EUR minimum

maximum

25th percentile

mean median

75th percentile


Source: EIA analysis, EUR = total projected production over 30 year life of wells

billion cubic feet/well

For more information

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U.S. Energy Information Administration home page | www.eia.gov

Annual Energy Outlook | www.eia.gov/forecasts/aeo

Short-Term Energy Outlook | www.eia.gov/forecasts/steo

International Energy Outlook | www.eia.gov/forecasts/ieo

Today In Energy | www.eia.gov/todayinenergy

Natural Gas Weekly Update | http://www.eia.gov/naturalgas/weekly/

States data | http://www.eia.gov/beta/state/

Shale gas | http://www.eia.gov/energy_in_brief/article/about_shale_gas.cfm


http://www.eia.gov/

http://www.eia.gov/forecasts/aeo

http://www.eia.gov/forecasts/steo

http://www.eia.gov/forecasts/ieo

http://www.eia.gov/todayinenergy

http://www.eia.gov/naturalgas/weekly/

http://www.eia.gov/beta/state/

http://www.eia.gov/energy_in_brief/article/about_shale_gas.cfm

Supplemental slides


Over time the electricity mix gradually shifts to lower-carbon options, led by growth in natural gas and renewable generation

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U.S. electricity net generation trillion kilowatthours


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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

25%

19%

42%

13%

1%

Nuclear

Oil and other liquids

Natural gas

Coal

Renewables

2011 Projections History

17%

16%

35%

30%

1%

1993

53%

13%

19% 11%

4%


Natural gas and renewables account for the vast majority of capacity additions from 2012 to 2040

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U.S. cumulative capacity additions gigawatts


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100

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2011 2015 2020 2025 2030 2035 2040

Nuclear Coal

Natural gas

Renewables


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Wind 45 (4%)

* Includes pumped storage

Coal 8 (2%)

Natural gas 215 (64%)

Hydropower* 2 (1%)

Nuclear 11 (3%)

Other renewables 58 (17%)

Other 0.4 (0.1%)

339 gigawatts

Wind 42 (13%)

End-use coal 4 (0.4%)

Coal 315 (30%)

Natural gas 413 (39%)

Hydropower* 101 (10%)

Nuclear 101 (10%)

Other renewables

15 (1%)

Other 59 (6%)

1,055 gigawatts

End-use coal 1 (0.4%)

2011 capacity Capacity additions 2012 to 2040

Natural gas, wind and other renewables account for the vast majority of capacity additions from 2011 to 2040

Source: EIA, Annual Energy Review 2011 and Annual Energy Outlook 2013 Early Release


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