Winter Fuels Outlook...Utica (OH, PA & WV) Marcellus Woodford (OK) Granite Wash (OK & TX) Austin...

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

Winter Fuels Outlook

For NCAC-USAEE October 24, 2014 | Washington, DC By Adam Sieminski, Administrator U.S. Energy Information Administration

NCAC-USAEE Luncheon October 24, 2014 2

Winter Outlook


Winter 2013-14 compared with winter 2014-15 • NOAA’s central forecast is for 12% lower winter heating degree days.

• Natural gas stocks are lower this winter, but production levels are elevated. We anticipate continued congestion in natural gas transportation into New England for home heating and electricity generation.

• Propane stocks are beginning this winter much higher in PADD 1 (East Coast), PADD 2 (the Midwest) and PADD 3 (Gulf Coast) than last winter. Secondary and tertiary stocks have reportedly been building in the Midwest.

• Corn harvest forecasts by the USDA call for a record crop yield. Last year’s large, wet corn harvest increased the demand for propane used in crop drying. The corn belt has been drier this year.

• Total distillate stocks, which include heating oil as well as Ultra Low Sulfur Diesel (ULSD) are about the same as year-ago levels. Five states in the Northeast have lowered sulfur specifications for heating oil.

• Coal stocks at electric utilities are at the low end of the 2006-2013 range.

0

5

10

15

20

25

30

35

Jan-

12

Mar

-12

May

-12

Jul-1

2

Sep

-12

Nov

-12

Jan-

13

Mar

-13

May

-13

Jul-1

3

Sep

-13

Nov

-13

Jan-

14

Mar

-14

May

-14

Jul-1

4

Sep

-14

Nov

-14

5-year range

inventory level

rolling 5-year average

PADD 2 (Midwest) propane inventories are currently above the five-year average


PADD 2 propane* inventories million barrels

Source: EIA, Weekly Petroleum Status Report, data through October 10 *propane/propylene for fuel use only

27.3 previous 5-year average, as of

10/10/14

Typical corn harvest dates (Sept 20 – Nov 10)

28.1 (10/10/14)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

U.S. propane production and trade trends


U.S. propane and propylene production, imports, and exports million barrels per day

Source: EIA, Petroleum Supply Monthly through July 2014; August and September 2014 are estimates

exports imports

production

Natural gas stocks are currently below the five-year average and five-year minimum, but have been climbing steadily

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Jan 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016

billion cubic feet

forecast

10% warmer Base case

10% colder

6

history

NCAC-USAEE Luncheon October 24, 2014

Note: Normal range (gray band) represents the range between the minimum to maximum from Jan. 2009 to Dec. 2013 Source: EIA Short-Term Energy Outlook, October 2014


Key pipelines delivering natural gas into New England have been at or close to capacity on most days since the start of last winter

Source: Derived from the Ventyx Energy Velocity Suite. Scheduled volumes based on Algonquin Gas Transmission’s Stony Point compressor station and Tennessee Gas Pipeline’s Station 245-249 Segment using intra-day 2 nominations from November 1, 2013 to September 9, 2014.

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1-N

ov-1

3

22-N

ov-1

3

13-D

ec-1

3

3-Ja

n-14

24-J

an-1

4

14-F

eb-1

4

7-M

ar-1

4

28-M

ar-1

4

18-A

pr-1

4

9-M

ay-1

4

30-M

ay-1

4

20-J

un-1

4

11-J

ul-1

4

1-A

ug-1

4

22-A

ug-1

4

capacity

natural gas scheduled to flow as of last intra-

day cycle

Daily scheduled natural gas and maximum capacity at the Stony Point Compressor Station on Algonquin Gas Transmission billion cubic feet per day

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1-N

ov-1

3

22-N

ov-1

3

13-D

ec-1

3

3-Ja

n-14

24-J

an-1

4

14-F

eb-1

4

7-M

ar-1

4

28-M

ar-1

4

18-A

pr-1

4

9-M

ay-1

4

30-M

ay-1

4

20-J

un-1

4

11-J

ul-1

4

1-A

ug-1

4

22-A

ug-1

4

Daily scheduled natural gas and maximum capacity at Segment 245-249 on the Tennessee Gas Pipeline billion cubic feet per day

capacity

Current forward natural gas prices in Boston, and to a lesser extent New York, indicate the likelihood of constraints again this winter


Source: Ventyx Energy Velocity Suite and Bloomberg. JKM is a proxy for LNG priced into Japan, Korea, and Malaysia. The Algonquin Citygates, Transco Zone 6 New York, and Columbia Gas Appalachia prices include the Henry Hub natural gas futures market price. Prices reflect recent settlements in early October.

Forward natural gas prices for winter months 2014-15 in selected markets as of early October U.S. dollars per million British thermal unit


Distillate inventories in key regions

0

2,000

4,000

6,000

8,000

10,000

12,000

7/4 7/25 8/15 9/5 9/26 10/17

PADD 1A - New England thousand barrels

5-year average

2014 stock level

05,000

10,00015,00020,00025,00030,00035,00040,000

7/4 7/25 8/15 9/5 9/26 10/17

PADD 1B – Mid-Atlantic thousand barrels

5-year average

2014 stock level

0

10,000

20,000

30,000

40,000

50,000

7/4 7/25 8/15 9/5 9/26 10/17

PADD 3 – Gulf Coast thousand barrels

5-year average level

2014 stock level

EIA is using total distillate fuel inventories for heating oil notifications under Reliable Home Heating Fuels (RHHA). For many states, the largest component of total distillate fuel is diesel fuel, which contains less than 15 ppm of sulfur content. Lower sulfur distillate may be used when higher sulfur heating oil is scarce.

Heating oil sulfur specifications lowered in five states as of July 2014

10 NCAC-USAEE Luncheon October 24, 2014

Note: Specifications change on July 1 of the years shown, with the exception of Maine's 15 ppm requirement, which changes on January 1, 2018. * Philadelphia, Pennsylvania changes from 2,000 ppm to 15 ppm on July 1, 2015. Source: U.S. Energy Information Administration

15 ppm

15 ppm

Coal stocks at electric utilities are at the bottom of the multi-year range


Note: Range represents difference between minimum and maximum from 2006 to 2013 Source: EIA Short-Term Energy Outlook, October 2014

forecast

0

25

50

75

100

125

150

175

200

225

250

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Historical rangeU.S. electric power coal stocks

U.S. coal stocks million short tons

Historical range (2006-2013)

U.S. electric power coal stocks


EIA actions to improve winter fuels information • More Detailed Weekly Propane Stock Data – In addition to weekly PADD-

level propane stocks, EIA will publish figures for Kansas (Conway hub), Michigan, Minnesota and Wisconsin, and a 4-state total for Iowa, Illinois, Indiana and Ohio.

• Notification to Governors of Low Stock Levels – Pursuant to the Reliable Home Heating Act, EIA now notifies state Governors when stocks of heating oil, natural gas, or propane in their PADD fall below the 5-year average for more than 3 weeks.

• Expanded State Participation in EIA Weekly Price Reporting – The State Heating Oil and Propane Program (SHOPP) now includes 14 more states for a total of 38. The first data release was on October 16.

• Increased Visibility on EIA Website and Targeted Communication with State Officials – EIA launched a special winter fuels webpage showcasing stock and price data. Beyond this, EIA will proactively reach out to both industry and public stakeholders in the states.


Oil and Gas Markets

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10.0

20.0

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40.0

50.0

60.0

U.S. is the largest producer of petroleum and natural gas in the world


estimated U.S., Russia, and Saudi Arabia petroleum and natural gas production quadrillion Btu million barrels per day of oil equivalent

United States

Russia

Saudi Arabia

petro-leum

natural gas

2008 2009 2010 2011 2012 2013 2014e Source: U.S. Energy Information Administration Note: Petroleum production includes crude oil, natural gas liquids, condensates, refinery processing gain, and other liquids, including biofuels; barrels per day oil equivalent were calculated using a conversion factor of 1 barrel oil equivalent=5.55 million British thermal units (Btu)


These seven regions accounted for 95% of U.S. oil production growth and all U.S. natural gas production growth from 2011-2013

Source: EIA, Drilling Productivity Report

The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources

16

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2000 2002 2004 2006 2008 2010 2012 2014

Eagle Ford (TX)Bakken (MT & ND)Spraberry (TX & NM Permian)Bonespring (TX & NM Permian)Wolfcamp (TX & NM Permian)Delaware (TX & NM Permian)Yeso-Glorieta (TX & NM Permian)Niobrara-Codell (CO, WY)HaynesvilleUtica (OH, PA & WV)MarcellusWoodford (OK)Granite Wash (OK & TX)Austin Chalk (LA & TX)Monterey (CA)

U.S. tight oil production million barrels of oil per day

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5

10

15

20

25

30

35

40

2000 2002 2004 2006 2008 2010 2012 2014

Marcellus (PA & WV)

Haynesville (LA & TX)

Eagle Ford (TX)

Fayetteville (AR)

Barnett (TX)

Woodford (OK)

Bakken (ND)

Antrim (MI, IN, & OH)

Utica (OH, PA & WV)

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 August 2014 and represent EIA’s official tight oil & shale gas estimates, but are not survey data. State abbreviations indicate primary state(s).


U.S. shale gas leads growth in total gas production through 2040, when production exceeds 100 billion cubic feet per day

17

U.S. dry natural gas production trillion cubic feet

Source: EIA, Annual Energy Outlook 2014, Reference case

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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


billion cubic feet per day

18

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2005 2012 2020 2025 2030 2035 2040

U.S. dry gas consumption trillion cubic feet

Source: EIA, Annual Energy Outlook 2014, Reference case

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

Natural gas consumption growth is driven by electric power, industrial, and transportation use


U.S. becomes a net exporter of natural gas in the near future

19

U.S. dry natural gas trillion cubic feet per year

Source: EIA, Annual Energy Outlook 2014 Reference case


-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


Source: EIA, Annual Energy Outlook 2014, Reference case and High Oil and Gas Resource case


-4

-2

0

2

4

6

8

2010 2015 2020 2025-4

-2

0

2

4

6

8

2010 2015 2020 2025

Projected U.S. natural gas trade depends on assumptions regarding resources and future technology advances

Reference case trillion cubic feet per year

exports to Mexico exports to Canada

lower 48 LNG exports

imports from Canada

LNG imports

High Oil and Gas Resource case trillion cubic feet per year


0

5

20

15

10

-5

-10

Resource and technology assumptions have major implications for projected U.S. crude oil production beyond the next few years

0

2

4

6

8

10

12

14

1990 2000 2010 20200

2

4

6

8

10

12

14

1990 2000 2010 2020

21

Source: EIA, Annual Energy Outlook 2014; Short Term Energy Outlook, October 2014

Alaska

tight oil

other lower 48 states onshore

lower 48 states offshore

STEO October 2014 U.S. crude oil projection

2012 projections history projections history

2012

Alaska

tight oil

other lower 48 states onshore

Reference case million barrels per day

High Oil and Gas Resource case million barrels per day

lower 48 states offshore


U.S. rail carloads of crude oil and petroleum products exceed 1.5 million b/d in 2014


0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2006 2007 2008 2009 2010 2011 2012 2013 2014

number of rail carloads per week

Source: U.S. Energy Information Administration, based on Association of American Railroads

million barrels per day

U.S. petroleum product net exports million barrels per day

-3

-2

-1

0

1

2

3

1950 1960 1970 1980 1990 2000 2010

Source: EIA, Annual Energy Outlook 2014 Reference case and Short Term Energy Outlook


U.S. is already a major net exporter of petroleum products

2015(e)

Growing U.S. oil production and rising demand in China have together made China the world’s largest net oil importer


0

1

2

3

4

5

6

7

8

9

10

Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15

U.S. net imports

China net imports

net imports for China and the United States million barrels per day

Note: Net oil imports are defined as total liquid fuels consumption less domestic production Source: EIA, Short-Term Energy Outlook, October 2014

projections history

Aug-14

Most of the growth in production between 2011 and 2015 consists of sweet grades with API gravity of 40 or above

0

1

2

3

4

5

6

7

8

9

10

2011 2012 2013 2014 2015

API 50+API 40-50API 35-40API 27-35API below 27

U.S. crude oil production by type million barrels of oil per day

Source: EIA, DrillingInfo, Colorado DNR, Texas RRC. http://www.eia.gov/analysis/petroleum/crudetypes/


forecast history

http://www.eia.gov/analysis/petroleum/crudetypes/


Crude oil and associated liquids contain a wide variety of hydrocarbons

Source: EIA via Harvey Crude Assay Management System


There are several different distillation processes used in the petroleum industry; they are typically named for their function, not their configuration

Dis

tilla

tion

Com

plex

ity

Distillation Efficiency

Flash Drum

Heater Treater

Stabilizer

Splitter

Complex Distillation Tower

Separation via Pressure Changes

EIA Refinery Survey

Separation via Column Temperature Gradients

mixed hydrocarbon wells (gas, condensate, oil)

dry gas

(exportable with order/authorization)

crude oil / lease condensate (exportable under limited conditions) wet gas

EIA Refinery Survey

plant condensate

splitter complex distillation stabilizer finished product streams

processed products for domestic use or exportable without license

finished petroleum products and other processed hydrocarbon liquids

separation via temperature gradients

water

separation via pressure changes field / lease separator

flash drum heater treater

Distillation processes and resulting products


other processed gas liquids

fractionator separator gas processing plant

processed condensate

Areas of uncertainty in the outlook

• China’s energy demand growth; particularly in transportation – EIA is working with MIT and others to upgrade the structural and macroeconomic

determinates of transportation demand in all regions for IEO2015

• Increasing global trade of natural gas and HGL in addition to oil – EIA is integrating the representation of oil and natural gas supply and other

hydrocarbons

• Global development of tight oil and shale gas resources – EIA is gathering geology and production information, and conducting outreach

• Policy decisions on crude oil exports

• Impact of geopolitical tensions on energy supply – EIA exploring options for representing these uncertainties in the outlook


For more information


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

Annual Energy Outlook | www.eia.gov/aeo

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

International Energy Outlook | www.eia.gov/ieo

Monthly Energy Review | www.eia.gov/mer

Today in Energy | www.eia.gov/todayinenergy

State Energy Portal | www.eia.gov/state

Drilling Productivity Report | www.eia.gov/petroleum/drilling/

http://www.eia.gov/http://www.eia.gov/aeohttp://www.eia.gov/steohttp://www.eia.gov/ieohttp://www.eia.gov/merhttp://www.eia.gov/todayinenergyhttp://www.eia.gov/statehttp://www.eia.gov/petroleum/drilling/

Winter Fuels OutlookWinter OutlookWinter 2013-14 compared with winter 2014-15PADD 2 (Midwest) propane inventories are currently above the five-year averageU.S. propane production and trade trendsNatural gas stocks are currently below the five-year average and five-year minimum, but have been climbing steadilyKey pipelines delivering natural gas into New England have been at or close to capacity on most days since the start of last winterCurrent forward natural gas prices in Boston, and to a lesser extent New York, indicate the likelihood of constraints again this winterSlide Number 9Heating oil sulfur specifications lowered in five states as of July 2014Coal stocks at electric utilities are at the bottom of the multi-year rangeEIA actions to improve winter fuels informationOil and Gas MarketsU.S. is the largest producer of petroleum and natural gas in the worldThese seven regions accounted for 95% of U.S. oil production growth and all U.S. natural gas production growth from 2011-2013The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resourcesU.S. shale gas leads growth in total gas production through 2040, when production exceeds 100 billion cubic feet per dayNatural gas consumption growth is driven by electric power, industrial, and transportation useU.S. becomes a net exporter of natural gas in the near futureProjected U.S. natural gas trade depends on assumptions regarding resources and future technology advances Resource and technology assumptions have major implications for projected U.S. crude oil production beyond the next few yearsU.S. rail carloads of crude oil and petroleum products exceed 1.5 million b/d in 2014U.S. is already a major net exporter of petroleum productsGrowing U.S. oil production and rising demand in China have together made China the world’s largest net oil importerMost of the growth in production between 2011 and 2015 consists of sweet grades with API gravity of 40 or aboveCrude oil and associated liquids contain a wide variety of hydrocarbonsSlide Number 27Distillation processes and resulting productsAreas of uncertainty in the outlookFor more information

Winter Fuels Outlook...Utica (OH, PA & WV) Marcellus Woodford (OK) Granite Wash (OK & TX) Austin...

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