EIA Energy Outlook 2011 more than doubles estimates of US shale gas resources; higher production at lower prices
|Shale gas offsets declines in other US supply to meet consumption growth and lower import needs. Source: EIA. Click to enlarge.|
The Annual Energy Outlook 2011 (AEO2011) Reference case released yesterday by the US Energy Information Administration (EIA) more than doubles the technically recoverable US shale gas resources assumed in AEO2010 and added new shale oil resources.
The technically recoverable unproved shale gas resource is 827 trillion cubic feet (as of 1 January 2009) in the AEO2011 Reference case, 474 trillion cubic feet larger than in the AEO2010 Reference case, reflecting additional information that has become available with more drilling activity in new and existing shale plays. This larger resource leads to about double the shale gas production and more than 20% higher total lower-48 natural gas production in 2035, with lower natural gas prices, than was projected in the AEO2010 Reference case.
Our Reference case projection shows the growing importance of natural gas from domestic shale gas resources in meeting US energy demand and lowering natural gas prices. Energy efficiency improvements and the increased use of renewables are other key factors that moderate the projected growth in energy-related greenhouse gas emissions.—EIA Administrator Richard Newell
CO2. Assuming no changes in policy related to greenhouse gases, carbon dioxide emissions grow slowly, but do not again reach 2005 levels until 2027. After falling 3% in 2008 and nearly 7% in 2009, largely driven by the economic downturn, energy-related CO2 emissions do not return to 2005 levels (5,980 million metric tons) until 2027. CO2 emissions then rise by an additional 5% from 2027 to 2035, reaching 6,315 million metric tons in 2035.
Transportation updates. Among the transportation-related updates going into AEO2011, the EIA increased the limit for blending ethanol into gasoline for approved vehicles from 10% to 15%, as a result of the waiver granted by the US Environmental Protection Agency (EPA) in October 2010. It also updated the costs and sizes of electric and plug-in hybrid electric batteries and revised downward light-duty vehicle travel demand due to the adoption of a new estimation technique.
It also incorporated California’s Low Carbon Fuel Standard—which reduces the carbon intensity of gasoline and diesel fuels in that State by 10% from 2012 through 2020, and incorporated changes in environmental rules at the State level.
AEO2011 assumes the adoption of CAFE standards for light-duty vehicles for model year 2011, as well as joint CAFE and greenhouse gas emissions standards set forth by the EPA and NHTSA for model years 2012 through 2016. The fuel economy standards are increased through model year 2020 to meet the statutory requirements of EISA2007. Beyond 2020, CAFE standards for both passenger cars and light-duty trucks are held constant. The AEO2011 Reference case does not include the proposed fuel economy standards for heavy-duty vehicles because the specifics of the new standards are not yet available.
|Unconventional vehicle sales. Source: EIA. Click to enlarge.|
To attain the mandated fuel economy levels, the AEO2011 Reference case includes a rapid increase in sales of unconventional vehicle technologies, such as flex-fuel, hybrid electric, micro hybrid, plug-in, and diesel vehicles, as well as a lower ratio of light-duty truck sales to passenger car sales. According to the forecast, unconventional vehicles will represent more than 40% of US light-duty vehicle sales in 2035.
Transportation projections. Delivered energy consumption in the transportation sector grows from 27.2 quadrillion Btu in 2009 to 31.8 quadrillion Btu in 2035 in the AEO2011 Reference case, slightly lower than the 32.5 quadrillion Btu projected for 2035 in the AEO2010 Reference case.
Energy consumption for light-duty vehicles grows from 16.7 quadrillion Btu in 2009 to 18.4 quadrillion Btu in 2035 in the AEO2011, about the same as projected in the AEO2010 Reference case, as lower projections for vehicle-miles traveled are offset by relatively lower fuel economy improvements after CAFE standards applicable for model year 2020 are achieved.
Lower projected growth in light-duty vehicle travel demand (1.6% annually) is a result of the rate of economic recovery and prolonged high unemployment rates in the early part of the projection.
Energy demand for heavy trucks increases from 4.5 quadrillion Btu in 2009 to 6.7 quadrillion Btu in 2035, compared with 6.8 quadrillion Btu in the AEO2010 Reference case. Relatively lower projected industrial output leads to lower vehicle-miles traveled by freight trucks, more than offsetting the relatively lower projected fuel economy of heavy vehicles.
Biofuels fall short of the RFS goal in 2022, but exceed the 36 billion gallon RFS target by 2030.
Energy consumption for aircraft increases from 2.7 quadrillion Btu in 2009 to 3.1 quadrillion Btu in 2035 in the AEO2011 Reference case, lower than the 3.3 quadrillion Btu projected in the AEO2010 Reference case, due to relatively lower disposable personal income.
Other key findings of AEO2011 include:
Non-hydro renewables and natural gas are the fastest growing fuels used to generate electricity, but coal remains the dominant fuel because of the large amount of existing capacity. Coal remains the dominant energy source for electricity generation because of continued reliance on existing coal-fired plants. EIA is not projecting any new central station coal-fired power plants, however, beyond those already under construction or supported by clean coal incentives.
The generation share from renewable resources increases from 11% in 2009 to 14% in 2035 in response to Federal tax credits in the near term and State requirements in the long term. Natural gas also plays a growing role due to lower natural gas prices and relatively low capital construction costs that make it more attractive than coal. The share of generation from natural gas increases from 23% in 2009 to 25% in 2035.
Industrial natural gas demand recovers, reversing recent trend. Industrial natural gas demand grows sharply in the near term from 7.3 trillion cubic feet in 2009 to 9.4 trillion cubic feet in 2020. This growth reverses the recent downward trend, as a result of a strong recovery in near-term industrial production, growth in combined heat and power, and relatively low natural gas prices.
World oil prices rise in the Reference case, as the world economy recovers and pressure from growth in global demand continues. In 2035, the average real price of crude oil in the Reference case is $125 per barrel in 2009 dollars. World liquids consumption grows from 83.7 million barrels per day in 2009 to 110.8 million barrels per day in 2035. Most of the growth is in non-OECD countries or regions, lead by China, India, and the Middle East.
In the AEO2011 Reference case, US natural gas consumption rises 16% from 22.7 trillion cubic feet in 2009 to 26.5 trillion cubic feet in 2035. The total in 2035 is about 1.6 trillion cubic feet higher than in the AEO2010 Reference case (24.9 trillion cubic feet).
US crude oil production increases from 5.4 million barrels per day in 2009 to 6.1 million barrels per day in 2019 and declines slightly from that level through 2035. Production increases come from onshore enhanced oil recovery projects and shale oil plays.
Imports meet a major but declining share of total US energy demand. Projected demand for energy imports is moderated by increased use of domestically produced biofuels, demand reductions resulting from the adoption of efficiency standards, and rising energy prices. Rising fuel prices also spur domestic energy production across all fuels, which moderates growth in energy imports. The net import share of total US energy consumption in 2035 is 18%, compared with 24 percent in 2009.
Imports of liquid fuels falls. Source: EIA. Click to enlarge.
The full AEO2011 report, including projections with differing assumptions on the price of oil, the rate of economic growth, and the characteristics of new technologies, will be released in Spring 2011, along with regional projections.