Monday, December 16, 2013

EIA Releases Annual Energy Outlook 2014 Reference case

In the Alphaville post "The North Dakota millionaires rocking oil markets" (linked to earlier this morning) a commenter noted:
How do markets appreciate the enormous decline rates of existing wells? Every month a lot of new wells have to be drilled and to be brought online because otherwise... NDs oil output starts to go down. 
All of which is true but not urgent. Using the chart below it looks as though 2016 is top-tick for tight shale production. What might be of interest is the fact that some shale gas wells may never be able to produce enough to pay for themselves. But that's another story for another day.

Anyhoo, the EIA realized the need for more timely and granular information and back in early November we posted "Oil&Gas: A Deep Dive Into the EIA's New Metric, Rig Productivity" for folks who are interested.

Here's the announcement of the first report since the methodology upgrade.
From the EIA's Today in Energy:

Increased tight oil production, vehicle efficiency reduce petroleum and liquid imports
graph of U.S. liquid fuels supply, as explained in the article text
Source: U.S. Energy Information Administration, Annual Energy Outlook 2014 Early Release
Note: Other includes refinery gains, biofuels production, all stock withdrawals, and other domestic sources of liquid fuels.

The U.S. Energy Information Administration's Annual Energy Outlook 2014 Reference case shows that recent growth in domestic crude oil and natural gas production is expected to continue for many years. In 2016, crude oil production is expected to be close to the historical high of 9.6 million barrels per day, a record set in 1970. The AEO2014 Reference case was released at 9:30 a.m. EST today. It contains baseline projections for U.S. energy production, consumption, and imports through 2040.

While domestic crude oil production is projected to level off and then slowly decline after 2020, natural gas production grows steadily, with a 56% increase between 2012 and 2040, when production reaches 37.6 trillion cubic feet. The full AEO2014 report, to be released next spring, will also consider alternative resource and technology scenarios, some showing significantly higher long-term oil production than in the Reference case.

Some other key findings of the AEO2014 Reference case include:
Low natural gas prices boost natural gas-intensive industries. Industrial shipments are expected to grow at 3.0% per year over the first 10 years of the projection and then slow to 1.6% annual growth through 2040. Bulk chemicals and metals-based durables account for much of the increased growth in industrial shipments. Industrial shipments of bulk chemicals, which benefit from an increased supply of natural gas liquids, grow by 3.4% per year from 2012 to 2025. The competitive advantage in bulk chemicals diminishes in the long term. Industrial natural gas consumption is projected to grow by 22% between 2012 and 2025....MORE
Here's the Outlook page:
AEO2014 Early Release Overview
This release is an abridged version of the Annual Energy Outlook that highlights changes in the AEO Reference case projections for key energy topics. The Early Release includes data tables for the Reference case only. The AEO2014 full version will be released early Spring 2014.
Download the AEO2014 Early Release Report
   Watch the live webcast—at 9:30am EST

In preparing the AEO2014 Reference case, the U.S. Energy Information Administration (EIA) evaluated a wide range of trends and issues that could have major implications for U.S. energy markets. This overview presents the AEO2014 Reference case and compares it with the AEO2013 Reference case released in April 2013 (see Table 1 on pages 17-18). Because of the uncertainties inherent in any energy market projection, the Reference case results should not be viewed in isolation. Readers are encouraged to review the alternative cases when the complete AEO2014 publication is released, to gain perspective on how variations in key assumptions can lead to different outlooks for energy markets. To provide a basis against which alternative cases and policies can be compared, the AEO2014 Reference case generally assumes that current laws and regulations affecting the energy sector remain unchanged throughout the projection (including the implication that laws that include sunset dates do, in fact, expire at the time of those sunset dates). This assumption clarifies the relationship of the Reference case to other AEO2014 cases and enables policy analysis with less uncertainty regarding unstated legal or regulatory assumptions....MORE