The Annual Energy Outlook 2011 released earlier this month by the U.S. Energy Information Administration project a major expasion of shale gas production and increased imports of oil from Alberta's tar sands.
The reference gas predicts a world oil price of $125 per barrel in 2009 dollars, a gradual increase in GHG emissions - but not reaching 2005 levels until 2027, and continued dominance of coal as the basis for U.S. electricity production.
'Our Reference case projection shows the growing importance of natural gas from domestic shale gas resources in meeting U.S. energy demand and lowering natural gas prices,' said EIA Administrator Richard Newell.
'Energy efficiency improvements and the increased use of renewables are other key factors that moderate the projected growth in energy-related greenhouse gas emissions,' said Newell.
The EIA forecast notes that with the economic viability of Canada's oil sands supported by rising world oil prices and advances in production technology, Canadian oil sands production reaches 5.1 million barrels per day in 2035, up significantly from 1.8 million barrels per day today.
Significantly, despite this increase, net imports of energy meet a major, but declining, share of total U.S. energy demand in the AEO2011 Reference case. The projected growth in energy imports is moderated by increased use of biofuels (much of which are produced domestically), demand reductions resulting from the adoption of new efficiency standards, and rising energy prices.
Rising fuel prices also spur domestic energy production across all fuels, particularly natural gas from plentiful shale gas resources, and temper the growth of energy imports. The net import share of total U.S. energy consumption in 2035 is 18 percent, compared with 24 percent in 2009.
Some other key findings from the 2035 Reference Case include:
Higher domestic shale gas production at lower prices than last year:
- The technically recoverable unproved shale gas resource is 827 trillion cubic feet, 480 trillion cubic feet larger than the AEO2010 Reference case, reflecting a doubling of shale gas production, with lower natural gas prices.
Imports meet a major but declining share of total U.S. 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 U.S. energy consumption in 2035 is 18 percent, compared with 24 percent in 2009.
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 ( Figure 2) 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. Natural gas will play a growing role due to lower prices and relatively low capital construction costs.
Industrial natural gas demand recovers, reversing recent trend: I
- ndustrial 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.
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 percent in 2008 and nearly 7 percent 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 percent from 2027 to 2035, reaching 6,315 million metric tons in 2035.
Other highlights of the AEO2011 Reference case projections:
- World oil prices rise in the Reference case ( Figure 4), 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.
- In the AEO2011 Reference case, U.S. natural gas consumption rises 16 percent 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).
- U.S. 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.
The Annual Energy Outlook reports are considered to be one of the most accurate forecasts of trends in the U.S. and global energy market, and are of particular importance to canada given the extent to which our energy systems are inter-linked.
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.
Full details of the Annual Energy Outlook 2011 report are available here.