(EnergyAsia, December 27 2013, Friday) — Due to the industry’s use of “advanced technologies”, the US will continue to boost domestic crude oil production through 2020 while natural gas output will rise through 2040, said the Energy Information Administration (EIA).

In its latest forecast, the EIA expects US oil production to rise by 800,000 b/d every year through 2016 to almost reach the historical high of 9.6 million b/d achieved in 1970.

Natural gas production will set new record highs as it is seen expanding by 56% from 2012 to reach 37.6 trillion cubic feet (tcf) in 2040, according to the EIA’s Annual Energy Outlook 2014 (AEO2014).

The agency said rising crude oil and natural gas production will reshape the US energy economy as well as expand the potential for natural gas exports.

Reflecting the Obama administration’s call for “energy independence”, EIA administrator Adam Sieminski said growing domestic hydrocarbon production benefitting the US economy by reducing the nation’s dependence on imported oil and helping its gas-consuming industries.

Helped by low natural gas prices, US industrial shipments will grow at a three-percent annual rate over the first 10 years of the projection and then slow to a 1.6% annual growth from 2020 to 2040. Bulk chemicals and metals-based durables account for much of the increased growth in industrial shipments.

Industrial shipments of bulk chemicals, bolstered by an increased supply of natural gas liquids, will grow by 3.4% per year from 2012 to 2025.

The EIA expects US industrial natural gas consumption to grow by 22% between 2012 and 2025.

At the same time, prospects are improving for the US to increase exports of both pipeline and liquefied natural gas (LNG).

According to the AEO’s forecast, US exports of LNG will risee to 3.5 tcf before 2030 and remain at that level through 2040.
US pipeline exports of natural gas to Mexico will grow by six percent per year, from 600 billion cubic feet in 2012 to 3.1 trillion cubic feet in 2040, while pipeline exports to Canada will increase by 1.2% per year from one tcf in 2012 to 1.4 tcf in 2040.

Over the same period, the EIA expects US pipeline imports from Canada to fall by 30% from three tcf in 2012 to 2.1 tcf in 2040 as the US becomes increasingly self-sufficient.

The AEO report highlighted the declining energy consumtpion of cars and light trucks brought on by slow growth in travel and accelerated vehicle efficiency improvements.

Over the next three decades, US vehicle use will be influenced by lower population growth rates and an aging population and. The AEO2014 report projects that the annual increase in vehicles miles travelled (VMT) in light-duty vehicles (LDV) to average 0.9% from 2012 to 2040, compared to the 1.2% rate over the same period in last year’s report.

The rising fuel economy of light vehicles will more than offset the modest growth in the fleet’s population, resulting in a 25% decline in light-vehicle energy consumption decline between 2012 and 2040.

The natural gas “revolution” will extend to the power sector as more electricity companies switch to using the fuel in place of coal, said the EIA.
Projected low prices for natural gas make it a very attractive fuel for new generating capacity, displacing nuclear and coal as the main feedstock.

In 2040, natural gas will account for 35% of total US electricity generation, while coal will slip to 32% while renewable fuels will also take a bigger share of the US energy mix.

On the oulook for the oil markets, the EIA expects Brent crude oil spot price to decline from US$112 per barrel in 2012 to US$92 in 2017 and to surge to US$141 in 2040 due to growing global demand.

It forecasts world liquid fuels consumption to grow from 89 million b/d in 2012 to 117 million b/d in 2040, driven by growing demand in China, India, Brazil, and other developing economies.