The Future of Fuel: Toward the Next Decade of U.S. Energy Policy
Resources For the Future
November 28, 2012 | Washington, DC
Michael Schaal
Director, Office of Petroleum, Natural Gas and Biofuels Analysis
U.S. Energy Information Administration
Independent Statistics & Analysis www.eia.gov

Michael Schaal
RFF, Washington, D.C., November 28, 2012
• Generally assumes current laws and regulations
• Some grey areas regarding potential legislation
• Includes technologies that are commercial or reasonably expected to become commercial
• Assumptions to the AEO are also available at eia.gov/forecasts/aeo/assumptions
2

Energy use grows slowly over the projection in response to a slow and extended economic recovery and improving energy efficiency
U.S. primary energy consumption quadrillion Btu per year
Shares of total U.S. energy
History 2010 Projections
Renewables
(excluding liquid biofuels)
7%
11%
4%
1%
25%
Liquid biofuels
Natural gas 26%
9%
21%
Nuclear
Coal
9%
20%
37% Oil and other liquids 32%
Source: EIA, Annual Energy Outlook 2012
Michael Schaal
RFF, Washington, D.C., November 28, 2012
3

Energy and CO
2
per dollar of GDP continue to decline; per-capita energy use also declines index, 2005=1
1.75
1.50
1.25
1.00
0.75
History 2010 Projections
Per dollar
Per capita
CO2 per GDP
0.50
0.25
0.00
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Source: EIA, Annual Energy Outlook 2012
Michael Schaal
RFF, Washington, D.C., November 28, 2012
4

Shale gas offsets declines in other U.S. natural gas production sources
U.S. dry gas production trillion cubic feet per year
History Projections
2010
49%
23%
Shale gas
26%
Tight gas
2%
9%
9%
10%
21%
Non-associated offshore
Coalbed methane
Associated with oil
Non-associated onshore
Source: EIA, Annual Energy Outlook 2012
Michael Schaal
RFF, Washington, D.C., November 28, 2012
22%
Alaska 1%
7%
6%
6%
9%
5

U.S. imports of liquid fuels continue to decline due to increased production of gas liquids and biofuels and greater fuel efficiency
U.S. liquid fuels supply million barrels per day
History 2010 Projections
5%
Biofuels including imports
10%
Natural gas plant liquids
36%
12%
15%
Petroleum production
36%
Liquids from coal
1%
49%
Net petroleum imports
36%
Source: EIA, Annual Energy Outlook 2012
Energy Information Administration
AEO2012, June 2012
6

While total electricity generation grows by 21% over the projection, the annual rate of growth slows percent growth (3-year rolling average)
History
2010
Period Annual Growth
1950s 9.8
1960s 7.3
1970s 4.7
1980s 2.9
1990s 2.4
2000-2010 1.0
2010-2035 0.8
Projections
Source: EIA, Annual Energy Outlook 2012
Michael Schaal
RFF, Washington, D.C., November 28, 2012
7

Electricity mix gradually shifts to lower-carbon options, led by growth in renewables and natural gas electricity net generation trillion kilowatthours per year
2010
24%
10%
20%
45%
Oil and other liquids
1%
Source: EIA, Annual Energy Outlook 2012
Michael Schaal
RFF, Washington, D.C., November 28, 2012
Natural gas
Renewables
Nuclear
Coal
28%
15%
18%
38%
1%
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Non-hydro renewable sources more than double between 2010 and 2035 non-hydropower renewable generation billion kilowatthours per year
2010
Advanced biofuels cogeneration
Power sector
Biomass
Industrial CHP
Wind
Solar
Geothermal
Waste
Source: EIA, Annual Energy Outlook 2012
Michael Schaal
RFF, Washington, D.C., November 28, 2012
9

2010 2035
Electric Power
2,271 (40%)
Buildings and
Industrial
1,492 (26%)
Electric Power
2,330 (41%)
Buildings and
Industrial
1,527 (27%)
5,639 million metric tons
5,728 million metric tons
2% growth
Transportation
1,876 (33%)
Source: Annual Energy Outlook 2012
Michael Schaal
RFF, Washington, D.C., November 28, 2012
Transportation
1,871 (33%)
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Michael Schaal
RFF, Washington, D.C., November 28, 2012 11

Energy Information Administration
AEO2012, June 2012
12

• Greenhouse gas legislation
• Renewable fuels standards
• Production Tax Credit
• Appliance efficiency standards
• Corporate Average Fuel Economy standards
• Investment tax credits
Michael Schaal
RFF, Washington, D.C., November 28, 2012 13

•Reference
•High and low economic growth (2)
•High and low oil price (2)
•Demand sector technology cases (2011, High, and Buildings Best Available) (3)
•Integrated high and low technology (applied to demand sectors; renewable; and electric power and refinery sector fossil; and nuclear) (2)
•High and low coal cost (2)
•High and low estimated ultimate recovery cases and high technically recoverable resources (3)
•High and low nuclear (2)
•Low renewable cost (1)
Liquid Fuels Market Module (1)
•Policy related: Extended Policy, No Sunset, carbon dioxide allowance fee ($15 and $25), and 5-year investment recovery with reference and with low natural gas prices (7)
•Proposed light-duty vehicle CAFE standards; advanced battery technology; heavy-duty truck natural gas potential (3)
Michael Schaal
RFF, Washington, D.C., November 28, 2012 14

U.S. dependence on imported petroleum continues to decline
U.S. liquid fuel supply million barrels per day
History Projections
2005 2010
Consumption
Net petroleum imports
60%
Domestic supply
49%
36%
Source: EIA, Annual Energy Outlook 2012
Michael Schaal
RFF, Washington, D.C., November 28, 2012 15

New light duty vehicle fuel economy reaches almost 38 mpg by 2035 in the Reference case, which does not include proposed standards for
MY2017 to MY2025 vehicles miles per gallon
History 2010 Projections
Summary of standards
2012-2016: 34.1 mpg CAFE average (based on NHTSA vehicle footprint sales distribution)
2020: 35 mpg by statute
2017-2025: Reference case does not include proposed rulemaking from December 2011
Source: EIA, Annual Energy Outlook 2012
Michael Schaal
RFF, Washington, D.C., November 28, 2012 16

Gasoline-only vehicles without hybrid technologies decline as a share of new vehicle sales
U.S. light car and truck sales millions
Source: EIA, Annual Energy Outlook 2012
Michael Schaal
RFF, Washington, D.C., November 28, 2012
17

U.S. imports of liquid fuels fall due to increased domestic production – including biofuels – and greater efficiency
U.S. liquid fuels consumption million barrels per day
2025 2035
21
18
Net petroleum imports
15
49%
12
Domestic petroleum supply
9
36%
6
3
10%
5%
0
2010 Low
EUR
Reference
High High
EUR TRR
Source: EIA, Annual Energy Outlook 2012
Michael Schaal
RFF, Washington, D.C., November 28, 2012
Low
EUR
Reference
High High
EUR TRR
Natural gas plant liquids
Biofuels including imports
Other non- petroleum supply
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billions ethanol-equivalent gallons
45
40
35
30
25
20
15
Legislated RFS in 2022
10
5
0
2010
Source: EIA, Annual Energy Outlook 2012
2022 2035
Biodiesel
Net imports
Other Advanced
Cellulosic biofuels
Corn ethanol
Michael Schaal
RFF, Washington, D.C., November 28, 2012 19

Success in the Barnett prompted companies to look at other shale formations in the U.S.
Michael Schaal
RFF, Washington, D.C., November 28, 2012 20

Domestic production of shale gas and tight oil has grown dramatically over the past few years
30 shale gas production (dry) billion cubic feet per day
25
20
15
10
Rest of US
Bakken
Eagle Ford
Marcellus
Haynesville
Woodford
Fayetteville
Barnett
Antrim
5
1.6 tight oil production for select plays million barrels of oil per day
1.4
1.2
1.0
0.8
0.6
0.4
Eagle Ford
Bakken
Granite Wash
Bone Spring
Monterey
Woodford
Niobrara
Spraberry
Austin Chalk
0.2
0
2000 2002 2004 2006 2008 2010 2012
0.0
2000 2002 2004 2006 2008 2010 2012
Sources shale gas: LCI Energy Insight gross withdrawal estimates as of September 2012 and converted to dry production estimates with EIA-calculated average gross-to-dry shrinkage factors by state and/or shale play.
Source tight oil: Drilling Info (formerly HPDI), Texas RRC, North Dakota department of mineral resources, and EIA, through June 2012.
Michael Schaal
3 rd Annual Bakken Summit, Denver, CO , October 24 th , 2012
21

Domestic natural gas production grows faster than consumption
15
10
5
0
U.S. dry gas trillion cubic feet per year
History
30
25
20
Consumption
Domestic supply
Net imports
2010
Projections
-5
1990 1995 2000 2005
Source: EIA, Annual Energy Outlook 2012
Michael Schaal
RFF, Washington, D.C., November 28, 2012
2010 2015 2020 2025 2030 2035
22

Technically recoverable dry gas resources
U.S. dry gas resources trillion cubic feet
3,000
2,500
2,000
Unproved Shale Gas
Unproved Other Gas (including Alaska* and offshore)
Proved Reserves (all types and locations)
Cumulative Production Since 2000
2,203
482
1,500
1,000
1,449
500
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
AEO Edition
*Alaska resource estimates prior to AEO2009 reflect resources from the North Slope that were not included in previously published documentation.
Source: EIA, Annual Energy Outlook 2012
273
Michael Schaal
RFF, Washington, D.C., November 28, 2012 23

Levelized electricity costs for new power plants, excluding subsidies, 2020 and 2035 costs for new U.S. electricity power plants
2010 cents per kilowatthour
2020
2035
Source: EIA, Annual Energy Outlook 2012
Adam Sieminski
AEO2012
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