Annual Energy Outlook 2015
For
Columbia University
May 2015 | New York, NY
By
Adam Sieminski
U.S. Energy Information Administration
U.S. Energy Information Administration
Independent Statistics & Analysis
www.eia.gov
Key results from Annual Energy Outlook 2015 (AEO2015)
•  In most AEO2015 cases, U.S. net energy imports, including all fuels,
decline and ultimately end by 2030 for the first time since the 1950s
–  Strong growth in domestic production of crude oil from tight formations through
2020 and limited growth in domestic demand after 2020 leads to a decline in net
petroleum and other liquids imports
–  The United States transitions from being a net importer of natural gas to a net
exporter by 2017 in all cases
•  U.S. energy consumption grows at a modest rate over the projection with
reductions in energy intensity resulting from improved technologies and
trends driven by existing laws and regulations
•  Renewables provide an increased share of electricity generation, reflecting
rising long-term natural gas prices and the high capital costs of new coal
and nuclear generation capacity
•  Improved efficiency of energy consumption in end-use sectors and a shift
away from more carbon-intensive fuels help to stabilize U.S. energy-related
carbon dioxide emissions, which remain below the 2005 level through 2040
Annual Energy Outlook 2015
May 2015
2
Overview of AEO2015
Annual Energy Outlook 2015
May 2015
3
Crude oil price projection is lower in the AEO2015 Reference
case than in AEO2014, particularly in the near term
Brent crude oil spot price
2013 dollars per barrel
History
160
Projections
2013
AEO2014
120
AEO2015
80
40
0
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Source: EIA, Annual Energy Outlook 2015 Reference case and Annual Energy Outlook 2014 Reference case
Annual Energy Outlook 2015
May 2015
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Reductions in energy intensity largely offset impact of GDP
growth, leading to slow projected growth in energy use
U.S. primary energy consumption
quadrillion Btu
History
120
100
Projections
2025
2013
2040
Renewables (excluding liquid biofuels)
80
Coal
40
20
0
1980
27%
8%
9%
10%
18%
19%
18%
8%
8%
8%
Natural gas
60
Nuclear
Liquid biofuels
1985
1990
1995
2000
1%
1%
2005
2010
1%
35%
36%
Petroleum and other liquids
29%
27%
2015
2020
2025
33%
2030
2035
2040
Source: EIA, Annual Energy Outlook 2015 Reference case
Annual Energy Outlook 2015
May 2015
5
U.S. net energy imports continue to decline in the near term,
reflecting increased oil and natural gas production coupled with
slow demand growth
U.S. net energy imports
quadrillion Btu
2013
History
40
Projections
30
20
10
Low Oil Price
Reference
0
-10
High Oil Price
-20
-30
2005
High Oil and Gas Resource
2010
2015
2020
2025
2030
2035
2040
Source: EIA, Annual Energy Outlook 2015
Annual Energy Outlook 2015
May 2015
6
CO2 emissions are sensitive to the influence of future economic
growth and energy price trends on energy consumption
energy-related carbon dioxide emissions
million metric tons
6,250
History
Projections
2013
6,000
High Economic Growth
5,750
High Oil and Gas Resource
5,500
Reference
5,250
Low Economic Growth
5,000
2000
2005
2010
2015
2020
2025
2030
2035
2040
Source: EIA, Annual Energy Outlook 2015
Annual Energy Outlook 2015
May 2015
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Short-term and long-term outlook:
Petroleum
Annual Energy Outlook 2015
May 2015
8
Brent crude oil prices were relatively stable through the first half of
2014; increased oil supply and lower global economic growth
expectations lowered prices from July 2014 to January 2015
dollars per barrel
Source: EIA, Bloomberg
Annual Energy Outlook 2015
May 2015
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Average household energy expenditures fall by 16% in 2015,
then increase somewhat in 2016 (based on EIA price forecast)
household energy expenditures
dollars
5,000
$4,568
$4,534
$393
$417
$3,805
4,000
$4,090
$404
$1,422
$1,464
$394
3,000
Natural gas
$1,514
$142
$140
$1,489
$114
2,000
Electricity
Fuel oil and other fuels
$105
$2,611
$2,513
1,000
$1,817
$2,058
Transportation (gasoline
and motor oil)
0
2013
2014
2015
2016
Sources: 2013 expenditures and income from BLS Consumer Expenditure Survey. The average household in the
BLS survey (called a consuming unit) averages 2.5 people and 1.3 income earners. Expenditures for 2014-16
based on average prices from EIA Short-Term Energy Outlook, April 2015
Annual Energy Outlook 2015
May 2015
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Oil prices rise from mid-2015 through mid-2016 in EIA’s forecast
– however, the market-implied confidence band is very wide
WTI price
dollars per barrel
150
125
100
75
Historical Spot Price
STEO Forecast
50
NYMEX Futures Price
25
Current 95% NYMEX futures price confidence interval
April 2014 95% NYMEX futures price confidence interval
0
Jan Apr
Jul Oct Jan Apr Jul Oct Jan Apr Jul
2013
2014
2015
Oct Jan Apr
Jul
2016
Oct
Source: EIA, Short-Term Energy Outlook, April 2015
Annual Energy Outlook 2015
May 2015
11
Various events could lead to changes in global supply or
demand that could push future crude oil prices higher or lower
than the forecast
Event
Oil demand growth surprises to the upside (economy- or price-driven)
Key OPEC producers cut output more than expected
Increase Prices
Iraq production is significantly disrupted (ISIL? other discord?)
Social unrest in oil-dependent countries leads to supply disruptions
Non-OPEC production slows more than expected
World economic growth is lower than projected (e.g., China)
Saudi Arabia keeps production at 9.6-9.7 million bbl/d in 2016
Decrease Prices
Reduction in unplanned production outages
Iranian sanctions are lifted
Annual Energy Outlook 2015
May 2015
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AEO2015 explores scenarios that encompass a wide range of
future crude oil price paths
Brent crude oil spot price
2013 dollars per barrel
History
Projections
2013
250
High Oil Price
200
150
Reference
100
Low Oil Price
50
High Oil and Gas Resource
0
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Source: EIA, Annual Energy Outlook 2015
Annual Energy Outlook 2015
May 2015
13
U.S. crude oil production rises above previous historical highs before
2020 in all AEO2015 cases, with a range of longer-term outcomes
U.S. crude oil production
million barrels per day
History
2013
2013
20
2013
High Oil and Gas
Resource
Reference
Low Oil Price
15
U.S. maximum production level of
9.6 million barrels per day in 1970
10
Tight oil
5
Lower 48 offshore
Other lower 48 onshore
Alaska
0
1990
2000
2010
2020
2030
2040
2020
2030
2040
2020
2030
2040
Source: EIA, Annual Energy Outlook 2015
Annual Energy Outlook 2015
May 2015
14
U.S. net exports of petroleum products vary with the level of
domestic oil production given current limits on U.S. crude oil exports
U.S. petroleum product imports and exports
million barrels per day
High Oil and Gas
Reference
Low Oil Price
History
Resource
2013
2013
2013
12 Total petroleum product net exports
Other petroleum
Total petroleum product
12
High Oil and Gas Resource
product exports
net exports
8
Reference
4
8
Low Oil Price
0
-4
2005 2010 2015 2020 2025 2030 2035 2040
Motor gasoline exports
4
Distillate
exports
0
Other petroleum
product imports
-4
1990
2000
Motor gasoline imports
Distillate imports
2010
2020
2030
2040
2020
2030
2040
2020
2030
2040
Source: EIA, Annual Energy Outlook 2015
Annual Energy Outlook 2015
May 2015
15
Combination of increased tight oil production and higher fuel
efficiency drive projected decline in oil imports
U.S. liquid fuels supply
million barrels per day
History
25
Projections
2013
2020
2040
20
14%
33%
15
Net petroleum and other liquids imports
14%
10
21%
Natural gas
plant liquids
21%
29%
Tight oil
production
22%
17%
5
Other crude oil production
(excluding tight)
23%
17%
25%
27%
12%
12%
14%
Other
0
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Note: “Other” includes refinery gain, biofuels production, all stock withdrawals, and other domestic sources of liquid fuels
Source: EIA, Annual Energy Outlook 2015 Reference case
Annual Energy Outlook 2015
May 2015
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Net liquid imports provide a declining share of U.S. liquid fuels supply
in most AEO2015 cases; in two cases the nation becomes a net exporter
net crude oil and petroleum product imports as a percentage of total U.S. supply
percent
2013
Projections
History
70
60
50
40
Low Oil Price
30
20
Reference
10
0
High Oil Price
-10
-20
-30
2005
High Oil and Gas Resource
2010
2015
Source: EIA, Annual Energy Outlook 2015
Annual Energy Outlook 2015
May 2015
2020
2025
2030
2035
2040
17
In the transportation sector, motor gasoline use declines; diesel fuel,
jet fuel, and natural gas use all grow
transportation energy consumption by fuel
quadrillion Btu
History
30
Projections
2013
2040
2030
25
24%
20
Diesel
10%
Other*
Jet fuel
3%
4%
15
31%
31%
1% 13%
CNG/LNG 14%
4%
Ethanol
2%
5%
3%
3%
10
5
0
1990
Motor gasoline
58%
1995
2000
2005
2010
2015
Source: EIA, Annual Energy Outlook 2015 Reference case
Annual Energy Outlook 2015
May 2015
2020
2025
44%
48%
2030
2035
2040
*Includes aviation gasoline, propane, residual fuel oil,
lubricants, electricity, and liquid hydrogen
18
Most significant contributors to non-OPEC crude and lease
condensate production: Canada, Brazil, U.S., Kazakhstan, Russia
non-OPEC crude and lease condensate production, Reference case
million barrels per day
24
2010
2025
2040
18
12
6
0
Canada
United States
Mexico
Brazil
Kazakhstan
Russia
Other
Source: EIA, International Energy Outlook 2014
Annual Energy Outlook 2015
May 2015
19
All of the growth in liquid fuels consumption occurs in the
emerging non-OECD (million barrels per day)
petroleum and other liquid fuels consumption, 1990-2040
million barrels per day
history
90
projections
2010
Non-OECD
60
OECD
30
0
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Source: EIA, International Energy Outlook 2014
Annual Energy Outlook 2015
May 2015
20
Non-OECD Asia and the Middle East account for 85% of the
world’s growth in liquids consumption over the projection
non-OECD petroleum and other liquid fuels consumption, Reference case, 1990-2040
million barrels per day
projections
history
80
Europe and Eurasia
Central and South America
60
Africa
Middle East
Other Asia
China
40
20
0
1990
2000
2010
2020
2030
2040
Source: EIA, International Energy Outlook 2014
Annual Energy Outlook 2015
May 2015
21
Short-term and long-term outlook:
Natural gas
Annual Energy Outlook 2015
May 2015
22
Henry Hub spot prices are expected to average $3.07/million
Btu in 2015 and $3.45/million Btu in 2016
Henry Hub spot price
dollars per million Btu
7
6
5
4
3
Historical Spot Price
2
STEO Forecast
NYMEX Futures Price
1
95% NYMEX futures price confidence interval
0
Jan
Apr
Jul Oct
2013
Jan
Apr
Jul Oct
2014
Jan
Apr
Jul
2015
Oct
Jan
Apr
Jul
2016
Oct
Source: EIA, Short-Term Energy Outlook, April 2015
Annual Energy Outlook 2015
May 2015
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After cold weather caused large natural gas storage withdrawals
in 2014, inventories are expected to remain within historical
average levels in 2015 and 2016
U.S. working natural gas in storage
billion cubic feet per day
5,000
deviation from average
120%
Forecast
4,000
100%
3,000
80%
2,000
60%
1,000
40%
0
20%
-1,000
-2,000
0%
Deviation from average
Storage level
-20%
-3,000
-40%
-4,000
Jan 2011
-60%
Jan 2012
Jan 2013
Jan 2014
Jan 2015
Jan 2016
Note: Colored band around storage levels represents the range between the minimum
and maximum from Jan. 2010 - Dec. 2014.
Source: EIA, Short-Term Energy Outlook, April 2015
Annual Energy Outlook 2015
May 2015
24
Future domestic natural gas prices depend on both domestic
resource availability and world energy prices
average Henry Hub spot prices for natural gas
2013 dollars per million Btu
History
2013
12
Projections
High Oil Price
9
Reference
6
Low Oil Price
High Oil and Gas Resource
3
0
2005
2010
2015
2020
2025
2030
2035
2040
Source: EIA, Annual Energy Outlook 2015
Annual Energy Outlook 2015
May 2015
25
Shale resources remain the dominant source of U.S. natural gas
production growth
U.S. dry natural gas production
trillion cubic feet
billion cubic feet per day
History
40
Projections
2013
100
35
90
30
80
25
70
Shale gas and tight oil plays
20
50
15
10
40
30
Tight gas
Other lower 48 onshore
20
Coalbed methane
5
0
1990
60
Alaska
Lower 48 offshore
1995
2000
2005
2010
2015
2020
2025
2030
2035
10
0
2040
Source: EIA, Annual Energy Outlook 2015 Reference case
Annual Energy Outlook 2015
May 2015
26
Natural gas consumption growth is driven by increased use in
all sectors except residential
U.S. dry gas consumption
trillion cubic feet
35
billion cubic feet per day
History
Residential
Projections
Commercial
Transportation**
Electric power
Industrial*
30
90
80
25
10.9
70
60
8.9
20
50
15
9.4
8.2
40
30
10
5
0.9
3.3
1.6
4.9
4.2
3.6
0
20
10
0
2005
2013
2020
2025
Source: EIA, Annual Energy Outlook 2015 Reference case
Annual Energy Outlook 2015
May 2015
2030
2035
2040
*Includes combined heat-and-power and lease and plant fuel
**Includes pipeline fuel
27
Projected U.S. natural gas exports reflect the spread between domestic
natural gas prices and world energy prices
U.S. natural gas imports and exports
trillion cubic feet
16
billion cubic feet per day
History 2013
2013
Projections
2013
Lower 48 states
LNG exports
12
40
30
Alaska LNG exports
8
Pipeline exports
to Mexico
20
4
10
0
0
Pipeline imports from Canada
Pipeline exports to Canada
-4
LNG imports
-8
2000
2010
High Oil and Gas
Resource
Reference
2020
2030
2040
2020
2030
2040
-10
Low Oil Price
2020
2030
-20
2040
Source: EIA, Annual Energy Outlook 2015
Annual Energy Outlook 2015
May 2015
28
Short-term and long-term outlook:
Electricity
Annual Energy Outlook 2015
May 2015
29
Growth in electricity use slows, but electricity use still increases
by 24% from 2013 to 2040
Period
Average Growth__
Electricity use
1950s
9.8
1960s
7.3
2013 1970s
4.7
1980s
2.9
1990s
2.4
2000-2013
0.7
2013-2040
0.8
U.S. electricity use and GDP
percent growth (rolling average of 3-year periods)
History
14
12
10
GDP
4.2
4.5
3.2
3.1
3.2
1.9
2.4
Projections
Electricity use
8
6
4
2
0
1950
Gross domestic product
1960
1970
1980
1990
2000
2010
2020
2030
2040
Source: EIA, Annual Energy Outlook 2015 Reference case
Annual Energy Outlook 2015
May 2015
30
Over time the electricity mix gradually shifts to lower-carbon
options, led by growth in renewables and gas-fired generation
electricity net generation
trillion kilowatthours
13%
6
History
Projections
2013
1993
2040
2025
5
31%
27%
Natural gas
13%
16%
Renewables
18%
39%
38%
Coal
34%
Petroleum and other liquids 19%
1%
18%
1%
Nuclear
16%
4
27%
3
13%
11%
2
53%
1
19%
0
1990 4%1995
2000
2005
2010
2015
2020
2025
2030
2035
1%
2040
Source: EIA, Annual Energy Outlook 2015 Reference case
Annual Energy Outlook 2015
May 2015
31
Non-hydro renewable generation grows to double hydropower
generation by 2040
renewable electricity generation by fuel type
billion kilowatthours
750
History
Projections
2013
600
450
300
Conventional
Hydroelectric
Power
Wind
Solar
150
0
2000
Geothermal
Biomass
Municipal waste/Landfill gas
2005
2010
2015
2020
2025
2030
2035
2040
Source: EIA, Annual Energy Outlook 2015 Reference case
Annual Energy Outlook 2015
May 2015
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For more information
U.S. Energy Information Administration home page | www.eia.gov
Annual Energy Outlook | www.eia.gov/aeo
Short-Term Energy Outlook | www.eia.gov/steo
International Energy Outlook | www.eia.gov/ieo
Monthly Energy Review | www.eia.gov/mer
Today in Energy | www.eia.gov/todayinenergy
State Energy Profiles | http://www.eia.gov/state
Drilling Productivity Report | http://www.eia.gov/petroleum/drilling/
Annual Energy Outlook 2015
May 2015
33