EIA’s latest Annual Energy Outlook (AEO) projects a 56 percent increase in natural gas production by 2040, overtaking coal as the largest share of U.S. electric power generation.
On December 16, 2013, the Energy Information Administration (EIA) released the AEO 2014 Early Release Overview presenting updated projections for U.S. energy markets through 2040. The AEO 2014 highlights that strong growth in crude oil and natural gas production, driven by advanced technologies, would continue to reshape the energy economy. Among the key updates, the AEO 2014 Reference case includes a new demographic profile of driving behavior and a lower population growth rate based on revised Census Bureau projections.
Among the major findings, AEO 2014 expects domestic crude oil production to reach the 1970 historical high of 9.6 million barrels per day (MMbbl/d). In the AEO 2014 Reference case, crude oil production increases at an average annual rate of 0.8 MMbbl/d and levels off at 9.5 MMbbl/d in 2016 and begins to decline after 2020. Over the 2012-2040 projection period, natural gas production increases by 56 percent to reach 37.6 trillion cubic feet (Tcf). In 2040, natural gas would represent the largest share of total electricity generation reaching 35 percent, overtaking coal which would represent 32 percent.
According to EIA, natural gas-intensive industries would continue to benefit from low natural gas prices over the term. Industrial shipments are projected to increase by 3 percent per year through 2022 and then decrease to 1.6 percent through 2040. Bulk chemical shipments would grow at a 3.4 percent annual rate between 2012 and 2025 in AEO 2014, compared to 1.9 percent in the AEO 2013 Reference case. As a result, natural gas consumption in the U.S. industrial sector is expected to increase from 8.7 quadrillion British thermal units (Btu) in 2012 to 10.6 quadrillion Btu 2025, compared to the AEO 2013 projection of 9.8 quadrillion Btu in 2025. Energy-intensive industrial growth is expected to flatten after 2030 due to growing global competition.
AEO 2014 projects higher electricity generation from renewables due largely to tax credit extensions that took effect in the beginning of 2013, after the AEO 2013 release. It projects 10 percent lower nuclear power generation in 2040 compared to AEO 2013 levels due to increased nuclear plant retirements.
Domestic energy production is expected to increase from 79.1 quadrillion Btu to 102.1 quadrillion Btu between 2012 and 2040, compared to the AEO 2013 projection of 98.5 quadrillion Btu in 2040. Over the projection period, net imported energy consumption is expected to decline from 16 percent of total consumption to 4 percent, compared to the AEO 2013 consumption of 9 percent in 2040. Increased natural gas production is expected to bolster U.S. liquefied natural gas (LNG) exports, which is projected to increase to 3.5 Tcf in 2029 and then level off through 2040. Over the projection period, natural gas pipeline exports to Mexico and Canada are expected to increase by 6 percent and 1.2 percent, respectively. Pipeline imports from Canada are projected to decrease by 30 percent due to increased domestic production.
AEO 2014 projects sharp declines in light-duty vehicle (LDV) energy consumption due to slow growth in vehicle miles traveled (VMT) and increased vehicle efficiency improvements, based on a new demographic profile of driving behavior. It projects an average 0.9 percent annual VMT increase for LDVs between 2012 and 2040, compared to 1.2 percent increase in the AEO 2013 Reference case over the same period. Over the projection period, LDV energy consumption is expected to decrease from 16.0 quadrillion Btu to 12.1 quadrillion Btu, compared to the AEO 2013 projection of 13.0 quadrillion Btu in 2040.
EIA expects energy-related carbon dioxide emissions to remain below 2005 levels through 2040 due to increased energy efficiency in residential and transportation sectors and a transition to low-carbon fuels for electricity generation. AEO 2014 projects 2020 and 2040 emissions to remain approximately 9 percent and 7 percent below the 2005 level. Emissions decline in the transportation sector is attributed to new fuel economy standards, biofuel mandates, and shifts in consumer behavior. In the mid-2020s, industrial activity-related emissions are expected to exceed transportation sector emissions for the first time since late 1990s.
December 17, 2013 via Energy Solutions Forum
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