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DOE Evaluates Future Energy Scenarios

June 27, 2012

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Looking at the period of 2010 through 2035, the U.S. Department of Energy believes the rate of growth in U.S. energy use will slow, domestic crude oil production will increase, reliance on imported energy will drop, the country will become a net exporter or natural gas rather than a net importer, and carbon dioxide emissions will remain below their 2005 level.


These are the broad strokes of the Annual Energy Outlook 2012 released this week by the DOE's Energy Information Administration. It features "reference case" projections that reflect what the agency believes are the most likely scenarios, as well as 29 alternative cases showing how different assumptions regarding market, policy, and technology affect projections of energy production, consumption, technology, and market trends.

"Uncertainty is inherent in long-term projections," says EIA Administrator Adam Sieminski. "By modeling scenarios using a range of assumptions about market, policy, and technology drivers, we gain a better understanding of the potential impacts in critical areas of uncertainty."

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Slowing Growth

The report predicts the rate of growth in energy use will slow over the projection period.

The "reference case" projects U.S. energy consumption will grow at an average annual rate of 0.3% from 2010 through 2035. The scenario predicts the U.S. will not return to the levels of energy demand growth experienced in the 20 years prior to the 2008-2009 recession, because of more moderate projected economic growth and population growth, coupled with increasing levels of energy efficiency and rising energy prices.

New federal and state policies could lead to further reductions in energy consumption. The potential impact of technology change and the proposed vehicle fuel efficiency standards on energy consumption are examined in several of the alternate cases in the AEO2012.

Oil Production Grows

Domestic crude oil production has increased over the past few years, reversing a decline that began in 1986. U.S. crude oil production increased from 5 million barrels per day in 2008 to 5.5 million barrels per day in 2010. Over the next 10 years, continued development of tight oil, in combination with the ongoing development of offshore resources in the Gulf of Mexico, is predicted to push domestic crude oil production higher.

Because the technology advances that have provided for recent increases in supply are still in the early stages of development, future U.S. crude oil production could vary significantly, notes the agency.

Less Foreign Oil

With modest economic growth, increased efficiency, growing domestic production, and continued adoption of nonpetroleum liquids, net imports of petroleum and other liquids make up a smaller share of total U.S. energy consumption

U.S. dependence on imported petroleum and other liquids declines in the AEO2012 Reference case, primarily as a result of:
- rising energy prices;
- growth in domestic crude oil production to more than 1 million barrels per day above 2010 levels in 2020;
-an increase of 1.2 million barrels per day crude oil equivalent from 2010 to 2035 in the use of biofuels, much of which is produced domestically;
- slower growth of energy consumption in the transportation sector as a result of existing corporate average fuel economy standards.

Proposed light-duty vehicle fuel economy standards covering vehicle model years 2017 through 2025, which are not included in the Reference case, could further reduce demand for petroleum and other liquids and the need for imports, and increased supplies from U.S. tight oil deposits could also significantly decrease the need for imports.

More Natural Gas

Natural gas production increases throughout the projection period, allowing the United States to transition from a net importer to a net exporter of natural gas

Much of the growth in natural gas production in the AEO2012 Reference case results from the application of recent technological advances and continued drilling in shale plays with high concentrations of natural gas liquids and crude oil, which have a higher value than dry natural gas.

Shale gas production increases in the Reference case from 5 trillion cubic feet per year in 2010 (23% of total U.S. dry gas production) to 13.6 trillion cubic feet per year in 2035 (49% of total U.S. dry gas production).

As a result of the projected growth in production, the Reference case projects that U.S. natural gas production will exceed consumption early in the next decade. The outlook reflects increased use of LNG in markets outside North America, strong growth in domestic natural gas production, reduced pipeline imports and increased pipeline exports, and relatively low natural gas prices in the United States.

There are unresolved uncertainties surrounding the technological advances that have made shale gas production a reality. The potential impact of those uncertainties results in a range of outcomes for U.S. shale gas production from 9.7 trillion to 20.5 trillion cubic feet per year when looking forward to 2035.

Less CO2

Energy-related carbon dioxide (CO2) emissions are projected to grow slowly in the AEO2012 Reference case, due to a combination of modest economic growth, growing use of renewable technologies and fuels, efficiency improvements, slow growth in electricity demand, and increased use of natural gas, which is less carbon-intensive than other fossil fuels.

Projections for CO2 emissions are sensitive to economic and regulatory factors. These linkages result in a range of potential GHG emissions scenarios.

The projections from the complete AEO2012, including the Reference case, all of the alternative cases, and supplemental tables showing the regional projections, can be found at: www.eia.gov/forecasts/aeo

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