The Energy Information Administration (EIA) in its Annual Energy Outlook 2013 has made some very interesting projections through 2040 that reflect a very dynamic energy sector in terms of the international lineup of energy producers as well as major shifts in primary fuel sources. It is important that the AEO2013 reference case only includes existing legislation and regulations and does not include, for example, the potential impact of the the Shaheen-Portman Energy Efficiency Bill currently before Congress.
- Strong growth in domestic crude oil production and production of natural gas, primarily from shale-gas and shale -oil production.
- Increased use of natural gas for electric power generation and transportation
- Expanding natural gas exports
- Decline in gasoline consumption, because of more stringent corporate average fuel economy (CAFE) standards, growth in diesel fuel consumption and increased use of natural gas to power heavy-duty vehicles
- Low electricity demand growth
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Iincreased electricity generation capacity fueled by natural gas and renewable energy
- Coal's share of total electricity generation could fall below the natural gas share through the end of the projection period.
Shale-gas and shale-oil
Crude oil production has increased from 5.0 million barrels per day in 2008 to 6.5 million barrels per day in 2012. The projected growth results largely from a significant increase in onshore crude oil production, particularly from shale and other tight formations, which has been spurred by technological advances and relatively high oil prices. The International Energy Agency (IEA) in its World Energy Outlook 2012 has projected that by 2020 the U.S. will surpas Saudi Arabia as the world's largest oil producer.
U.S. natural gas production is projected to increase 1.3 % per year throughout the Reference case projection, leading to net exports of natural gas. Shale gas production is central to higher total production volumes and a transition to net exports. U.S. net exports of natural gas are projected to grow to 3.6 trillion cubic feet in 2040 in the Reference case. Most of the projected growth in U.S. exports consists of pipeline exports to Mexico. Declining natural gas imports from Canada also contribute to the growth in U.S. net exports.
Electric power generation: coal, natural gas and renewables
In 2012, natural gas prices were low enough for power companies to run natural gas-fired generation plants more economically than coal plants in many areas. During those months, for the first time in recorded history coal and natural gas were nearly tied in providing the largest share of total electricity generation.
In the Reference case, the coal generation share is projected to fall to 35 % by 2040 and the share of natural gas to increase to 30 %.
In the alternative High Oil and Natural Gas Resource case, with much lower natural gas prices, coal accounts for only 27 % of total generation in 2040, exceeded by natural gas which accounts for 43 %.
GHG emissions reduction policies
The IEA projects that the coal generation share could be further reduced if policies aimed at reducing GHG emissions were enacted. In the GHG15 case, which assumes a fee on CO2 emissions that starts at $15 per metric ton in 2014 and increases by 5 percent per year through 2040, coal's share of total generation falls to 13 percent in 2040. Energy-related CO2 emissions also fall sharply in the GHG15 case, to levels that are 28 percent lower than 2005 emissions. Coal use in the electric power sector falls to only 6.1 quadrillion Btu in 2040, a drop of two-thirds from the 2011 level. Natural gas use in the electric power sector reaching more than 10 quadrillion Btu in 2016, but then falls to 8.8 quadrillion Btu in 2040 as growth in renewable and nuclear generation replaces natural gas use later in the projection period.
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