Released February 05, 2021 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--In its annual long-term outlook for U.S. energy trends, officials at the U.S. Energy Information Administration (EIA) (Washington, D.C.) emphasized the very high level of uncertainty they faced in projecting future energy trends. "It could take us five years, or 30 years, to get back to where energy production was in 2019," Angelina LaRose, EIA's assistant administrator for energy analysis, said Wednesday in releasing the agency's 2021 Annual Energy Outlook (AEO).
In summarizing the AEO, which looks out 30 years, LaRose and other EIA officials had these three top-line takeaways:
Significantly, the report does not address how the election of Joe Boden, and a federal court's vacating of then-President Donald Trump's Affordable Clean Energy rule on power-plant emissions of carbon dioxide (CO2), could affect their scenarios. Experts expect both could have a significant impact on future oil and gas production and prices as well as the new-build electric generation market. The EIA used September 2020 as the cut-off point for its analysis. For more on that court ruling, see January 21, 2021, article - Federal Appeals Court Vacates Trump's Affordable Clean Energy Plan.
Economic Growth
In its reference case, the agency said the U.S. economy will have a compound annual growth rate of 2.1% over the three-decade period 2020-2050. It also put forth other cases where U.S. gross domestic product (GDP) grew faster (2.6% per year) and slower (1.6% per year) until mid-century.
Click on the image at right to see EIA's reference case, and two other cases, for U.S. GDP growth through 2050.
Oil & NGLs
Combined production of crude oil and natural gas liquids (NGLs), which totaled about 16.5 million barrels per day (BBL/d) in 2020, will rise to about 20 million BBL/d in 2030 in EIA's reference case. After that, it stays flat until 2050. In the "High Oil & Gas Supply" case, production rises to 25 million BBL/d in 2030. In the "Low Oil & Gas Supply" case, combined oil and NGL production falls to 15 million BBL/d in 2030 and declines steadily after that.
Looking only at crude oil production, the agency crafted a reference case where production grows from about 11.5 million BBL/d in 2020 to nearly 14 million BBL/d by the end of this decade. After that, production mostly holds steady to 2050.
Click on the image at right to see EIA's reference case, and three other cases, for U.S. crude oil and natural gas liquids production over the next three decades.
Natural Gas and LNG Exports
U.S. dry natural gas production, which excludes associated gas produced when oil is extracted, rises from roughly 34 trillion cubic feet (Tcf) in 2020 to about 38 Tcf by 2030 and 40 Tcf in 2040 in EIA's Reference case. Dry gas production rises to 43.4 Tcf by 2030 in the "High Oil & Gas Supply" case, but in the opposite case, "Low Oil & Gas Supply," production falls to 31.4 Tcf in 2030 .
Click on the image at right to see EIA's reference case, and four other cases, for U.S. production of dry natural gas and exports of LNG over the next three decades.
Industrial demand for oil, gas and NGLs is expected to increase nearly 50% over the next three decades in EIA's reference case, from about 8.4 quads in 2020 to about 12 quads in 2050. Continued strong demand growth by petrochemical manufacturers and bulk chemicals companies, mainly fertilizer firms, drive the growth, EIA said.
Exports of liquefied natural gas (LNG) rise from approximately 3 Tcf in 2020 to roughly 5 Tcf in 2030 in EIA's Reference case, and hold steady at that level until 2050. Flat exports after 2030 signal an increasingly competitive global LNG market.
Many LNG contracts link the price of gas to a benchmark oil price. In a "High Oil Price" scenario, LNG exports exceed 7 Tcf in 2030 and 10 Tcf in 2040. Even in a "Low Oil Price" case, LNG exports average about 3 Tcf throughout the three-decade study period.
Electric Generation: Demand Growth, Plant Retirements and New-Build Construction
Annual electric demand growth averages about 1.5% over the next few years before retreating to about 1% for the remainder of the study period, EIA said in its reference case. That represents a significant improvement over load growth that was effectively zero in the previous decade, even before the pandemic hit, agency officials said. Expected electric load growth, coupled with anticipated power plant retirements, will spur an increase of between 52% and 84% in new-build electric generation across all of EIA's cases. In its reference case, plant retirements total nearly 200 gigawatts (GW) by 2050, with coal-fired power plants accounting for over half of that sum. Those retirements will be offset, in the Reference case, by the addition of 435 GW of solar generation, 114 GW of wind generation and 375 GW of gas or oil-fired generation by 2050.
Solar and wind generation could grow even faster if their costs decline more rapidly than in the Reference case. But a slower decline in renewables' cost declines, or low natural gas prices, could cut into renewables' market share gains.
Click on the image at right to see five EIA cases on power plant retirements and new-build generation construction over the next three decades.
Though the AEO did not address this potential, President Joe Biden's commitment to decarbonizing the nation's electric generation supply, coupled with a federal court's vacating of the Trump administration's Affordable Clean Energy rule, are expected to accelerate coal plant retirements and boost construction of renewable electric generation.
Electric Fuel Mix
Throughout the three-decade study period, coal and nuclear continue losing their share of the electric fuel mix to natural gas and renewables, the AEO said. Renewable energy incentives at the federal and state level, and the continued decline in renewables technologies, leads to robust competition with natural gas in the electric fuel mix, EIA said about its reference case.
In a media briefing on Wednesday, EIA officials said most of the growth of renewable generation would take place in the next few years, before federal tax incentives ramped down or expired altogether. And while its analyses included energy storage, the agency did not consider any "breakthrough" energy storage technologies in the AEO.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
In summarizing the AEO, which looks out 30 years, LaRose and other EIA officials had these three top-line takeaways:
- A return to 2019 levels of U.S. energy consumption will take years; energy-related carbon dioxide emissions fall further before leveling off or rising.
- Renewable energy incentives and falling technology costs support robust competition with natural gas, while coal and nuclear power decrease in the electricity mix.
- Continuing record-high domestic energy production supports natural gas exports.
Significantly, the report does not address how the election of Joe Boden, and a federal court's vacating of then-President Donald Trump's Affordable Clean Energy rule on power-plant emissions of carbon dioxide (CO2), could affect their scenarios. Experts expect both could have a significant impact on future oil and gas production and prices as well as the new-build electric generation market. The EIA used September 2020 as the cut-off point for its analysis. For more on that court ruling, see January 21, 2021, article - Federal Appeals Court Vacates Trump's Affordable Clean Energy Plan.
Economic Growth
In its reference case, the agency said the U.S. economy will have a compound annual growth rate of 2.1% over the three-decade period 2020-2050. It also put forth other cases where U.S. gross domestic product (GDP) grew faster (2.6% per year) and slower (1.6% per year) until mid-century.
Click on the image at right to see EIA's reference case, and two other cases, for U.S. GDP growth through 2050. Oil & NGLs
Combined production of crude oil and natural gas liquids (NGLs), which totaled about 16.5 million barrels per day (BBL/d) in 2020, will rise to about 20 million BBL/d in 2030 in EIA's reference case. After that, it stays flat until 2050. In the "High Oil & Gas Supply" case, production rises to 25 million BBL/d in 2030. In the "Low Oil & Gas Supply" case, combined oil and NGL production falls to 15 million BBL/d in 2030 and declines steadily after that.
Looking only at crude oil production, the agency crafted a reference case where production grows from about 11.5 million BBL/d in 2020 to nearly 14 million BBL/d by the end of this decade. After that, production mostly holds steady to 2050.
Click on the image at right to see EIA's reference case, and three other cases, for U.S. crude oil and natural gas liquids production over the next three decades. Natural Gas and LNG Exports
U.S. dry natural gas production, which excludes associated gas produced when oil is extracted, rises from roughly 34 trillion cubic feet (Tcf) in 2020 to about 38 Tcf by 2030 and 40 Tcf in 2040 in EIA's Reference case. Dry gas production rises to 43.4 Tcf by 2030 in the "High Oil & Gas Supply" case, but in the opposite case, "Low Oil & Gas Supply," production falls to 31.4 Tcf in 2030 .
Click on the image at right to see EIA's reference case, and four other cases, for U.S. production of dry natural gas and exports of LNG over the next three decades. Industrial demand for oil, gas and NGLs is expected to increase nearly 50% over the next three decades in EIA's reference case, from about 8.4 quads in 2020 to about 12 quads in 2050. Continued strong demand growth by petrochemical manufacturers and bulk chemicals companies, mainly fertilizer firms, drive the growth, EIA said.
Exports of liquefied natural gas (LNG) rise from approximately 3 Tcf in 2020 to roughly 5 Tcf in 2030 in EIA's Reference case, and hold steady at that level until 2050. Flat exports after 2030 signal an increasingly competitive global LNG market.
Many LNG contracts link the price of gas to a benchmark oil price. In a "High Oil Price" scenario, LNG exports exceed 7 Tcf in 2030 and 10 Tcf in 2040. Even in a "Low Oil Price" case, LNG exports average about 3 Tcf throughout the three-decade study period.
Electric Generation: Demand Growth, Plant Retirements and New-Build Construction
Annual electric demand growth averages about 1.5% over the next few years before retreating to about 1% for the remainder of the study period, EIA said in its reference case. That represents a significant improvement over load growth that was effectively zero in the previous decade, even before the pandemic hit, agency officials said. Expected electric load growth, coupled with anticipated power plant retirements, will spur an increase of between 52% and 84% in new-build electric generation across all of EIA's cases. In its reference case, plant retirements total nearly 200 gigawatts (GW) by 2050, with coal-fired power plants accounting for over half of that sum. Those retirements will be offset, in the Reference case, by the addition of 435 GW of solar generation, 114 GW of wind generation and 375 GW of gas or oil-fired generation by 2050.
Solar and wind generation could grow even faster if their costs decline more rapidly than in the Reference case. But a slower decline in renewables' cost declines, or low natural gas prices, could cut into renewables' market share gains.
Click on the image at right to see five EIA cases on power plant retirements and new-build generation construction over the next three decades.Though the AEO did not address this potential, President Joe Biden's commitment to decarbonizing the nation's electric generation supply, coupled with a federal court's vacating of the Trump administration's Affordable Clean Energy rule, are expected to accelerate coal plant retirements and boost construction of renewable electric generation.
Electric Fuel Mix
Throughout the three-decade study period, coal and nuclear continue losing their share of the electric fuel mix to natural gas and renewables, the AEO said. Renewable energy incentives at the federal and state level, and the continued decline in renewables technologies, leads to robust competition with natural gas in the electric fuel mix, EIA said about its reference case.
In a media briefing on Wednesday, EIA officials said most of the growth of renewable generation would take place in the next few years, before federal tax incentives ramped down or expired altogether. And while its analyses included energy storage, the agency did not consider any "breakthrough" energy storage technologies in the AEO.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
