EIA: Record U.S. Oil & Gas Production to Fuel Net Energy Exports

Researched by Industrial Info Resources (Sugar Land, Texas)--Propelled by record natural gas and crude oil production, the U.S. is projected to become a net exporter of energy in 2020, for the first time in more than 70 years, according the U.S. Energy Information Administration's (EIA) Annual Energy Outlook 2019 report that was released on Thursday. The U.S. will remain a net exporter through 2050, the report says.

Click on the image at right to see an EIA chart showing projected U.S. exports and imports through 2050.

Speaking at the Bipartisan Policy Center in Washington, D.C., EIA Administrator Linda Capuano noted the U.S. produced nearly 11 million barrels per day (BBL/d) of oil in 2018, exceeding the previous 1970 record of 9.6 million barrels, and making it the world's largest oil producer.

U.S. crude oil production will continue to set annual records through the mid-2020s and remain greater than 14 million BBL/d through 2040, according to the report's reference case. The reference case generally assumes that current laws and regulations that affect the energy sector are unchanged throughout the projection period. The EIA also publishes side cases that are based on different assumptions.

The U.S. will become a net exporter of petroleum on a volume basis from 2020 to 2049, according to the projection. Net U.S. imports of crude oil and liquid fuels are forecast to fall between 2018 and 2034. Net exports of petroleum are projected to peak at more than 3.68 million BBL/d in 2034, before reversing as domestic consumption rises. The U.S. would return to being a net importer in 2050.

Natural gas was projected to have the largest production increase of all fossil fuels, driven by continued development of lower-cost shale gas and tight-oil resources.

Natural gas production would grow 7% per year from 2018 to 2020, but growth then would slow to less than 1% per year, as growth in both domestic consumption and demand for U.S. natural gas exports slows. Natural gas production will be driven largely by continued development of the Marcellus and Utica shale plays, according to the report.

Associated natural gas production from tight-oil production in the Permian Basin is projected to grows strongly in the early part of the 2000-2050 period, but remains relatively flat after 2030.

Production of natural gas plant liquids (NGPL) such as ethane, propane, normal butane, and isobutane, is projected to grow by 32% between 2018 and 2050 as a result of growing demand by the petrochemical industry.

Industrial Info is tracking more than $300 billion in oil and gas production project activity in the U.S, with about two-thirds of that amount in the Southwest region, which includes Texas, Louisiana, Oklahoma and Arkansas.

In the U.S. power sector, low-priced natural gas will maintain a leading share of electricity generation and continue to grow, according to the reference case projection, increasing from 34% in 2018 to 39% in 2050.

The renewables share is projected to increase from 18% in 2018 to 31% in 2050, driven largely by growth in wind and solar generation. Renewables were projected to take a larger share of electricity generation than nuclear and coal in less than a decade. The U.S. would see 72 gigawatts (GW) of new wind and solar photovoltaic capacity between 2018 and 2021, amid declining capital costs and the availability of tax credits.

During Industrial Info's Market Outlook & Networking Event on Wednesday in Houston, Texas, Britt Burt, Industrial Info's vice president of research for the Global Electric Power industry, noted that 2019 is the last year that wind power developers can start construction of new projects and be eligible for U.S. production tax credits. Whether wind power development continues strong growth after the expiration of the credits remains to be seen, Burt said.

Coal-fired generating capacity is projected to decline through 2050, with 101 GW (42% of existing coal-fired capacity) to retire by 2050. Also, nuclear power generation capacity is projected to drop 22 GW, or 22% of current nuclear capacity, by 2050 due to plant retirements.

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