By David Bird
--Higher U.S. oil output to curb dependence on imports
--Rising fuel economy to slow U.S. oil demand growth
--Oil, gas output forecasts raised vs April outlook
NEW YORK--Surging U.S. crude oil output will rise by 800,000
barrels a day through 2016, when it nears 9.6 million barrels a
day, the record high hit in 1970, government forecasters said
Monday.
Increased use of hydraulic fracturing and horizontal drilling
techniques in shale oil fields will continue the recent renaissance
in U.S. domestic oil output, which had fallen to a 62-year low of 5
million barrels a day in 2008, the Energy Information
Administration said.
Oil output will level off and then start a slow decline after
2020, returning to its expected 2013 average of around 7.5 million
barrels a day in 2040, the EIA said.
While oil output's downward turn is less than a decade away, the
EIA projects domestic natural gas output will grow strongly and
steadily, posting a 56% rise between 2012 and 2040, when production
hits 37.6 trillion cubic feet.
The projections, in EIA's early release of its 2014 Annual
Energy Outlook, are significant upward revisions from the previous
update to the annual outlook released in April.
Oil production forecasts for 2025 and 2040 are 32.5% and 22%
higher, respectively, than in the April outlook, while natural gas
output projections in those years are 11% and 13% higher,
respectively.
The sizeable upward revisions to the forecasts show "that
advanced technologies for crude oil and natural gas production are
continuing to increase domestic supply and reshape the U.S. energy
economy as well as expand the potential for U.S. natural gas
exports," EIA Administrator Adam Sieminski said in a statement.
"Growing domestic hydrocarbon production is also reducing our
net dependence on imported oil and benefiting the U.S. economy as
natural-gas-intensive industries boost their output," Mr. Sieminski
said.
The forecast is based on U.S. benchmark crude oil averaging near
$107 a barrel in 2025 and near $139.50 in 2040, compared with $94
in 2012. Benchmark natural gas prices at Henry Hub are projected at
around $5.25 per million British thermal units in 2025 and $7.65 in
2040, compared with $2.75 in 2012.
The forecast also assumes that current U.S. energy laws and
regulations remain unchanged through 2040.
Relatively low prices for natural gas "make it a very attractive
fuel" for new power generating capacity, the EIA said. In some
areas, natural-gas-fired power generation will replace electricity
formerly supplied by coal and nuclear plants. In 2040, gas will
account for 35% of power generation, topping coal's 32% share.
Demand for natural gas from the industrial sector is projected
to grow by 22% between 2012 and 2025. But large gains in output
will allow for increased gas exports, in addition to the greater
domestic use, the EIA projects.
The U.S. will become a net exporter of liquefied natural gas in
2016, and will become an exporter of all forms of natural gas in
2018, two years earlier than was projected in the April forecast.
Pipeline exports of gas to Mexico are expected to grow by 6% per
year to 2040, while exports to Canada grow by 1.2% annually in the
same period. The U.S. is projected to reduce imports of gas from
Canada by 30% by 2040, as more demand is met by domestic
supply.
Rising oil output will mean less reliance on imports of
petroleum and other liquid fuels, the EIA said. Imports will
account for 25% of liquid fuel demand in 2016, compared with the
peak of more than 60% in 2005 when U.S. oil use hit a record high
of 20.8 million barrels a day. Reliance on imports will inch up to
32% in 2040, but that's down from 37% in the previous forecast.
U.S. energy consumption will rise by just 12% between 2012 and
2040. Oil demand, at near 18.5 million barrels a day in 2012, will
rise to near 19.3 million barrels a day in 2025, but will decline
to about 18.7 million barrels a day in 2040. EIA projects rising
fuel economy of light-duty vehicles will more than offset growth in
miles driven, helping to cut oil demand.
The U.S. will account for just 16% of global demand of 117
million barrels a day for oil and other liquid fuels like biofuels
in 2040, down from 20.8% of demand of 89 million barrels a day in
2012. Global liquid fuels demand growth will be driven by China,
India, Brazil and other developing economies, the EIA projects.
Write to David Bird at david.bird@wsj.com
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