New forecast finds U.S. flush with energy

McClatchy Washington BureauDecember 16, 2013 

US NEWS TEXAS-SHALE 7 FT

Because of lower natural gas prices, production has been cut back on wells in formations such as the Barnett Shale.

DAVID KENT — Fort Worth Star-Telegram/MCT

— U.S. oil production will surge toward a record high in the next two years and the nation’s natural gas dominance is expected to rise for decades, according to a new government forecast.

The U.S. Energy Information Administration is dramatically increasing its production forecast in response to the shale revolution. The Annual Energy Outlook, released Monday, projects U.S. oil production will increase to 9.5 million barrels a day in 2016, near the all-time high set in the boom of 1970.

“The EIA report confirms that the United States really is experiencing an energy revolution,” said Pulitzer Prize-winning oil historian and analyst Daniel Yergin.

While the agency expects the country’s oil drilling to slowly decline after 2020, it sees no end to skyrocketing natural gas production. The U.S. recently became the world’s largest natural gas producer, and the Energy Information Administration forecasts a 56 percent increase in American natural gas production over the coming two and a half decades.

“We don’t see any peaking at all in the ability of the industry in the United States to produce shale gas,” said Adam Sieminski, who directs the EIA.

A major factor is the Marcellus Shale in Pennsylvania and West Virginia, he said. The Marcellus reached 13 billion cubic feet a day of natural gas production this year, over six times the level of 2010.

As a result of the increase in U.S. oil and gas production, the Energy Information Administration predicts use of imported energy sources will fall to just 4 percent of domestic consumption by 2040. That’s down from a high of 30 percent in 2005.

The U.S. energy boom is largely a result of horizontal drilling and the controversial practice of fracking, or hydraulic fracturing, in which high-pressure water and chemicals are pumped deep underground to release oil and gas trapped in shale rock.

Environmental groups say it poses a threat to air and water. But the process is embraced by an Obama administration that touts the increased energy and the environmental benefits of switching from coal to natural gas, which has become cheap and abundant.

The EIA said natural gas should beat coal as the nation’s main source of electrical generation by at least the 2030s; sooner if coal keeps getting hit with government regulations limiting greenhouse gas emissions.

Natural gas is also a feedstock to build a wide range of products, and its use for American manufacturing is expected to rise by 22 percent in the next dozen years. The U.S. is also increasingly exporting its natural gas abroad, a trend the EIA believes will continue.

The Energy Information Administration predicts that the price of gasoline in the U.S will drop to an average $3.03 a gallon (in 2012 dollars) by 2017, but then rise to about $3.90 over the following two decades.

The agency forecast that renewable sources will generate 16 percent of the nation’s electricity by 2040, a modest increase from 12 percent last year.

Email: scockerham@mcclatchydc.com; Twitter: @seancockerham

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