aeo2019 review and aeo2020 plans...0 2 4 6 8 10 12 14 16 2000 2010 2020 2030 2040 2050 tight oil...

www.eia.govU.S. Energy Information Administration Independent Statistics & Analysis

AEO2019 Review and AEO2020 Plans

ForAnnual Energy Outlook 2020 PNGBA 1st Working GroupJune 5, 2019 | Washington, DC

ByDana Van Wagener, James Preciado, and Katie DylOffice of Petroleum, Natural Gas, and Biofuels Analysis

Oil and Gas Supply

Office of Petroleum, Natural Gas, & Biofuels Analysis DO NOT CITE OR DISTRIBUTE 2

Outline• Evaluation and discussion of results from the Annual Energy Outlook 2019

(AEO2019)

• Review of changes to the short-term outlook

• Current plans for AEO2020

Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE 3


(AEO2019)




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2018history projections

U.S. crude oil and natural gas plant liquids productionmillion barrels per day

High Oil and Gas Resource and TechnologyHigh Oil PriceHigh Economic GrowthReferenceLow EconomicGrowthLow Oil PriceLow Oil and Gas Resource and TechnologyReference, crude oil only

1970 crude oil production level

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140

160

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2000 2010 2020 2030 2040 2050

Dry natural gas productiontrillion cubic feet billion cubic feet

per day2018history projections

Source: U.S. Energy Information Administration, Annual Energy Outlook 2019

U.S. crude oil and natural gas production are sensitive to resource availability and technological improvements


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2000 2010 2020 2030 2040 2050

tight oil

other


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100

120

05

101520253035404550

2000 2010 2020 2030 2040 2050


tight/shale gas

other

U.S. crude oil productionmillion barrels per day

U.S. dry natural gas productiontrillion cubic feet billion cubic feet per day

Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE

Growth in supply from tight and shale resources continues to drive U.S. crude oil and natural gas production

Source: U.S. Energy Information Administration, Annual Energy Outlook 2019 Reference case

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Lower 48 onshore crude oil production by regionmillion barrels per day

Lower 48 onshore dry natural gas production by regiontrillion cubic feet billion cubic feet per day

The Southwest region leads growth in U.S. crude oil production and the East region leads growth in natural gas in the Reference case

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50

02468

101214161820

2000 2010 2020 2030 2040 2050

East

Gulf Coast

SouthwestRocky Mountains

MidcontinentNorthern Great Plains

West Coast


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1

2

3

4

5

6

2000 2010 2020 2030 2040 2050


Southwest

Gulf Coast

Northern Great PlainsRocky Mountains

MidcontinentEast

West Coast


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1

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5

6

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

sum of selected Permian

Wolfcamp*

Bakken

other

Eagle Ford

Spraberry*

Avalon/Bonespring*

Austin Chalk

Niobrara

Woodford

Monterey

U.S. tight oil productionmillion barrels per day


Bakken and Wolfcamp lead growth in tight oil production

*Permian BasinSource: U.S. Energy Information Administration, Annual Energy Outlook 2019 Reference case

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2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Marcellus

Utica

other

Haynesville/Bossier

Eagle Ford

Barnett

Fayetteville

Woodford

Bakken

Antrim

U.S. dry shale gas productiontrillion cubic feet

Marcellus, Utica, and Permian tight oil plays lead growth in production of shale gas

Note: Other includes natural gas production in tight oil plays.Source: U.S. Energy Information Administration, Annual Energy Outlook 2019 Reference case

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U.S. natural gas plant liquids production by regionmillion barrels per day

U.S. natural gas plant liquids production by fuelmillion barrels per day

The East and Southwest regions lead the production of natural gas plant liquids in the Reference case


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2000 2010 2020 2030 2040 2050


East

Southwest

other

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2000 2010 2020 2030 2040 2050


normal butaneisobutane

propane

ethane

natural gasoline



(AEO2019)




U.S. crude oil production by regionmillion barrels per day


EIA’s 2019 May Short-Term Energy Outlook (STEO) projects stronger growth in crude oil production than in the 2018 October STEO

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2020 2025 2030 2035 2040 2045 20500

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4

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2017 2018 2019 2020

Southwest

Northern Great PlainsGulf CoastLower OffshoreMidcontinentRocky MountainsEastWest Coast and Alaska

history STEO projections AEO2019 projections

2018 October STEO

2019 May STEO

Source: U.S. Energy Information Administration, Short-Term Energy Outlooks and Annual Energy Outlook 2019 Reference case

U.S. dry natural gas production by regionbillion cubic feet per day (Bcf/d)


EIA’s 2019 May Short-Term Energy Outlook (STEO) projects stronger growth in natural gas production than in the 2018 October STEO

Source: U.S. Energy Information Administration, Short-Term Energy Outlooks and Annual Energy Outlook 2019 Reference case

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2020 2025 2030 2035 2040 2045 20500

30

60

90

120

2017 2018 2019 2020

East

Lower Offshore

Gulf Coast

Southwest

MidcontinentNorthern Great PlainsRocky MountainsWest Coast and Alaska

history STEO projections AEO2019 projections

2018 October STEO

2019 May STEO


(AEO2019)



14Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE

Current plan for AEO2020 updates/enhancements• Update estimated ultimate recovery (EUR) for tight and shale wells

– Expand play areas as needed

– Determine target zone for wells in the Permian Basin

• Incorporate 45Q federal tax credits for carbon capture and sequestration

• Update Alaska and Lower 48 offshore announced discoveries


Liquid Fuels Market Module (LFMM) and

International Energy Module (IEM)


Brent price, 2018 $/b

Crude oil prices are expected to be lower in the AEO2020 Reference case relative to AEO2019

Source: U.S. Energy Information Administration, Annual Energy Outlook 2019 Reference case and preliminary Annual Energy Outlook 2020 Reference case

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2015 2020 2025 2030 2035 2040 2045 2050

AEO2019 Reference CasePreliminary AEO2020 Reference Case

Includes preliminary AEO2020 resultsDo not cite or distribute



Expected updates to international petroleum market representation

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• Revisit assumptions on how the U.S. crude oil and petroleum product market interacts with the international market

• Specifically consider how the IEO can potentially inform international crude oil supply/demand curves in the AEO

• Expect that there will be changes to crude oil imports and exports



Expected biofuel updates for AEO2020

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• Revisit assumptions related to biofuel feedstock quantities and prices

• Use more data from EIA’s agricultural model (POLYSYS)

• Anticipate that using more POLYSYS data will lead to changes in ethanol prices, imports, and exports

• Updated RFS obligation levels to at least reflect 2018 rulemaking


Other annual updates for AEO2020• Use EIA’s new database for crude oil and petroleum product pipelines to update

pipeline capacities in LFMM

• Update U.S. refinery capacity based on the Petroleum Supply Annual

• Update state taxes for gasoline, diesel, and jet fuel

• Consider new distribution cost markups for gasoline, diesel, and jet fuel based on price data from EIA and public sources

• Adjust refinery fuel consumption (such as cat coke, still gas, natural gas) to better match historical levels

• Continue to monitor developments in marine fuel markets related to the International Maritime Organization’s (IMO) 2020 sulfur limit and adjust our model assumptions accordingly.


Natural Gas Market Module (NGMM)



U.S. natural gas consumption and production increase in most cases with production growth outpacing natural gas consumption in all cases

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Dry natural gas productiontrillion cubic feet billion cubic feet per day

2018history projections High Oil and

Gas Resource and TechnologyHigh Oil PriceHigh Economic GrowthReferenceLow EconomicGrowthLow Oil PriceLow Oil and Gas Resource and Technology

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20

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120

140

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2000 2010 2020 2030 2040 2050

Natural gas consumptiontrillion cubic feet


billion cubic feet per day


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9

2010 2020 2030 2040 2050

Natural gas price at Henry Hub2018 dollars per million British thermal unit


Low Oil and Gas Resource and Technology

High Oil PriceReferenceLow Oil PriceHigh Oil and Gas Resource and Technology



Oil and natural gas prices are affected by assumptions about international supply and demand and the development of U.S. shale resources

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2000 2010 2020 2030 2040 2050

Dry natural gas productiontrillion cubic feet billion cubic feet per day

2018history projections High Oil and

Gas Resource and TechnologyHigh Oil PriceReferenceLow Oil PriceLow Oil and Gas Resource and Technology

-14

-7

0

7

14

21

28

-5

0

5

10

2000 2010 2020 2030 2040 2050


liquefied natural gas (LNG) exports

pipeline exports to MexicoCanada

pipeline imports fromCanada

LNG imports

Natural gas trade (Reference case)trillion cubic feet billion cubic feet per day

U.S. net exports of natural gas continue to grow in the Reference case, led by growth in LNG exports to overseas markets



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Liquefied natural gas exportstrillion cubic feet


billion cubic feet per day

High OilPriceHigh Oil and Gas Resource and TechnologyReferenceLow Oil and Gas Resource and TechnologyLow OilPrice 0

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2000 2010 2020 2030 2040 2050

Brent crude oil price to Henry Hub natural gas price ratioenergy-equivalent terms



AEO2019 projected 14 Bcf/d of LNG exports in 2030 in Reference case


LNG export assumptions are being reevaluated

• Dates of projects under construction in AEO 2019 updated• New projects receiving FID are assumed to be built

– Golden Pass LNG (February 2019): 3 trains, 2.04 Bcf/d, 2024-2025– Sabine Pass Train 6 (June 2019): 0.7 Bcfd, 2023– Calcasieu Pass (construction, no FID): 10 trains, 1.32 Bcf/d, 2023-2024

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Assumption AEO2019 AEO2020Phase-in Years 3 2

Utilization Year 1 33% 50%Utilization Year 2 67% 90%

Maximum trains per year 3 3Years to build 4 4% Liquefaction fuel 10% 10%


Source: Electricity Market Module documentation, AEO2020 Electricity Working Group 1

Electricity Market Module regionality changes are expected to result in changes to regional natural gas use in power generation/improved convergence


Planned changes in the regional mapping between EMM and NGMM


• Realign Mountain region states - source of convergence issues• Realign South Atlantic region states to match more closely with NERC-based regions• Realign Southeast/Gulf Coast states to NERC-based regions, not Census divisions

AEO2019 NGEMM regionsProposed AEO2020 NGEMM regions

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Natural gas delivered end-use prices by sector (Reference case) 2018 dollars per thousand cubic feet

Delivered end-use natural gas price markups to be reevaluated, accounting for projected regional population and climate



residential

electric powerindustrial

commercial

From Macroeconomic Model and Buildings team:

‒ HDDs‒ CDDs‒ population

Henry Hub

Expectations of changes and additional model developments• LNG export assumptions: Expectation of higher LNG exports

• Electricity Market Module incorporating new regions into AEO2020; impacts unknown at this point, but changes are expected in terms of regional natural gas use in power generation

• Delivered end-use natural gas price updates: Some regional changes, but minimal impact at national, annual level

• Model calibration efforts are still ongoing; any impacts are expected to be at the regional level (state-to-state monthly flows)


We welcome feedback on our assumptions and documentation• Working group meetings http://www.eia.gov/forecasts/aeo/workinggroup/

• The AEO Assumptions report http://www.eia.gov/forecasts/aeo/assumptions/

• NEMS model documentation– Oil and gas supply (OGSM)

https://www.eia.gov/outlooks/aeo/nems/documentation/ogsm/pdf/m063(2018).pdf

– Liquid Fuels Market Module (LFMM) https://www.eia.gov/outlooks/aeo/nems/documentation/lfmm/pdf/m059(2018).pdf

– International Energy Module (IEM) https://www.eia.gov/outlooks/aeo/nems/documentation/international/pdf/m071(2018).pdf

– Natural Gas Market Module (NGMM) https://www.eia.gov/outlooks/aeo/nems/documentation/ngmm/pdf/ngmm(2018).pdf


http://www.eia.gov/forecasts/aeo/workinggroup/

http://wwwdev.eia.gov/forecasts/aeo/assumptions/

https://www.eia.gov/outlooks/aeo/nems/documentation/ogsm/pdf/m063(2018).pdf

https://www.eia.gov/outlooks/aeo/nems/documentation/lfmm/pdf/m059(2018).pdf

https://www.eia.gov/outlooks/aeo/nems/documentation/international/pdf/m071(2018).pdf

https://www.eia.gov/outlooks/aeo/nems/documentation/ngmm/pdf/ngmm(2018).pdf

For more informationU.S. Energy Information Administration home page | www.eia.gov

Annual Energy Outlook | www.eia.gov/forecasts/aeo

Short-Term Energy Outlook | www.eia.gov/forecasts/steo

International Energy Outlook | www.eia.gov/forecasts/ieo

Today In Energy | www.eia.gov/todayinenergy

Monthly Energy Review | www.eia.gov/totalenergy/data/monthly

State Energy Portal | www.eia.gov/state


http://www.eia.gov/

http://www.eia.gov/forecasts/aeo

http://www.eia.gov/forecasts/steo

http://www.eia.gov/forecasts/ieo

http://www.eia.gov/todayinenergy

http://www.eia.gov/totalenergy/data/monthly

http://www.eia.gov/state

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residential

electric power

industrialliquifactionlease and plantother

commercialtransportation

Natural gas consumption by sector (Reference case) trillion cubic feet billion cubic feet per day

The industrial sector, followed by the electric power sector, drives U.S. natural gas consumption growth



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