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www.eia.gov U.S. Energy Information Administration Independent Statistics & Analysis
Outlook for Natural Gas
for National Conference of State Legislatures (NCSL) Hydraulic fracturing webinar John Staub, Team Lead for Exploration and Production Analysis December 19, 2012
States pages include EIA datasets and analysis on all fuels and energy infrastructure included in EIA data collection
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EIA updates state level data sets with mapping features and energy infrastructure datasets
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Interactive map links to state level energy data
John Staub NCSL webinar, December 19, 2012
Multiple layers of user selected options are available such as shale gas plays, power plants, pipelines, and transmission lines
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Jan 2011 Jul 2011 Jan 2012 Jul 2012 Jan 2013 Jul 2013
Henry Hub Natural Gas Price dollars per million btu
Historical spot price STEO forecast price NYMEX futures price 95% NYMEX futures upper confidence interval 95% NYMEX futures lower confidence interval
Source: Short-Term Energy Outlook, December 2012
Note: Confidence interval derived from options market information for the 5 trading days ending December 6, 2012. Intervals not calculated for months with sparse trading in near-the-money options contracts.
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Forecast
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15
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Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013
U.S. Natural Gas Prices dollars per thousand cubic feet
Residential price Henry Hub spot price Composite wellhead price
Source: Short-Term Energy Outlook, December 2012
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-2 -1 0 1 2 3 4 5 6 7 8 9
2010 2011 2012 2013 50 52 54 56 58 60 62 64 66 68 70 72
U.S. Natural Gas Production and Imports billion cubic feet per day (bcf/d)
Federal Gulf of Mexico production (right axis) U.S. non-Gulf of Mexico production (right axis)
U.S. net imports (right axis) Total marketed production (left axis)
Marketed production forecast (left axis)
annual change (bcf/d)
Source: Short-Term Energy Outlook, December 2012
Natural gas prices increase over the outlook
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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Henry Hub Spot Price 2011 dollars per million Btu
Source: EIA, Annual Energy Outlook 2013 Early Release
2011 History Projections
Coal regains some competitive advantage relative to natural gas over time on a national average basis
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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
ratio of natural gas price to steam coal price
Source: EIA, Annual Energy Outlook 2013 Early Release
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2
4
6
8
10
1990 2000 2010 2020 2030 2040
History Projections
2011 2011 dollars per Btu
History Projections 2011
Competitive parity
Energy prices to the electric power sector
Coal
Natural gas
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Currently, U.S. shale gas production comprises about 35% of total U.S. dry production
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0.0
3.7
7.3
11.0
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10
20
30
2000 2002 2004 2006 2008 2010 2012
Other U.S. shale gas Bakken (ND and MT) Eagle Ford (TX) Marcellus (PA and WV) Haynesville (LA and TX) Woodford (OK) Fayetteville (AR) Barnett (TX) Antrim (MI, IN, and OH)
Shale gas production (dry) billion cubic feet per day
Sources: LCI Energy Insight gross withdrawal estimates as of November 2012 that are converted to dry production estimates with EIA-calculated average gross-to-dry shrinkage factors by state and/or shale play.
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Shale gas production (dry) trillion cubic feet per year
Domestic production grows rapidly over projection period, particularly natural gas and renewables, and liquids in the near term
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0
20
40
60
80
100
120
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
U.S. energy production quadrillion Btu
Source: EIA, Annual Energy Outlook 2013 Early Release
History Projections 2011
28%
19%
30%
12%
11%
24%
35%
17%
14%
10%
Shares of total U.S. production
Nuclear
Crude oil and natural gas plant liquids
Natural gas
Coal
Renewables
John Staub NCSL webinar, December 19, 2012
U.S. energy use grows slowly over the projection reflecting improving energy efficiency and a slow and extended economic recovery
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0
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40
60
80
100
120
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
U.S. primary energy consumption quadrillion Btu
Source: EIA, Annual Energy Outlook 2013 Early Release
History Projections 2011
36%
20%
26%
8% 8%
1%
32%
28%
19%
11%
9% 2%
Shares of total U.S. energy
Nuclear
Oil and other liquids
Liquid biofuels
Natural gas
Coal
Renewables (excluding liquid biofuels)
2000
23%
39%
24%
6% 8%
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Domestic natural gas production grows faster than consumption and the U.S. becomes a net exporter of natural gas around 2020
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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
U.S. dry gas trillion cubic feet
Source: EIA, Annual Energy Outlook 2013 Early Release
Projections History 2011
Consumption
Domestic supply
Net imports
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Total natural gas exports nearly quadruple by 2040 in the AEO2013 Reference case
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U.S. natural gas exports trillion cubic feet
Source: EIA, Annual Energy Outlook 2013 Early Release
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1
2
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6
2010 2015 2020 2025 2030 2035 2040
Alaska LNG exports
Exports to Mexico
Exports to Canada
Lower 48 LNG exports
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Shale gas production leads growth in production through 2040
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U.S. dry natural gas production trillion cubic feet
Source: EIA, Annual Energy Outlook 2013 Early Release
0
5
10
15
20
25
30
35
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Associated with oil Coalbed methane
Tight gas
Shale gas
Alaska
Non-associated onshore
Non-associated offshore
Projections History 2011
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2005 2011 2020 2025 2030 2035 2040
U.S. dry gas consumption trillion cubic feet
Source: EIA, Annual Energy Outlook 2013 Early Release
Projections History
Industrial*
Electric power
Commercial
Residential
Transportation**
33%
14%
6%
32%
12%
33%
19%
3%
31%
13%
*Includes combined heat-and-power and lease and plant fuel. **Includes pipeline fuel.
Gas to liquids 2%
Natural gas consumption is quite dispersed with electric power, industrial, and transportation use driving future demand growth
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There are three main drivers of natural gas production
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Technology Geology
Economics
Theory Experiment Practice
Three drivers impact resource estimation metrics differently
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Geology
Technology
Economics
Gas in Place (GIP)
Technically Recoverable Resources (TRR)
Economically Recoverable Resources (e.g. proved reserves)
Well-level data, incl. estimated ultimate recovery (EUR)
Thermal maturity Pressure Formation depth
Drilling costs Recompletions
Price of gas
P
Q
Technically recoverable natural gas resources continue long-term rise
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U.S. dry gas resources trillion cubic feet
Source: EIA, Annual Energy Outlook 2013 Early Release AEO Edition
0
500
1,000
1,500
2,000
2,500
3,000
2000 2005 2006 2007 2008 2009 2010 2011 2012 2013
2,327
304
543
1,479
*Alaska resource estimates prior to AEO2009 reflect resources from the North Slope that were not included in previously published documentation.
Unproved shale gas Unproved other gas (including Alaska* and offshore) Proved reserves (all types and locations)
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Steep decline curves for shale gas plays make the market more responsive to price
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1,000
1,500
2,000
0 5 10 15 20
Haynesville Eagle Ford Woodford Marcellus Fayetteville
million cubic feet per year
Source: EIA, Annual Energy Outlook 2012
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0%
50%
100%
0 5 10 15 20
Cumulative production
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Estimated ultimate recovery (EUR) calculated from historical individual natural gas well data shows most wells are concentrated around mean. Fort Worth Basin – natural gas
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bcf/well
Number of wells
Average EUR minimum
maximum
25th percentile
mean median
75th percentile
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Source: EIA analysis, EUR = total projected production over 30 year life of wells
billion cubic feet/well
For more information
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U.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
Natural Gas Weekly Update | http://www.eia.gov/naturalgas/weekly/
States data | http://www.eia.gov/beta/state/
Shale gas | http://www.eia.gov/energy_in_brief/article/about_shale_gas.cfm
John Staub NCSL webinar, December 19, 2012
Over time the electricity mix gradually shifts to lower-carbon options, led by growth in natural gas and renewable generation
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U.S. electricity net generation trillion kilowatthours
Source: EIA, Annual Energy Outlook 2013 Early Release
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1
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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
25%
19%
42%
13%
1%
Nuclear
Oil and other liquids
Natural gas
Coal
Renewables
2011 Projections History
17%
16%
35%
30%
1%
1993
53%
13%
19% 11%
4%
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Natural gas and renewables account for the vast majority of capacity additions from 2012 to 2040
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U.S. cumulative capacity additions gigawatts
Source: EIA, Annual Energy Outlook 2013 Early Release
0
50
100
150
200
250
300
350
2011 2015 2020 2025 2030 2035 2040
Nuclear Coal
Natural gas
Renewables
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Wind 45 (4%)
* Includes pumped storage
Coal 8 (2%)
Natural gas 215 (64%)
Hydropower* 2 (1%)
Nuclear 11 (3%)
Other renewables 58 (17%)
Other 0.4 (0.1%)
339 gigawatts
Wind 42 (13%)
End-use coal 4 (0.4%)
Coal 315 (30%)
Natural gas 413 (39%)
Hydropower* 101 (10%)
Nuclear 101 (10%)
Other renewables
15 (1%)
Other 59 (6%)
1,055 gigawatts
End-use coal 1 (0.4%)
2011 capacity Capacity additions 2012 to 2040
Natural gas, wind and other renewables account for the vast majority of capacity additions from 2011 to 2040
Source: EIA, Annual Energy Review 2011 and Annual Energy Outlook 2013 Early Release
John Staub NCSL webinar, December 19, 2012