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www.eia.gov U.S. Energy Information Administration Independent Statistics & Analysis
Lower oil prices and the energy outlook
For
Midwestern Legislative Conference 70th Annual Meeting
July 2015 | Bismarck, ND
By
Adam Sieminski
U.S. Energy Information Administration
0
5
10
15
20
25
30
0.0
10.0
20.0
30.0
40.0
50.0
60.0
U.S. is the largest producer of petroleum and natural gas in the world
Lower oil prices and the energy outlook
July 2015 2
estimated U.S., Russia, and Saudi Arabia petroleum and natural gas production
quadrillion Btu million barrels per day of oil equivalent
United States
Russia
Saudi Arabia
petro-
leum
natural
gas
2008 2009 2010 2011 2012 2013 2014e
Note: Petroleum production includes crude oil, natural gas liquids, condensates, refinery processing gain, and other liquids, including biofuels;
barrels per day oil equivalent were calculated using a conversion factor of 1 barrel oil equivalent=5.55 million British thermal units (Btu)
Source: International Energy Statistics (EIA), July 2015 STEO (EIA), The 2014 Natural Gas Year in Review: First Estimates (CEDIGAZ)
The U.S. has experienced a rapid increase in natural gas and oil
production from shale and other tight resources
3
Sources: EIA derived from state administrative data collected by DrillingInfo Inc. Data are through May 2015 and represent
EIA’s official tight oil & shale gas estimates, but are not survey data. State abbreviations indicate primary state(s).
Lower oil prices and the energy outlook
July 2015
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0Eagle Ford (TX)
Bakken (MT & ND)
Spraberry (TX & NM Permian)
Bonespring (TX & NM Permian)
Wolfcamp (TX & NM Permian)
Delaware (TX & NM Permian)
Yeso-Glorieta (TX & NM Permian)
Niobrara-Codell (CO, WY)
Haynesville
Utica (OH, PA & WV)
Marcellus
Woodford (OK)
Granite Wash (OK & TX)
Austin Chalk (LA & TX)
Monterey (CA)
U.S. tight oil production
million barrels of oil per day
0
5
10
15
20
25
30
35
40
45Marcellus (PA & WV)
Haynesville (LA & TX)
Eagle Ford (TX)
Fayetteville (AR)
Barnett (TX)
Woodford (OK)
Bakken (ND)
Antrim (MI, IN, & OH)
Utica (OH, PA & WV)
Rest of US 'shale'
U.S. dry shale gas production
billion cubic feet per day
EIA’s new data series on crude-by-rail (CBR) provides direct
estimates for crude oil movements
Lower oil prices and the energy outlook
July 2015 4
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
AAR (crude oil and petroleum products)
EIA (crude oil only)
monthly average of rail carloads per week
Source: Association of American Railroads (AAR) RailTime Indicators and U.S. Energy Information Administration,
based on Surface Transportation Board and other information
million barrels per day
5
Annual CBR flows, 2010 – 2014 2010 2011
2012
2013
2014
Lower oil prices and the energy outlook
July 2015
Production growth in top crude producing regions (Permian,
Bakken, Niobrara, and Eagle Ford) reverses in early 2015
6
monthly percent change
three month rolling average
Source: EIA, DPR, June 2015
Lower oil prices and the energy outlook
July 2015
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Jan 2012 Jan 2013 Jan 2014 Jan 2015
Short-term considerations
7 Lower oil prices and the energy outlook
July 2015
For oil prices, the market-implied confidence band is very wide
8
WTI price
dollars per barrel
Source: EIA, Short-Term Energy Outlook, July 2015
0
25
50
75
100
125
150
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
Historical Spot Price
STEO Forecast
NYMEX Futures Price
Current 95% NYMEX futures price confidence interval
July 2014 95% NYMEX futures price confidence interval
2013 2014 2015 2016
Lower oil prices and the energy outlook
July 2015
North American oil production growth slows with lower oil
prices but remains the main driver of global production growth
9
world crude oil and liquid fuels production growth
million barrels per day
Source: EIA, Short-Term Energy Outlook, July 2015
Lower oil prices and the energy outlook
July 2015
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2014 2015 2016
OPEC countries North America
Russia and Caspian Sea Latin America
North Sea Other Non-OPEC
Forecast
Surprises in liquid fuel demand to the upside are rare
10
world liquid fuels consumption
million barrels per day
Source: EIA, Short-Term Energy Outlook, July 2015
Lower oil prices and the energy outlook
July 2015
annual change
million barrels per day
Forecast
-2
-1
0
1
2
3
4
5
6
7
8
76
78
80
82
84
86
88
90
92
94
96
2008 2009 2010 2011 2012 2013 2014 2015 2016
Change in U.S. consumption (right axis)
Change in China consumption (right axis)
Change in other consumption (right axis)
Total world consumption (left axis)
Oil supply and demand begin to rebalance in 2016
11
million barrels per day MMbbl/d
Source: EIA, Short-Term Energy Outlook, June 2015
Lower oil prices and the energy outlook
July 2015
-3
-2
-1
0
1
2
3
4
5
6
78
80
82
84
86
88
90
92
94
96
98
2010-Q1 2011-Q1 2012-Q1 2013-Q1 2014-Q1 2015-Q1 2016-Q1
Implied stock change and balance (right axis)
World production (left axis)
World consumption (left axis)
OECD commercial crude oil stocks remain high
12
days of supply
Source: EIA, Short-Term Energy Outlook, July 2015
Lower oil prices and the energy outlook
July 2015
Forecast
45
50
55
60
65
70
Jan 2010 Jan 2011 Jan 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016
OPEC surplus crude oil production capacity remains moderate
to low
13
million barrels per day
Source: EIA, Short-Term Energy Outlook, July 2015
Lower oil prices and the energy outlook
July 2015
0
1
2
3
4
5
6
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Forecast
Note: Shaded area represents 2004-2014 average (2.2 MMb/d)
Long-term considerations
14 Lower oil prices and the energy outlook
July 2015
0
40
80
120
160
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
World crude oil price projection is lower in the AEO2015
Reference case than in AEO2014, particularly in the near term
15
Brent crude oil spot price
2013 dollars per barrel
Source: EIA, Annual Energy Outlook 2015 Reference case and Annual Energy Outlook 2014 Reference case
History Projections 2013
AEO2014
AEO2015
Lower oil prices and the energy outlook
July 2015
All of the growth in liquid fuels consumption occurs in the
emerging non-OECD (million barrels per day)
0
30
60
90
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
petroleum and other liquid fuels consumption, 1990-2040
million barrels per day
Source: EIA, International Energy Outlook 2014
Lower oil prices and the energy outlook
July 2015 16
projections history 2010
OECD
Non-OECD
Most significant contributors to non-OPEC crude and lease
condensate production: Canada, Brazil, U.S., Kazakhstan, Russia
0
6
12
18
24
Canada United States Mexico Brazil Kazakhstan Russia Other
2010 2025 2040
non-OPEC crude and lease condensate production, Reference case
million barrels per day
Source: EIA, International Energy Outlook 2014
Lower oil prices and the energy outlook
July 2015 17
U.S. crude oil production rises above previous historical highs before
2020 in all AEO2015 cases, with a range of longer-term outcomes
18
U.S. crude oil production
million barrels per day
Source: EIA, Annual Energy Outlook 2015
0
5
10
15
20
1990 2000 2010 2020 2030 2040 2020 2030 2040 2020 2030 2040
Tight oil
Alaska
Lower 48 offshore
History 2013 2013 2013
U.S. maximum production level of
9.6 million barrels per day in 1970
Other lower 48 onshore
Reference High Oil and Gas
Resource Low Oil Price
Lower oil prices and the energy outlook
July 2015
U.S. natural gas imports and exports
trillion cubic feet
-8
-4
0
4
8
12
16
2000 2010 2020 2030 2040 2020 2030 2040 2020 2030 2040
LNG imports
Source: EIA, Annual Energy Outlook 2015
19
billion cubic feet per day
Projected U.S. natural gas exports reflect the spread between domestic
natural gas prices and world energy prices
Projections History 2013
-10
0
10
20
2013 2013
30
40
-20 Reference Low Oil Price
High Oil and Gas
Resource
Pipeline exports
to Mexico
Lower 48 states
LNG exports
Pipeline exports to Canada Pipeline imports from Canada
Alaska LNG exports
Lower oil prices and the energy outlook
July 2015
EIA is publishing a series of reports on U.S. crude exports
20 Lower oil prices and the energy outlook
July 2015
Report Publish date
U.S. crude oil production forecast—analysis of crude types www.eia.gov/analysis/petroleum/crudetypes/
May 2014
What drives U.S. gasoline prices www.eia.gov/analysis/studies/gasoline/
October 2014
U.S crude oil import tracking tool www.eia.gov/beta/petroleum/imports/browser/
November 2014
Technical options for processing additional light tight oil
volumes within the United States www.eia.gov/analysis/studies/petroleum/lto/
April 2015
Implications of increasing light tight oil production for U.S.
refining (Turner Mason) www.eia.gov/analysis/studies/petroleum/morelto/
April 2015
U.S. crude oil production to 2025: Updated projection of
crude types http://www.eia.gov/analysis/petroleum/crudetypes/
May 2015
Effects of relaxing U.S. crude export restrictions August 2015
Lower oil prices and the energy outlook
July 2015 21
For more information
22
U.S. Energy Information Administration home page | www.eia.gov
Annual Energy Outlook | www.eia.gov/aeo
Short-Term Energy Outlook | www.eia.gov/steo
International Energy Outlook | www.eia.gov/ieo
Monthly Energy Review | www.eia.gov/mer
Today in Energy | www.eia.gov/todayinenergy
State Energy Profiles | www.eia.gov/state
Drilling Productivity Report | www.eia.gov/petroleum/drilling/
International Energy Portal | www.eia.gov/beta/international/?src=home-b1
Lower oil prices and the energy outlook
July 2015
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