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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Office of Petroleum, Natural Gas, & Biofuels Analysis DO NOT CITE OR DISTRIBUTE 2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Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE 3
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Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE 4
0
5
10
15
20
25
30
2000 2010 2020 2030 2040 2050
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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40
60
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100
120
140
160
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10
20
30
40
50
60
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
Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE 5
0
2
4
6
8
10
12
14
16
2000 2010 2020 2030 2040 2050
tight oil
other
2018history projections
0
20
40
60
80
100
120
05
101520253035404550
2000 2010 2020 2030 2040 2050
2018history projections
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Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE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
6
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
7
Source: U.S. Energy Information Administration, Annual Energy Outlook 2019 Reference case
0
10
20
30
40
50
02468
101214161820
2000 2010 2020 2030 2040 2050
East
Gulf Coast
SouthwestRocky Mountains
MidcontinentNorthern Great Plains
West Coast
2018history projections
0
1
2
3
4
5
6
2000 2010 2020 2030 2040 2050
2018history projections
Southwest
Gulf Coast
Northern Great PlainsRocky Mountains
MidcontinentEast
West Coast
Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
0
1
2
3
4
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
Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
Bakken and Wolfcamp lead growth in tight oil production
*Permian BasinSource: U.S. Energy Information Administration, Annual Energy Outlook 2019 Reference case
8
2018history projections
0
2
4
6
8
10
12
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
9
2018history projections
Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
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
Source: U.S. Energy Information Administration, Annual Energy Outlook 2019 Reference case
10
0
1
2
3
4
5
6
7
2000 2010 2020 2030 2040 2050
2018history projections
East
Southwest
other
0
1
2
3
4
5
6
7
2000 2010 2020 2030 2040 2050
2018history projections
normal butaneisobutane
propane
ethane
natural gasoline
Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
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 11
U.S. crude oil production by regionmillion barrels per day
Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
EIA’s 2019 May Short-Term Energy Outlook (STEO) projects stronger growth in crude oil production than in the 2018 October STEO
12
2020 2025 2030 2035 2040 2045 20500
2
4
6
8
10
12
14
16
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)
Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
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
13
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
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
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
15Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
Liquid Fuels Market Module (LFMM) and
International Energy Module (IEM)
Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE 16
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
17
0
20
40
60
80
100
120
2015 2020 2025 2030 2035 2040 2045 2050
AEO2019 Reference CasePreliminary AEO2020 Reference Case
Includes preliminary AEO2020 resultsDo not cite or distribute
Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
Source: U.S. Energy Information Administration, Annual Energy Outlook 2019 Reference case
Expected updates to international petroleum market representation
18
• 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
Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
Source: U.S. Energy Information Administration, Annual Energy Outlook 2019 Reference case
Expected biofuel updates for AEO2020
19
• 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
Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
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.
20Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
Natural Gas Market Module (NGMM)
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Source: U.S. Energy Information Administration, Annual Energy Outlook 2019
U.S. natural gas consumption and production increase in most cases with production growth outpacing natural gas consumption in all cases
22
0
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40
60
80
100
120
140
160
0
10
20
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60
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 PriceHigh Economic GrowthReferenceLow EconomicGrowthLow Oil PriceLow Oil and Gas Resource and Technology
0
20
40
60
80
100
120
140
160
0
10
20
30
40
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60
2000 2010 2020 2030 2040 2050
Natural gas consumptiontrillion cubic feet
2018history projections
billion cubic feet per day
Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
0
1
2
3
4
5
6
7
8
9
2010 2020 2030 2040 2050
Natural gas price at Henry Hub2018 dollars per million British thermal unit
2018history projections
Low Oil and Gas Resource and Technology
High Oil PriceReferenceLow Oil PriceHigh Oil and Gas Resource and Technology
Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
Source: U.S. Energy Information Administration, Annual Energy Outlook 2019
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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40
60
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100
120
140
160
0
10
20
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60
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
2018history projections
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
Source: U.S. Energy Information Administration, Annual Energy Outlook 2019
24Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
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5
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25
30
35
0
2
4
6
8
10
12
2000 2010 2020 2030 2040 2050
Liquefied natural gas exportstrillion cubic feet
2018history projections
billion cubic feet per day
High OilPriceHigh Oil and Gas Resource and TechnologyReferenceLow Oil and Gas Resource and TechnologyLow OilPrice 0
1
2
3
4
5
6
7
8
9
2000 2010 2020 2030 2040 2050
Brent crude oil price to Henry Hub natural gas price ratioenergy-equivalent terms
2018history projections
Source: U.S. Energy Information Administration, Annual Energy Outlook 2019
AEO2019 projected 14 Bcf/d of LNG exports in 2030 in Reference case
25Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
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
26
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%
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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
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Planned changes in the regional mapping between EMM and NGMM
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• 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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2010 2015 2020 2025 2030 2035 2040 2045 2050
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
Source: U.S. Energy Information Administration, Annual Energy Outlook 2019 Reference case
29Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE
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)
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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
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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
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0
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20
25
30
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40
2000 2010 2020 2030 2040 2050
2018history projections
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
Source: U.S. Energy Information Administration, Annual Energy Outlook 2019
33Office of Petroleum, Natural Gas, and Biofuels Analysis DO NOT CITE OR DISTRIBUTE