EIA Increases U.S. Shale Gas Estimate

The U.S. Energy Information Administration (EIA) now estimates the U.S. to have technically recoverable unproved shale gas resources totaling 827 trillion cubic feet (Tcf) as of Jan. 1, 2009, or 474 Tcf larger than previously estimated.

The new estimate was released today in the Annual Energy Outlook 2011 (AEO2011) Reference case, which also detailed updated projections for U.S. energy markets through 2035. The increased shale gas estimate reflects additional information that has become available with more drilling activity in new and existing shale plays, and leads to nearly double the shale gas production and more than 20 percent higher total Lower-48 gas production in 2035.

“Our Reference case projection shows the growing importance of natural gas from domestic shale gas resources in meeting U.S. energy demand and lowering natural gas prices,” said EIA Administrator Richard Newell. “Energy efficiency improvements and the increased used of renewables are other key factors that moderate the projected growth in energy-related greenhouse gas emissions.”

U.S. natural gas consumption is estimated to rise 16 percent from 22.7 Tcf in 2009 to 26.5 Tcf in 2035, with the total in 2035 about 1.6 Tcf higher than in the AEO2010 Reference case (24.9 Tcf). While non-hydro renewables and natural gas are expected to be the fastest growing fuels used to generate electricity, coal will remain the dominant energy source for electricity generation because of continued reliance on existing coal-fired plants.

Despite coal’s continued importance as an energy resource, EIA noted that it is not projecting any new central station coal-fired power plants, beyond those already under construction or supported by clean coal incentives. Additionally, natural gas will play a growing role due to lower natural gas prices and relatively low capital construction costs that make it more attractive than coal.

The generation share from renewable resources is expected to increase from 11 percent in 2009 to 14 percent in 2035 in response to Federal tax credits in the near term and State requirements in the long term. The share of generation from natural gas is expected to rise from 23 percent in 2009 to 25 percent in 2035.

EIA forecasts that industrial natural gas demand will grow sharply in the near term from 7.3 Tcf in 2009 to 9.4 Tcf in 2020, reversing the recent downward trend due to a strong recovery in near-term industrial production, growth in combined heat and power, and relatively low gas prices.

Assuming no changes in policy related to greenhouse gases, carbon dioxide (CO2) emissions will grow slowly, but do not again reach 2005 levels until 2027. After falling 3 percent in 2008 and nearly 7 percent in 2009, largely driven by the economic downturn, energy-related CO2 emissions do not return to 2005 levels (5,980 million metric tons) until 2027, EIA said. CO2 emissions then rise by an additional 5 percent from 2027 to 2035, reaching 6,315 million metric tons in 2035.

EIA forecasts that projected demand for energy imports will be moderated by increased use of domestically produced biofuels, demand reductions resulting from the adoption of efficiency standards, and rising energy prices. Rising fuel prices also will spur domestic energy production across all fuels, which will moderate growth in energy imports. The net import share of total U.S. energy consumption in 2035 is 18 percent, compared with 24 percent in 2009.

EIA estimates in the Reference case that in 2035, the average real price of crude oil is $125 per barrel in 2009 dollars, with world liquids consumption growing from 83.7 million b/d in 2009 to 110.8 million b/d in 2035. Most of the growth is in non-OECD countries or regions, lead by China, India, and the Middle East.

U.S. crude oil production is expected to increase from 5.4 million b/d in 2009 to 6.1 million b/d in 2019 and decline slightly from that level through 2035, with production increases coming from onshore enhanced oil recovery projects and shale oil plays.

The full AEO2011 report, including projects with differing assumptions on the price of oil, the rate of economic growth, and the characteristics of new technologies, will be released in the spring of 2011, along with regional projections.