Posted January 6, 2017
Sometime in the mid-2020s, U.S. energy officials project, two key lines measuring energy imports and exports will cross, and the United States will have achieved something quite special – the advent of an era in which America is a net energy exporter.
That’s one of the big projections contained in the U.S. Energy Information Administration’s newly released Annual Energy Outlook for 2017 (AEO2017). It’s largely the result of expected declining oil imports and rising natural gas exports. EIA’s charts:
On the left we see the larger exports and imports measured in quadrillion British thermal units (Btu). On the right, net energy trade of various commodities, with net imports of petroleum and other liquids falling steeply and net exports of natural gas growing. EIA Administrator Adam Sieminski:
“Exports – the thing to watch here is in the reference case … the U.S. becomes a slight (net) energy exporter. The big differences come with low oil prices, you’re still importing, with a low technology case you’re still importing. You get just the opposite with a high oil price or a high technology case. So yes, the U.S. could be completely – I think the phrase that was used at one time was energy independent. In certain cases, even in the reference case, we’re a net exporter of energy, largely because of what’s happening in the natural gas area.”
Sieminski put a finer point on where EIA projects this key measure of U.S. energy security is headed:
“Given what we know about how things have changed over the past 10 years, that I would not underline that EIA thinks we are going to continue to be a net importer. These numbers could be a little bit higher, they could be a little bit lower. It wouldn’t surprise me, in a reference case two or three years from now, as technology keeps improving, that the U.S. could be a net exporter even in the reference case.”
The significance is that when EIA’s “reference case” – its baseline projection based on current technologies, statutes and policies – projects the U.S. as a net energy exporter, that’s a big deal for American energy self-sufficiency and security. Technological advances, favorable market conditions and other positive energy factors would only improve the picture. Sieminski:
“EIA’s projections show how advances in technology are driving oil and natural gas production, renewables penetration, and demand-side efficiencies and reshaping the energy future. … In the reference case we see energy production rising, especially in the period out to 2025, flattening out a little bit then but still drifting upward to a little over a hundred quadrillion Btus. U.S. energy production continues upward, led by dry natural gas production, and that has a lot to do with shale. Crude oil and lease condensate also rises in the near term.”
What we’re seeing, of course, are the positive supply impacts of the U.S. energy renaissance – dramatic increases in domestic oil and natural gas production over the past several years, thanks to the safe development of shale and other tight-rock formations using hydraulic fracturing and horizontal drilling. Fracking is the technological engine that’s driving the United States toward greater energy security and opening trade avenues for American energy around the world.
Other key points from AEO2017:
- U.S. crude oil production rebounds from recent lows, driven by continued development of tight oil resources, with consumption flat to down compared to recent history.
- Natural gas production increases across most of EIA’s scenarios despite relatively low and stable natural gas prices, supporting higher levels of domestic consumption and natural gas exports.
- Energy-related carbon dioxide emissions decline in most AEO cases.
EIA projects that domestic energy use will be relatively flat out to 2040, but that the mix of energy use will see big changes:
In that mix, oil and natural gas are projected to continue leading the U.S. energy portfolio. The chart below, based on AEO2017 projections, shows oil and gas will supply about 66 percent of the energy Americans use this year, growing to 68 percent in 2050. (BTW, AEO2017 is the first EIA report that includes projections about to 2050).
EIA’s report underscores the need for forward-looking energy policies that support production that will address America’s projected energy needs – especially in the context of projected increased global demand. API President and CEO Jack Gerard at this week’s State of American Energy event:
“Our global community will need more energy, and oil and natural gas will continue to be the dominant source for decades to come. The only question up for debate is which nations will help meet future energy demand. The ongoing American oil and natural gas development and refining renaissance has made it clear that the United States can help meet that need. But to achieve that goal we need smart pro-growth energy policies that promote safe and responsible energy development and recognize the central role that fossil fuels will play in meeting future energy demand.”
These include opening access to oil and natural gas reserves, onshore and offshore. Gerard said there hasn’t been a meaningful expansion in offshore access in decades, and with the Obama administration’s recent decision to withdraw areas in the Arctic and Atlantic oceans from future exploration and production, 94 percent of offshore acreage under Washington’s control is off limits to energy development.
The U.S. needs to expand its energy infrastructure, as Gerard said, to “keep pace with our new energy reality” by building the pipelines that will serve both refineries and retail markets. That means changing policies and clearing away red tape that are obstructing safe and responsible infrastructure development. Gerard:
“So the question we face in the future is not whether the United States of America has the natural resources, the talent and the technology to produce and refine the energy we need to grow and prosper. We clearly do. In the months and years ahead it is our hope that energy policy, at all levels of government, will be guided by a collective, bipartisan vision of an American energy future that generates the kinds of jobs, revenue to the government and economic opportunity that have been the hallmark of our industry since the very beginning.”
ABOUT THE AUTHOR
Mark Green joins API after spending 16 years as national editorial writer in the Washington Bureau of The Oklahoman newspaper. In all, he has been a reporter and editor for more than 30 years, including six years as sports editor at The Washington Times. He lives in Occoquan, Virginia, with his wife Pamela. Mark graduated from the University of Oklahoma with a degree in journalism and earned a masters in journalism and public affairs at American University. He's currently working on a masters in history at George Mason University, where he also teaches as an adjunct professor in the Communication Department.