The U.S. Energy Information Administration conducted its annual study and analysis of America’s Annual Energy Outlook for 2015 (AEO2015), and the future is bright. The report contains energy forecasts to 2040 that hold varying predictions taking into account if crude prices were to rebound quickly and remain high, as well as the reverse. The findings show what can be expected among various scenarios shaping the domestic energy market over the next 25 years.
Unleashing crude oil from tight formations thanks to hydraulic fracturing allows for strong growth in production through 2020, in turn causing a decline in net petroleum imports and a growth in net petroleum exports, in every pricing scenario. AEO2015 shows a slowing in growth of domestic production after 2020 offset by increased vehicle fuel economy standards and more efficient technologies decreasing dependency.
In 2040, 17% of U.S. crude oil and petroleum products will be imports, this cut by nearly half as the country was importing 33% of its total supply in 2013. In the high oil price and high oil and gas resource cases the U.S. can become a net exporter of petroleum and other liquids after 2020 as we continue to efficiently tap our resources. The current federal administration has recently vetoed the cross continental construction of the Keystone pipeline, an oil pipeline system crossing the United States into Canada.
Natural gas will be the dominant U.S. Energy export, forecasting that U.S. regulation changes will allow for exports. A handful of Ohio’s congressional delegation are currently trying to enact legislation and advocating for a lift in the ban on some exports. Upholding that allowing for exports of Liquefied Natural Gas (LNG) will be a start that allows the U.S. to turn closer to securing its energy independence.
The report finds that the U.S. could soon become a net exporter of natural gas as early as 2017, transition from its current position as being a net importer. Many areas of the country is blanketed with this resource, much of which we are seeing in Ohio with the Utica shale. Looking ahead to 2040, the lowest projection shows the U.S. exporting 3.0 trillion cubic feet (Tcf) in a low oil price scenario; in prime market conditions this could exceed 13 Tcf. In order to do so, additional infrastructure needs to be built.
To allow the natural gas to flow across U.S. regions, a stronger pipeline infrastructure needs to be put in place. This could require realignment of existing lines and new construction projects.
In Ohio two major pipeline projects are currently in the planning process. The Rover Pipeline LLC is approximately a $3.7 billion interstate natural gas project that could move 3.25 BcF a day, gathering in West Virginia and Eastern Ohio for delivery to the Midwest Hub near Defiance, Ohio. The NEXUS Pipeline project is approximately a $2 billion investment to move 1.5 BcF a day from Ohio to Ontario. These would allow for transportation of natural gas across Ohio states and are currently being mapped out with plans to have them built by 2017.
In turn, with growth in production and new infrastructure to transport the product will also contribute to expansion of several manufacturing industries. In Ohio we are seeing this first hand, one particularly impressive project in the works is the recent announcement of Belmont County being chosen as the potential site for a $5 billion ethane cracker plant. Capitalizing on the region’s natural resources, this type of investment will do great things for our state.
The all-intensive AEO2015 paper can be found here, including more than 150 pages of the United State’s energy outlook.