Posted on 12/17/2013 4:53:57 AM PST by thackney
U.S. oil production is on track to reach a near historic high by 2016, before leveling off and eventually beginning to taper in 2020, according to a new federal forecast.
The nation’s crude output will crest at 9.5 million barrels per day in 2016, according to the U.S. Energy Information Administration’s latest annual energy outlook, released Monday. The United States hit its peak oil production in 1970, with 9.6 million barrels of crude harvested daily.
Advancements in oil field technology — particularly the combination of horizontal drilling and hydraulic fracturing, or fracking — have helped reverse years of declining oil production in the United States.
Growing U.S. oil production will have an impact on global crude oil prices. The spot price for Brent crude, the international benchmark, is set to decline to $92 per barrel (in 2012 dollars) in 2017, down from $112 per barrel a year ago, according to the EIA.
But after 2017, the agency predicts the price for Brent crude oil will start climbing, ultimately reaching $141 per barrel in 2040, as the oil industry tries to meet growing demand by developing more costly resources.
Rising gas price
Natural gas production also will rise, despite the precipitous decline in its domestic price during the early shale gas boom. The price will remain low enough to propel domestic chemical and metal manufacturing, even as companies sell more of the U.S. harvest overseas, the EIA forecasts.
The Henry Hub natural gas spot price, the U.S. benchmark, will rise to $4.80 per million British thermal units in 2018, according to the EIA outlook. That’s 77 cents higher than the agency predicted last year for 2018, and about 60 cents higher than current prices.
Ultimately, by 2040, the EIA expects natural gas to sell for $7.65 per million Btu.
The federal agency said the price hike will be driven by “faster growth of consumption in the industrial and electric power sectors and, later, growing demand for export at liquefied natural gas facilities.”
Exporting US gas
The EIA is the statistical arm of the U.S. Department of Energy. Its predictions could help color the department’s decisions on nearly two dozen pending applications to export liquefied natural gas to countries that do not have free trade agreements with the United States. The Energy Department already has granted five LNG export licenses.
U.S. exports of liquefied natural gas are expected to climb to 9.6 billion cubic feet per day before 2030 and then remain at that level through 2040, according to the EIA.
But critics in Congress and the manufacturing sector want the Obama administration to slow down on natural gas exports and consider the new forecasts before granting any more.
Industry forecast: Exxon expects fossil fuels to reign supreme
The risk, they say, is that by boosting demand, too many foreign sales of U.S. natural gas could hike domestic prices for the fossil fuel, blunting the profit margin for manufacturers that use the substance as a chemical building block and causing higher electric bills for all consumers.
But the EIA’s new outlook, which is based on current policies only, suggests that natural gas-intensive industries still will benefit from rising U.S. production. The agency expects the domestic natural gas price to stay relatively low, compared to international prices, as U.S. production climbs to 37.6 trillion cubic feet annually by 2040 from about 29.5 trillion cubic feet last year.
Growing demand
The agency forecasts shipments of industrial goods will grow 3 percent annually for a decade before slowing to 1.6 percent in annual growth, largely driven by low natural gas prices. And shipments of bulk chemicals that benefit from a bigger supply of natural gas liquids are set to grow 3.4 percent each year from 2012 to 2025, EIA says.
More natural gas demand is set to come from power utilities, too, as electric companies slowly move to the fossil fuel as a replacement for coal. The EIA expects electricity generated from natural gas to surpass coal-based power for the first time around 2034.
In making its predictions, the EIA also now assumes that liquefied natural gas could make up 35 percent of the fuel used by freight rail locomotives by 2040 and supply some domestic marine vessels.
Other projections
In a change from last year’s prognostications, the agency now believes that renewable fuels will provide a greater share of electricity by 2040.
Total U.S. energy consumption will grow by just 12 percent between 2012 and 2040. But consumption of petroleum-based liquid fuels will fall during that time span as a result of greater vehicle efficiency.
Energy use by cars and light trucks will decline sharply. Vehicle efficiency improvements will more than make up for the slight climb in overall miles traveled in these light-duty vehicles. Light duty vehicle energy consumption is set to decline 25 percent between 2012 and 2014.
I don’t believe anything the “feds” say about anything at any time - ever!
When I was in school in the ‘60’s the feds were predicting no-oil in 1970. In 1970 it became 1975 and it kept moving up and changing name...peal oil. We were also heading into an ice age. Then it became man-made global warming.
These predictions are all about sending money to supporters.
They are not the only one say such. But the Feds are the greatest source of data due to the reporting requirements to operate oil/gas companies in the US.
There have been a dozen articles in the last few days talking about America “drowning in oil.” Now the Feds are saying it’s coming to an end?
SOMEONE is lying.
It’s “coming to an end” — in 2040. Maybe everyone is telling the truth!
Hydrocarbons need to be freely exportable and not locked into domestic consumption. Exporting will help sustain the boom in US hydrocarbon production and encourage further investment. That is why environmentalists, leftists, and Obaminists are opposed to it. Some on this forum too since they believe property rights end at the border.
Of course domestic consumers wish to keep it “at home”, because it is “our oil”, in an attempt to lower prices. Those attempts while successful in the short run cannot keep the US from ultimately paying the going world wide rate.
There will be no decline in the n hydrocarbon production if the market is allowed to function freely. The US and the rest of North American will swamp the world with hydrocarbons and thereby lower prices world wide. Bye bye petty oil fueled dictators and princes.
Or we can restrict exports and go back to the 70’s.
Read more than the headlines. In the coming few years, the growth of production will continue. But it will not continue without end.
One thing I’ve noticed about these predictions is they don’t say “unless...”
True they are a great source of data, but how is this prediction any different than all those we’ve heard since we were children, honestly?
I read that part. It’s the variation of the degrees that boggles me. Several independent organizations state we’re sitting on 100 years worth of oil while the government downplays it as much less. If you think there isn’t an agenda here, I have some swampland I’d like to sell you.
Those articles were in regard to Mexico’s decision to allow foreign companies back into their oil fields and the expected increase in output related to that.
Someone is lying, especially the lobbyists for the oil companies. Does anyone still believe that all that oil came from a bunch of Dinos? Beter yet, what were all those Dinos doing cahorting over a mile below the surface when we keep finding all their bones on the surface?
Read “This Town”.
Is this counting getting the environmentalists out of the way and going after Alaska and other areas? I bet not.
MSM, government reports........bull spit.......put out for political reasons only......no credibility.
Any “peak oil” forecast by THIS administration should be met with as much skepticism as one can muster.
We do not have 100 year supply at the current technology and prices. Yes, there is far more petroleum available in the ground, but that does not mean it can all be produced with the same economical conditions of today.
they are aware that Obama’s SS, the EPA, will make this happen.
The US oil boom will end because the government will end it.
Gas prices are high now not because of increased demand, there is actually much lower demand for gas in this recession.
Gas prices are high now not because of decreased supply - supplies are at an all time high.
Gas prices are high now because the dollar has been devalued.
Cheap energy = individual freedom and prosperity = a population less controlled by the elite.
They hate that idea.
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