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 have noticed that increased oil supply has changed nothing in the vehicle fuel prices here in the U.S. or anywhere else in the so-called free western world.
Something is wrong, it can’t all be about not having enough refineries, IMO.
Gas prices are due to oil prices.
Oil prices are not controlled by the US market alone.
There are reports in the Congressional Record dating back to the 1870’s claiming that US oil production will peak and begin to decline within 10 years. There is also a report saying there is no oil in Texas.
Didn't they have a slight overheating problem from the fuel tank?
Did you notice the “Green Energy” spin?
The word “harvest” is used to describe the production of crude and natural gas.
You cannot plant grow and “harvest” crude or natural gas for fuel, you drill and produce it.
Non renewable = peak oil
You plant grow and “harvest” crops for fuel.
Renewable = green energy
No doubt, this is just as accurate as their predictions of current production were 5 years ago.
Not so much for those model years.
By then rear axle shields were incorporated in production along with longer fuel fill pipes that would not disconnect from the tank in a rear ender. Excursions have a ~40 gal tank in the same location with few reported problems.
But not, I dare say, for lack of resources.
Rather, too much Marxism at the EPA, too many environmental whackjobs in the federal bureaucracy, and too many crooks in congress.
I posted another story on this last night.
This one spins the eia report differently.
They suggest that oil production increases will come to a screaming stop in 2017 but prices will continue to increase.
That scenario doesn’t seem likely.
If production increases come to a screaming stop — it will be because prices drop precipitously. that’s not in the cards.
world wide demand is just too high and growing.
what’s more likely is that production increases will slow down. How much is unknown right now.
imho production increases in 2014 and 2015 will be closer to 1 million barrels @ day. the eia usually underestimates everything. so their 800,000 Barrel @ day oil increase number for 2014-5 should be considered a low end estimate.
but I think we’ve been through this discussion before. this time however the eia provides some official numbers.
I don't see your type of description in the report.
world wide demand is just too high and growing.
But that is only part of the picture. Increased supply from other nations is going to effect the economical ability for companies to continued the capital investment into the US production market needed to maintain growth.
what’s more likely is that production increases will slow down. How much is unknown right now.
That is more inline with what I read.
I don't know how you read that as a screaming stop.
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.
I don’t know how you read that as a screaming stop.
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read the next paragraph:
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.
How does the word “crest” and “reach near historic high by 2016 before leveling off” mean different slow down rates to you?
But that is only part of the picture. Increased supply from other nations is going to effect the economical ability for companies to continued the capital investment into the US production market needed to maintain growth.
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agree. but I think the complexity of the technology will not allow competitors of the USA to bring volume to the market via fracking within the next five years. after that. yeah sure.
Much of the Hydraulic Fracturing work is actually done by International Firms like Halliburton. The small independents that have driven this growth are typically not doing the fracturing themselves.
How does the word “crest” and “reach near historic high by 2016 before leveling off” mean different slow down rates to you?
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The “crest” of the hill or the “crest” of a wave in both cases means the top of the hill or the top of a wave. that said, of course you’re free to interpret that as meaning production rate increases will slow down rather than stop.
myself, I actually think production increases will remain high for another 2-3 years.
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