US SHALE OIL & GAS OUTLOOK

1. U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov
Outlook for U.S. shale oil and gas
IAEE/AEA Meeting
January 4, 2014 | Philadelphia, PA
By
Adam Sieminski, EIA Administrator

2. Key insights on drilling productivity and production trends Adam Sieminski, IAEE/AEA
January 4, 2014 2
•
The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources
•
Six tight oil and shale gas plays taken together account for nearly 90% of domestic oil production growth and virtually all domestic natural gas production growth over the last 2 years
•
Higher drilling efficiency and new well productivity, rather than an increase in the rig count, have been the main drivers of recent production growth
•
Steep legacy production decline rates are being offset by growing production from new wells
•
Of the six plays, the Bakken and Eagle Ford plays account for about 67% of oil production growth; the Marcellus play accounts for about 75% of natural gas production growth

3. Six key plays account for nearly all recent growth in oil and natural gas production
Adam Sieminski, IAEE/AEA
January 4, 2014 3
Source: EIA, Drilling Productivity Report

4. The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources
Note: Dry shale gas production data are based on LCI Energy Insight gross withdrawal estimates as of June 2013,
converted to dry production estimates with EIA-calculated average gross-to-dry shrinkage factors by state and/or
shale play.
Source: EIA based on DrillingInfo and LCI Energy Insight
Adam Sieminski, IAEE/AEA
January 4, 2014
0
5
10
15
20
25
30
35
2000
2002
2004
2006
2008
2010
2012
Rest of US
Marcellus (PA and WV)
Haynesville (LA and TX)
Eagle Ford (TX)
Bakken (ND)
Woodford (OK)
Fayetteville (AR)
Barnett (TX)
Antrim (MI, IN, and OH)
0.0
0.4
0.8
1.2
1.6
2.0
2.4
2.8
2000
2002
2004
2006
2008
2010
2012
Eagle Ford (TX)
Bakken (MT & ND)
Granite Wash (OK & TX)
Bonespring (TX Permian)
Wolfcamp (TX Permian)
Spraberry (TX Permian)
Niobrara-Codell (CO)
Woodford (OK)
Monterey (CA)
Austin Chalk (LA & TX)
U.S. shale and tight oil production million barrels per day
U.S. dry shale gas production
billion cubic feet per day
4

5. U.S. crude oil and natural gas production is up dramatically since 2010 and will continue to grow rapidly; this has strategic implications for the United States:
•
Refinery operations/investment
•
Logistics infrastructure investment
•
Exports of petroleum products
•
Exports of crude oil and natural gas (LNG)
•
Management of Strategic Petroleum Reserve
5
Adam Sieminski, IAEE/AEA
January 4, 2014

6. Natural gas
6
Adam Sieminski, IAEE/AEA
January 4, 2014

7. U.S. natural gas prices remain well below crude oil prices
7
0
5
10
15
20
25
30
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
energy spot prices
2012 dollars per million Btu
Source: EIA, Annual Energy Outlook 2014 Early Release
History
Projections
2012
Henry Hub spot price
Adam Sieminski, IAEE/AEA
January 4, 2014
Brent crude oil spot price
2018
2040
Ratio:
7.1
Oil to gas price ratio:
3.4
Ratio: 3.2

8. Shale gas leads growth in total gas production through 2040 to reach half of U.S. output
8
U.S. dry natural gas production
trillion cubic feet
Source: EIA, Annual Energy Outlook 2014 Early Release
0
10
20
30
40
50
60
70
80
90
100
0
5
10
15
20
25
30
35
40
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Associated with oil
Coalbed methane
Tight gas
Shale gas
Alaska
Non-associated offshore
Non-associated onshore
Projections
History
2012
Adam Sieminski, IAEE/AEA
January 4, 2014
billion cubic feet per day

9. 9
0
5
10
15
20
25
30
35
2005
2012
2020
2025
2030
2035
2040
U.S. dry gas consumption
trillion cubic feet
Source: EIA, Annual Energy Outlook 2014 Early Release
Projections
History
Industrial*
Electric
power
Commercial
Residential
Transportation**
11.2
4.1
1.7
11.0
3.6
9.1
4.2
0.7
8.5
2.9
*Includes combined heat-and-power and lease and plant fuel
**Includes pipeline fuel
Natural gas consumption growth is driven by electric power, industrial, and transportation use
Adam Sieminski, IAEE/AEA
January 4, 2014

10. Manufacturing output and natural gas use grows with low natural gas prices, particularly in the near term
10
manufacturing natural gas consumption
quadrillion Btu
Source: EIA, Annual Energy Outlook 2014 Early Release
Adam Sieminski, IAEE/AEA
January 4, 2014
0
4
8
12
16
20
24
0
1
2
3
4
5
6
7
8
9
2010
2025
2040
Aluminum
Glass
Iron and steel
Paper
Food
Refining and
related
Bulk chemicals
Other
Metal based
billion cubic feet per day
durables
manufacturing

11. 0.0
0.5
1.0
1.5
2.0
2.5
0
100
200
300
400
500
600
700
800
900
2010
2015
2020
2025
2030
2035
2040
Natural gas use in the transportation sector grows rapidly with the largest share in freight trucks
11
natural gas use by mode
trillion Btu
Source: EIA, Annual Energy Outlook 2014 Early Release
Adam Sieminski, IAEE/AEA
January 4, 2014
Freight trucks
Buses
Freight rail and marine
Light-duty vehicles
22%
billion cubic feet per day
Approximate crude oil equivalent, (thousand barrels per day) 2040
Freight trucks
Freight rail and marine
Buses
Light-duty vehicles
290
71
38
9

12. U.S. natural gas imports and exports
trillion cubic feet per year
-6
-4
-2
0
2
4
6
8
10
2000
2005
2010
2015
2020
2025
2030
2035
2040
Alaska LNG exports
Pipeline exports to Mexico
Pipeline exports to Canada
Lower 48 states LNG exports
Pipeline imports from Canada
LNG imports
Source: EIA, Annual Energy Outlook 2014 Early Release
12
-15
-10
-5
0
5
10
15
20
25
billion cubic feet per day
5.4 tcf of exports
(14.8 bcf/day)
2.0 tcf of imports
(5.4 bcf/day)
U.S. natural gas gross exports exceed 5 tcf in 2025
Projections
History
2012
2025
Adam Sieminski, IAEE/AEA
January 4, 2014

13. U.S. becomes a net exporter of natural gas in the near future
13
U.S. dry natural gas
trillion cubic feet per year
Source: EIA, Annual Energy Outlook 2014 Early Release
Adam Sieminski, IAEE/AEA
January 4, 2014
-10
0
10
20
30
40
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Projections
History
2012
Consumption
Domestic supply
Net exports
100
75
50
25
0
-25
billion cubic feet per day

14. Petroleum
14
Adam Sieminski, IAEE/AEA
January 4, 2014

15. Growing tight oil and offshore crude oil production drive U.S. output close to historical high
15
U.S. crude oil production
million barrels per day
Source: EIA, Annual Energy Outlook 2014 Early Release
0
2
4
6
8
10
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Tight oil
Alaska
Other lower 48 onshore
Lower 48 offshore
Projections
History
2012
Adam Sieminski, IAEE/AEA
January 4, 2014
U.S. maximum production level of
9.6 million barrels per day in 1970

16. 0
5
10
15
20
25
30
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Transportation sector motor gasoline demand declines, while diesel fuel accounts for a growing portion of the market
16
transportation energy consumption by fuel
quadrillion Btu
Source: EIA, Annual Energy Outlook 2014 Early Release
Adam Sieminski, IAEE/AEA
January 4, 2014
Projections
History
2012
59%
Motor gasoline
Jet fuel
CNG/LNG
12%
13%
3%
44%
31%
3%
4%
Other*
Diesel
22%
2030
47%
13%
3%
30%
1%
2040
Ethanol
4%
5%
5%
*Includes aviation gasoline, propane, residual fuel oil, lubricants, electricity, and liquid hydrogen

17. U.S. petroleum product imports and exports
million barrels per day
-4
-3
-2
-1
0
1
2
3
4
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
Other petroleum
product imports
Distillate exports
Motor gasoline exports
Other petroleum
product exports
Distillate imports
Motor gasoline imports
Source: EIA, Annual Energy Outlook 2014 Early Release
Adam Sieminski, IAEE/AEA
January 4, 2014 17
U.S. maintains status as a net exporter of petroleum products
Projections
History
2012
Total petroleum product net exports

18. U.S. dependence on imported liquids declines, particularly in the near term
18
U.S. liquid fuel supply
million barrels per day
Source: EIA, Annual Energy Outlook 2014 Early Release
0
5
10
15
20
25
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Consumption
Domestic supply
Net imports
40%
32%
Projections
History
2012
2005
60%
Adam Sieminski, IAEE/AEA
January 4, 2014
25%
2016
2040

19. Energy-related CO2 emissions remain below the 2005 level over the projection period
19
carbon dioxide emissions
billion metric tons
Source: EIA, Annual Energy Outlook 2014 Early Release
0
1
2
3
4
5
6
7
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Projections
History
2012
2005
Adam Sieminski, IAEE/AEA
January 4, 2014
Energy-related carbon dioxide emissions are 9% below the 2005 level in 2020 and 7% below the 2005 level in 2040.

20. For more information
Adam Sieminski, IAEE/AEA
January 4, 2014 20
U.S. Energy Information Administration home page | www.eia.gov
Annual Energy Outlook | www.eia.gov/aeo
Short-Term Energy Outlook | www.eia.gov/steo
International Energy Outlook | www.eia.gov/ieo
Monthly Energy Review | www.eia.gov/mer
Today in Energy | www.eia.gov/todayinenergy
State Energy Profiles | http://www.eia.gov/state
Drilling Productivity Report | http://www.eia.gov/petroleum/drilling/