Annual Energy Outlook 2017

Annual Energy Outlook 2017

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Description: Key takeaways from AEO2017 With strong domestic production and relatively flat demand, the United States becomes a net energy exporter over the projection period in most cases. 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, net crude oil and petroleum product imports as a percentage of U.S.

product supplied decline across most cases. Across most cases, natural gas production increases despite relatively low and stable natural gas prices, supporting higher levels of domestic consumption and natural gas exports; projections are sensitive to resource and technology assumptions.

 
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Contents:
Annual Energy Outlook 2017

AEO2017 Rollout Presentation
Johns Hopkins School of Advanced International Studies
January 5, 2017 | Washington, D.C.
By
Adam Sieminski, Administrator

U.S. Energy Information Administration

Independent Statistics & Analysis

www.eia.gov

Key takeaways from AEO2017
• With strong domestic production and relatively flat demand, the United States becomes a net
energy exporter over the projection period in most cases
• 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, net crude oil and petroleum
product imports as a percentage of U.S. product supplied decline across most cases
• Across most cases, natural gas production increases despite relatively low and stable natural gas
prices, supporting higher levels of domestic consumption and natural gas exports; projections are
sensitive to resource and technology assumptions
• With modest demand growth, the primary driver for new electricity generation capacity in the
Reference case is the retirement of older, less efficient fossil fuel units, largely spurred by the
Clean Power Plan (CPP), and the near-term availability of renewable tax credits; even if the CPP
is not implemented, low natural gas prices and the tax credits result in natural gas and renewables
as the primary sources of new generation capacity; the future generation mix is sensitive to the
price of natural gas and the growth in electricity demand
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

2

Key takeaways from AEO2017 (continued)
• Transportation energy consumption peaks in 2018 in the Reference case because rising fuel
efficiency outweighs increases in total travel and freight movements throughout the projection
period
• Despite growth in the number of households and the amount of commercial floorspace, improved
equipment and efficiency standards contribute to residential and commercial consumption
remaining relatively flat or declining slightly from 2016 to 2040 in the Reference case
• With economic growth and relatively low energy prices, energy consumption in EIA’s three
industrial sub-sectors (energy-intensive manufacturing, non-energy-intensive manufacturing, and
nonmanufacturing) increases during the projection period across all cases; energy intensity
declines in the Reference case and most side cases as a result of technological improvements

Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

3

Overview

Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

4

AEO2017 includes side cases with different assumptions of
macroeconomic growth, world oil prices, technological progress, and
energy policies


Oil prices are primarily driven by global market balances that are mainly influenced by factors external to the NEMS
model; in the High Oil Price case, the price of Brent crude in 2016 dollars reaches $226 per barrel (b) by 2040,
compared to $109/b in the Reference case and $43/b in the Low Oil Price case



In the High Oil and Gas Resource and Technology case, lower costs and higher resource availability than in the
Reference case allow for higher production at lower prices; in the Low Oil and Gas Resource and Technology
case, more pessimistic assumptions about resources and costs are applied



The effects of economic assumptions on energy consumption are addressed in the High and Low Economic
Growth cases, which assume compound annual growth rates for U.S. gross domestic product of 2.6% and 1.6%,
respectively, from 2016–40, compared with 2.2% annual growth in the Reference case



A case assuming that the Clean Power Plan (CPP) is not implemented can be compared to the Reference case to
show how that policy could affect energy markets and emissions



Although the graphics in this presentation focus on projections through 2040, this AEO is the first projection to
include model results through 2050, which are available on the AEO page of the EIA website; EIA welcomes
feedback on the assumptions and results from the period 2040–50
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

5

Energy consumption varies minimally across all AEO cases,
bounded by the High and Low Economic Growth cases
Total energy consumption
quadrillion British thermal units
2016
history projections

140

High Economic
Growth
Low Oil Price
High Oil Price
High Oil and Gas
Resource and
Technology
Reference
Low Oil and Gas
Resource and
Technology
Low Economic
Growth

120
100
80
60
40
20
0
1980

1990

2000

2010

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

6

Domestic energy consumption remains relatively flat in the Reference
case, but the fuel mix changes significantly
Energy consumption (Reference case)
quadrillion British thermal units
2016
history
projections

45
40

petroleum and other
liquids
natural gas

35
30
25
20
15
10
5
0
1980

1990

2000

2010

2020

2030

other renewable
energy
coal
nuclear
hydro
liquid biofuels
2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

7

Energy production ranges from nearly flat in the Low Oil and Gas Resource and
Technology case, to continued growth in the High Resource and Technology case
Total energy production
quadrillion British thermal units
2016
history
projections

140

High Oil and Gas
Resource and
Technology
High Oil Price
High Economic
Growth
Reference
Low Economic
Growth
Low Oil Price
Low Oil and Gas
Resource and
Technology

120
100
80
60
40
20
0
1980

1990

2000

2010

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

8

United States energy production continues to increase in the Reference
case, led by growth in natural gas and renewables
Energy production (Reference case)
quadrillion British thermal units
2016
history
projections

40

dry natural gas

30
crude oil and lease
condensate

20

coal
other renewables
nuclear
natural gas plant liquids
hydro

10

0
1980

1990

2000

2010

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

9

The United States becomes a net energy exporter in most cases as
petroleum liquid imports fall and natural gas exports rise
Net energy trade
quadrillion British thermal units
2016
history projections

40

Low Oil Price
Low Oil and Gas
Resource and
Technology
High Economic
Growth
Reference case
Low Economic
Growth
High Oil Price
High Oil and Gas
Resource and
Technology

30
20
10

net imports

0
net exports

-10
-20
-30
1980

1990

2000

2010

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

10

The United States becomes a net energy exporter in the Reference case
projections as natural gas exports increase and petroleum imports decrease
Energy trade (Reference case)
quadrillion British thermal units

Net energy trade (Reference case)
quadrillion British thermal units

2016
history projections

40

30

2016
history projections

25

35
30

20

exports

15

25

10

20

imports

net imports

15

5

10

0

5

-5

petroleum
and other
liquids

0
1980

1990

2000

2010

2020

2030

2040

net exports

electricity
coal and
coke
natural gas

-10
1980 1990 2000 2010 2020 2030 2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

11

Energy related carbon dioxide emissions decline in most AEO cases,
with the highest emissions projected in the No Clean Power Plan case
Energy-related carbon dioxide emissions
billion metric tons of carbon dioxide
2016
history projections

7

No Clean Power Plan
High Economic Growth
Low Oil Price
High Oil and Gas
Resource and
Technology
Reference case
High Oil Price
Low Oil and Gas
Resource
and Technology
Low Economic Growth

6
5
4
3
2
1
0
1980

1990

2000

2010

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

12

Reference case energy-related carbon dioxide emissions fall, but at a
slower rate than in the recent past
U.S. energy-related carbon dioxide emissions (Reference case)
billion metric tons of carbon dioxide
billion metric tons of carbon dioxide
2016
history projections

3.0

2016
history projections

3.0

2.5

2.5
transportation

2.0

petroleum

2.0
natural gas

1.5

electric power

1.0

1.5

industrial

1.0

residential

0.5

coal
0.5
0.0
1980

commercial
1990

2000

2010

2020

2030

2040

0.0
1980

1990

2000

2010

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

13

Although population and economic output per capita are assumed to
continue rising, energy intensity and carbon intensity are projected to
continue falling in the Reference case
Gross domestic product Energy intensity
per capita
thousand British thermal
thousand dollars/person
units per dollar

U.S. population
million people

400

2016

2016

2016

Carbon intensity
metric tons CO2 per billion
British thermal units
70

80

14

350

70

12

60

300

60

10

50

250

50

8

40

6

30

4

2016

20

200

40

150

30

100

20

Reference
case

50
0
1980

history

2010

history

history

2040

0
1980

2010

10

2

10
2040

0
1980

2010

2040

0
1980

history

2010

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

14

Petroleum and other liquids

Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

15

Reference case oil prices and production rise from current levels, price
paths and production levels in the side cases are very different from
those in the Reference case
Crude oil production
million barrels per day

North Sea Brent oil price
2016 dollars per barrel
250

2016
history projections

18

2016
history projections

High Oil and
Gas Resource
and Technology

16
200

14
12

150

High Oil Price
Reference case

10
8

100

Low Oil Price
Low Oil and Gas
Resource and
Technology

6
4

50

2
0
2000

2010

2020

2030

2040

0
2000

2010

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

16

Tight oil dominates U.S. production in the Reference case, but other
types of oil production continue to yield significant volumes
Crude oil production
million barrels per day
18

2016
history projections

2016
projections

2016
projections

16
14
12

U.S. total

10
8
6

tight oil

4
2

non-tight oil

0
2000 2010 2020 2030 2040
Reference
Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

2020
2030
2040
Low Oil and Gas Resource
and Technology

2020
2030
2040
High Oil and Gas Resource
and Technology
17

In the High Oil Price and the High Oil and Gas Resource and
Technology cases, the United States becomes a net petroleum exporter
Petroleum net imports as a percentage of products supplied
percent
2016
history projections

80
60

Low Oil Price
Low Oil and Gas
Resource and
Technology
Reference

40
20
net imports
0

High Oil Price

net exports
-20
-40
2000

2005

2010

2015

2020

2025

2030

2035

High Oil and Gas
Resource and
Technology
2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

18

Average light-duty fuel economy improves in the Reference case, even
as the share of light-duty trucks increases
Light-duty stock fleet fuel economy
miles per gallon
2016
50
history projections

Light-duty vehicle sales shares
percent
2016
70%
history projections
car

40

fleet
average

30

truck

truck

60%

50%

20

40%

10

30%

0
2000

2010

2020

2030

2040

0%
20%
2000

car

2010

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

19

With the second phase of fuel efficiency regulations, medium- and
heavy-duty vehicle energy consumption declines over 2027-33 despite
continued growth in miles traveled
Medium- and heavy-duty vehicle metrics
travel indicator
stock fuel economy
billion vehicle-miles traveled
miles per gallon
450
400

2016
history projections

12

energy consumption
quadrillion British thermal units

2016
history

7

projections

10

projections

5

8

4

250

6

200

3
4

150
100

2

2

50
0
2000

history

6

350
300

2016

2020

2040

1

0
2000

0
2000

2020

2040

2020

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

20

Transportation energy use declines between 2018 and 2034 in the
Reference case, driven by improvements in fuel economy
Transportation sector consumption
quadrillion British thermal units
2016
35
history
projections

Transportation sector consumption
quadrillion British thermal units
2016
35
history
projections

30

30

25

motor
gasoline

distillate
fuel oil

20
15
10

15

jet fuel
electricity
other

5
0
2000

25

2010

2020

2030

2040

light-duty
vehicles
medium-and
heavy-duty
vehicles
air
commercial
light trucks
rail
marine
other

20

10
5
0
2000

2010

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

21

Natural gas

Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

22

U.S. dry natural gas production is the result of continued development of shale
gas and tight oil plays, alternative assumptions cause significant differences
U.S. natural gas production by type
trillion cubic feet
2016
60
history
projections

Dry natural gas production
trillion cubic feet
2016
60
history
projections

50

50

40

40

30
20
10
0
2000

30

shale gas and
tight oil plays

other
2010

20
10

tight gas
other Lower 48 onshore
Lower 48 offshore
2020

2030

High Oil Price
High Oil and
Gas Resource
and Technology
Reference case
Low Oil Price
Low Oil and Gas
Resource and
Technology

2040

0
2000

2010

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

23

Increasing demand from industrial and electric power markets drive
rising domestic consumption of natural gas in the Reference case
Natural gas consumption by sector
trillion cubic feet
40

billion cubic feet per day

2016
history projections
100

35
30

80
electric power

25
60

20
15

40 industrial

10

transportation
20 commercial

5

0

0
2010

2016

2020

2030

residential

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

24

Increased natural gas trade is dominated by liquefied natural gas
exports in the Reference case
Natural gas trade
trillion cubic feet
8
6
4
2

2016
history projections

billion cubic feet per day
22

liquefied natural gas (LNG)
exports

16
6
10

pipeline exports to
Canada
Mexico

5
2

0

0
-2
-5

-2
-4
-6
1980

pipeline imports from
Canada
LNG imports
1990

Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

-10

2000

2010

2020

2030

-16
-6
2040
25

U.S. LNG export levels vary across cases and reflect both the level of
global demand, as well as by the difference between domestic and global
natural gas prices
Liquefied natural gas exports
trillion cubic feet
billion cubic feet per day
2016
10
history
projections
25

Oil-to-natural gas price ratio
energy-equivalent terms
8

2016
history
projections

7

8

20

6

15

6
5
4

4

10

2

5

3
2
1

0
2000

2010

2020
Reference

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

2030

0
0
2040
2000
High and Low Oil and Gas
Resource and Technology

2010

2020
High and Low
Oil Price

2030

2040

26

Future domestic natural gas prices depend on both domestic resource
availability and world energy prices
Henry Hub natural gas price
2016 dollars per million Btu
2016
history
projections

12

Low Oil and
Gas Resource
and
Technology
High Oil Price
Reference
case
Low Oil Price
High Oil and
Gas Resource
and
Technology

10
8
6
4
2
0
2000

2010

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

27

Electricity

Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

28

Electricity use continues to increase, but the rate of growth remains
lower than historic averages in the Reference case
Electricity use by sector
billion kilowatthours

Electricity use growth rate
percent growth (three-year rolling average)

1,800

6

1,600

2016
history
projections

5

1,400

direct use

1,200
1,000

electricity
sales

800
600
400

4
3
2
1

200
0
1980
-1

0

residential

I commercial I Industrial I transportation

2000

2020

2040

-2

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

29

Fuel prices and current laws and regulations drive growing shares of
renewables and natural gas in the electricity generation mix as coal’s share
declines over time in the Reference case
U.S. net electricity generation from select fuels
billion kilowatthours
Reference
2016
2,500
history projections
2,000

No Clean
2016 Power Plan
projections

coal
natural gas

1,500
1,000
nuclear
renewable
energy

500
0
1980

petroleum
1990

2000

2010

2020

2030

2040

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

30

Natural gas resource availability affects prices and plays a critical role
in determining the mix of coal, natural gas, and renewable generation
U.S. net electricity generation from select fuels
billion kilowatthours
Reference
2016
2,500
history projections
coal
2,000
natural gas

Low Oil and Gas Resource
and Technology

High Oil and Gas Resource
and Technology

1,500
1,000
renewable
energy

500
0
1980

1990

2000

2010

2020

2030

2040

2015

2025

2035

2015

2025

2035

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

31

Lower capital costs and the availability of tax credits boost near-term wind
additions and sustain solar additions; whereas coal-fired unit retirements in the
Reference case are driven by low natural gas prices and the Clean Power Plan
Annual electricity generating capacity additions and retirements (Reference case)
gigawatts
2016
40
history projections
additions

30
20

solar
wind
oil and gas
nuclear
other
coal

10
0
-10
retirements

-20
-30
2005

2010

2015

2020

2025

2030

2035

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

32

Assumptions about license renewals in AEO2017 increase nuclear
retirements, leading to net nuclear capacity decreases
Nuclear electricity generating capacity
gigawatts
2016
120
history projections

Year-over-year nuclear capacity changes
gigawatts

100

2

3

assumed uprates
new reactors

additions

1

80

Reference

Reference
0

60
-1
actual/announced
retirements
projected
retirements

40
-2
20
0
2010

-3

retirements
-4
2020

2030

2040

2015

2020

2025

2030

2035

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

33

Coal production decreases, primarily in the Western region
Coal production
million short tons
2016
history projections

1,400
1,200

Coal consumption in electric power sector
million short tons
2016
1,400
history projections

total
No Clean Power Plan
Reference

1,000

1,200
1,000

No Clean
Power Plan

800

800
West

600

600
400
200

Appalachia

400
Reference

Interior

0
2000

200

2010

2020

2030

2040

0
2000

2010

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

34

Buildings and industrial

Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

35

Energy consumption decreases for most major end uses in the residential
and commercial sectors with improved equipment efficiency and
standards in the Reference case
Residential sector delivered energy consumption
quadrillion British thermal units

Commercial sector delivered energy consumption
quadrillion British thermal units

2016
2040

heating

2016
2040

heating

cooling

cooling

water heating

water heating

lighting

lighting

refrigeration

refrigeration

other

other
0

1

2

3

4

5

6

0

1

2

3

4

5

6

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

36

Per-household electricity use continues to decline in the Reference case
led by efficiency improvements in lighting, cooling, and refrigeration
Residential electricity use per household
thousand kilowatthours per household
2016
2040

cooling
lighting
heating
water heating
refrigerators and freezers
laundry and dishwashing
cooking
TVs and PCs
other uses
0

1

2

3

4

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

37

Industrial energy consumption grows in all cases, but is higher in the
High Oil Price case and the High Economic Growth cases over most of
the projection
Industrial energy consumption
quadrillion British thermal units
2016
history
projections

36

High Oil Price
High Economic
Growth
High Oil and
Gas Resource
and Technology
Reference
Low Oil and Gas
Resource and
Technology
Low Economic
Growth
Low Oil Price

34
32
30
28
26
24
22
20
//
18
1980

1990

2000

2010

2020

2030

2040

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

38

Industrial sector energy consumption growth in the Reference case is
led by increases in petroleum and natural gas consumption
Industrial energy consumption
quadrillion British thermal units

Industrial energy consumption
quadrillion British thermal units

2016
history projections

2016
history projections

35
30

hydrocarbon
gas liquids
petroleum

25
20

natural gas

15
10
5
0
1980

2000

2020

renewables
electricity
coal
2040

2010

2020

2030

nonmanufacturing
other non-energy
intensive
metal durables
refining
bulk chemical
feedstock
bulk chemical
heat & power
food
iron & steel
paper
other energy
2040 intensive

Source: EIA, Annual Energy Outlook 2017
Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

39

For more information
U.S. Energy Information Administration home page | www.eia.gov
Short-Term Energy Outlook | www.eia.gov/steo
Annual Energy Outlook | www.eia.gov/aeo
International Energy Outlook | www.eia.gov/ieo
Monthly Energy Review | www.eia.gov/mer
Today in Energy | www.eia.gov/todayinenergy

Adam Sieminski, Johns Hopkins SAIS
January 5, 2017

40