EIA: U.S. Will Be a Net Energy Exporter by 2020, Thanks to Shale
The 2015 U.S. Energy Information Administration’s (EIA) Annual Energy Outlook confirmed what nobody could have foreseen 10 years ago. The U.S. is on a clear path toward energy security – and we have the shale revolution to thank for it.
EIA’s recently released report projects U.S. energy imports and exports coming into balance within 15 years. According to the EIA’s analysis, the U.S. is now on track to become a net energy exporter by 2020 thanks to a dramatic increase in domestic oil and natural gas production. The U.S. hasn’t been a net exporter of energy since the 1950s.
The production spike, of course, has been made possible by horizontal drilling and high-volume hydraulic fracturing. Despite the recent drop in crude oil prices and subsequent decrease in drilling activity, that production is expected to continue increasing in the near future.
The EIA report states that in all six price/demand scenarios used in its analysis “continued strong growth in domestic production of crude oil from tight formations reduces net imports of petroleum and other liquids” through 2020. In most scenarios used in the study, U.S. net energy imports decline and ultimately end, as EIA Administrator Adam Sieminski explains:
“EIA’s AEO2015 shows that the advanced technologies are reshaping the U.S. energy economy. With continued growth in oil and natural gas production, growth in the use of renewables, and the application of demand-side efficiencies, the projections show the potential to eliminate net U.S. energy imports in the 2020 to 2030 timeframe. The United States has been a net importer of energy since the 1950s. In cases with the highest supply and lowest demand outlooks, the United States becomes a significant net exporter of energy.”
The report assumes a business-as-usual trend based on current policies, assuming laws and regulations remain unchanged. That said, the effects of relaxing current limits on U.S. crude oil exports are not considered in AEO2015, which could further brighten the U.S. energy outlook.
Though shale production is forecast to drop sooner than expected in the short term due to lower rig counts in response to falling crude oil prices, the EIA expects that trend will likely lead to a price rally.
Though the prognostication for the future of U.S. shale oil is encouraging, the outlook for natural gas is even brighter.
The EIA predicts the U.S. will become a net exporter of natural gas as early as 2017. And it once again touted the environmental benefits of natural gas with regard to CO2 emissions, just as it did in its 2014 overview.
“As renewable fuels and natural gas account for larger shares of total energy consumption, CO2 emissions per unit of GDP decline by 2.3%/year from 2013 to 2040.”
It wasn’t that long ago that doomsday projections of “peak oil” were accepted by the mainstream as an inevitability by 2040. But now, thanks to shale development, the U.S. is in firm control of its bright energy future.