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U.S. Energy Information Administration

Independent Statistics & Analysis

The Energy Information Administration’s Outlook of Energy Supply and Demand

The Future of Fuel: Toward the Next Decade of U.S. Energy Policy Resources For the Future November 28, 2012 | Washington, DC Michael Schaal Director, Office of Petroleum, Natural Gas and Biofuels Analysis

What’s included in EIA’s Reference Case?

2 Michael Schaal RFF, Washington, D.C., November 28, 2012

• Generally assumes current laws

and regulations

• Some grey areas regarding

potential legislation

• Includes technologies that are

commercial or reasonably expected to become commercial

• Assumptions to the AEO are also

available at eia.gov/forecasts/aeo/assumptions

Energy use grows slowly over the projection in response to a slow and extended economic recovery and improving energy efficiency

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U.S. primary energy consumption quadrillion Btu per year

Source: EIA, Annual Energy Outlook 2012

History Projections 2010 37% 25% 21% 9% 7% 1% 32% 26% 20% 11% 9% 4% Shares of total U.S. energy Nuclear Oil and other liquids Liquid biofuels Natural gas Coal Renewables (excluding liquid biofuels)

Michael Schaal RFF, Washington, D.C., November 28, 2012

Energy and CO2 per dollar of GDP continue to decline; per-capita energy use also declines

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index, 2005=1

Source: EIA, Annual Energy Outlook 2012

0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Per dollar Per capita CO2 per GDP History Projections 2010

Michael Schaal RFF, Washington, D.C., November 28, 2012

2%

Shale gas offsets declines in other U.S. natural gas production sources

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U.S. dry gas production trillion cubic feet per year

Source: EIA, Annual Energy Outlook 2012

Non-associated offshore Projections History Associated with oil Coalbed methane Non-associated onshore Shale gas 2010 10% 6% 9% 7% 21% 23% 9% 9% 6% 49% Alaska 1% Tight gas 26% 22%

Michael Schaal RFF, Washington, D.C., November 28, 2012

U.S. imports of liquid fuels continue to decline due to increased production of gas liquids and biofuels and greater fuel efficiency

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U.S. liquid fuels supply million barrels per day Projections History Natural gas plant liquids Petroleum production Biofuels including imports Net petroleum imports 15% 12% 36% 36% 10% 49% 36% 5% Liquids from coal 1%

Energy Information Administration AEO2012, June 2012

2010

Source: EIA, Annual Energy Outlook 2012

While total electricity generation grows by 21% over the projection, the annual rate of growth slows

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percent growth (3-year rolling average) Projections History Period Annual Growth 1950s 9.8 1960s 7.3 1970s 4.7 1980s 2.9 1990s 2.4 2000-2010 1.0 2010-2035 0.8 2010

Source: EIA, Annual Energy Outlook 2012 Michael Schaal RFF, Washington, D.C., November 28, 2012

18% 15%

Electricity mix gradually shifts to lower-carbon options, led by growth in renewables and natural gas

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electricity net generation trillion kilowatthours per year

Source: EIA, Annual Energy Outlook 2012

2010 24% 20% 45% 10% 1% 38% 28% 1% Nuclear Oil and other liquids Natural gas Coal Renewables

Michael Schaal RFF, Washington, D.C., November 28, 2012

Non-hydro renewable sources more than double between 2010 and 2035

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non-hydropower renewable generation billion kilowatthours per year

Source: EIA, Annual Energy Outlook 2012

Wind Solar Biomass Geothermal Waste

Industrial CHP Power sector Advanced biofuels cogeneration

2010

Michael Schaal RFF, Washington, D.C., November 28, 2012

10 Michael Schaal RFF, Washington, D.C., November 28, 2012

Assuming no new policies, energy-related CO2 grows by 2% through 2035

2% growth Transportation 1,876 (33%) Buildings and Industrial 1,492 (26%) Electric Power 2,271 (40%)

2010

5,639 million metric tons

2035

5,728 million metric tons

Transportation 1,871 (33%) Buildings and Industrial 1,527 (27%) Electric Power 2,330 (41%)

Source: Annual Energy Outlook 2012

For more information

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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

EIA Information Center

InfoCtr@eia.gov

Our average response time is within three business days.

(202) 586-8800

24-hour automated information line about EIA and frequently asked questions.

Michael Schaal RFF, Washington, D.C., November 28, 2012

Backup Slides

12 Energy Information Administration AEO2012, June 2012

Policy Change Possibilities

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• Greenhouse gas legislation
• Renewable fuels standards
• Production Tax Credit
• Appliance efficiency standards
• Corporate Average Fuel Economy standards
• Investment tax credits

Michael Schaal RFF, Washington, D.C., November 28, 2012

AEO 2012 Scenarios

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• Reference
• High and low economic growth (2)
• High and low oil price (2)
• Demand sector technology cases (2011, High, and Buildings Best Available) (3)
• Integrated high and low technology (applied to demand sectors; renewable; and electric power and

refinery sector fossil; and nuclear) (2)

• High and low coal cost (2)
• High and low estimated ultimate recovery cases and high technically recoverable resources (3)
• High and low nuclear (2)
• Low renewable cost (1)

Liquid Fuels Market Module (1)

• Policy related: Extended Policy, No Sunset, carbon dioxide allowance fee ($15 and $25), and 5-year

investment recovery with reference and with low natural gas prices (7)

• Proposed light-duty vehicle CAFE standards; advanced battery technology; heavy-duty truck natural

gas potential (3)

Michael Schaal RFF, Washington, D.C., November 28, 2012

U.S. dependence on imported petroleum continues to decline

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U.S. liquid fuel supply million barrels per day Projections History 2010 Consumption Domestic supply Net petroleum imports 49% 36%

Michael Schaal RFF, Washington, D.C., November 28, 2012

60% 2005

Source: EIA, Annual Energy Outlook 2012

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miles per gallon

Source: EIA, Annual Energy Outlook 2012

2010 Projections History Summary of standards 2012-2016: 34.1 mpg CAFE average (based on NHTSA vehicle footprint sales distribution) 2020: 35 mpg by statute 2017-2025: Reference case does not include proposed rulemaking from December 2011

Michael Schaal RFF, Washington, D.C., November 28, 2012

New light duty vehicle fuel economy reaches almost 38 mpg by 2035 in the Reference case, which does not include proposed standards for MY2017 to MY2025 vehicles

Gasoline-only vehicles without hybrid technologies decline as a share of new vehicle sales

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U.S. light car and truck sales millions

Source: EIA, Annual Energy Outlook 2012 Michael Schaal RFF, Washington, D.C., November 28, 2012

U.S. imports of liquid fuels fall due to increased domestic production – including biofuels – and greater efficiency

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U.S. liquid fuels consumption million barrels per day

Source: EIA, Annual Energy Outlook 2012

3 6 9 12 15 18 21 2010 Low High High Low High High EUR TRR 2025 2035 49% 5% 36% 10% Natural gas plant liquids Other non- petroleum petroleum supply Biofuels Net petroleum imports Domestic including imports EUR EUR TRR EUR supply Reference Reference

Michael Schaal RFF, Washington, D.C., November 28, 2012

5 10 15 20 25 30 35 40 45 2010 2022 2035 Other Advanced

Biofuels grow, but fall short of RFS target in 2022, exceed it in 2035

billions ethanol-equivalent gallons

Source: EIA, Annual Energy Outlook 2012

Legislated RFS in 2022 Biodiesel Net imports Cellulosic biofuels Corn ethanol

19 Michael Schaal RFF, Washington, D.C., November 28, 2012

Success in the Barnett prompted companies to look at other shale formations in the U.S.

20 Michael Schaal RFF, Washington, D.C., November 28, 2012

Domestic production of shale gas and tight oil has grown dramatically over the past few years

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0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 2000 2002 2004 2006 2008 2010 2012 Eagle Ford Bakken Granite Wash Bone Spring Monterey Woodford Niobrara Spraberry Austin Chalk tight oil production for select plays million barrels of oil per day

Sources shale gas: LCI Energy Insight gross withdrawal estimates as of September 2012 and converted to dry production estimates with EIA-calculated average gross-to-dry shrinkage factors by state and/or shale play. Source tight oil: Drilling Info (formerly HPDI), Texas RRC, North Dakota department of mineral resources, and EIA, through June 2012.

5 10 15 20 25 30 2000 2002 2004 2006 2008 2010 2012 Rest of US Bakken Eagle Ford Marcellus Haynesville Woodford Fayetteville Barnett Antrim shale gas production (dry) billion cubic feet per day

Michael Schaal 3rd Annual Bakken Summit, Denver, CO , October 24th, 2012

Domestic natural gas production grows faster than consumption

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5 10 15 20 25 30 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 U.S. dry gas trillion cubic feet per year

Source: EIA, Annual Energy Outlook 2012

Projections History 2010 Consumption Domestic supply Net imports

Michael Schaal RFF, Washington, D.C., November 28, 2012

Technically recoverable dry gas resources

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U.S. dry gas resources trillion cubic feet

*Alaska resource estimates prior to AEO2009 reflect resources from the North Slope that were not included in previously published documentation. Source: EIA, Annual Energy Outlook 2012

500 1,000 1,500 2,000 2,500 3,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2,203 273 482 1,449 AEO Edition Unproved Shale Gas Unproved Other Gas (including Alaska* and offshore) Proved Reserves (all types and locations) Cumulative Production Since 2000

Michael Schaal RFF, Washington, D.C., November 28, 2012

Levelized electricity costs for new power plants, excluding subsidies, 2020 and 2035

Adam Sieminski AEO2012 24

costs for new U.S. electricity power plants 2010 cents per kilowatthour

Source: EIA, Annual Energy Outlook 2012

2035 2020