US energy balance tipping toward net exports

EPA/YAHYA ARHAB/FILE PICTURE

Fuel dripping from a fuel nozzle at a gasoline station. Technology and more awareness of climate change could accelerate the move away from oil into lesser harmful hydrocarbons.

Liquid imports seen falling, outgoing gas going up


Share on Facebook
Share on Twitter
Share on Google+
Share on LinkedIn
+

The United States will become a net energy exporter in the long term, the US Energy Information Administration (EIA) said in its outlook through 2050.

The Annual Energy Outlook 2017 (AEO2017), released on January 5 by the EIA, presents updated projections for US energy markets through 2050 based on eight cases (Reference, Low and High Economic Growth, Low and High Oil Price, Low and High Oil and Gas Resource and Technology, No Clean Power Plan implementation). This is the first time that EIA is publishing projections through 2050 in the AEO tables.

The United States becomes a net energy exporter in most AEO2017 cases as petroleum liquid imports fall and natural gas exports rise. Exports are highest, and grow throughout the projection period, in the High Oil and Gas Resource and Technology case, as favourable geology and technological developments combine to produce oil and gas at lower prices, the EIA said in a press release.

The High Oil Price case provides favourable economic conditions for producers while restraining domestic consumption, enabling the most rapid transition to net exporter status, the EIA said.

Fadel Gheit, a senior energy analyst at Oppenheimer in New York, told New Europe by phone on January 5 that the energy industry would have to become more efficient in the future. “If we believe that we are going to go into a sustainable oil price, a new normal oil price of around 60-65-55 (dollars per barrel), that will push companies, the oil industry, to seek better ways, more efficient ways, lower cost ways of extracting more oil and gas from very tricky, difficult geologies and that is obviously very positive and very good,” Gheit said.

“But having said that, is not going to accelerate US production growth as it was on the run rate let’s say three years ago. Remember the industry was chasing 100-dollar oil. The industry today is not chasing 100-dollar oil anymore. The industry is hoping for say 60-dollar oil and there is a big different between 60-dollar oil and 100-dollar oil,” the Oppenheimer energy analyst said.

“Even the most efficient companies will find it very difficult to duplicate the returns and the growth projection they had only three years ago. But longer term, I truly believe that we’re going to see the US coming very close to becoming oil self-sufficient, not now. What is going to change in my view longer term is when natural gas substitute oil in transportation – water transportation as well as land transportation,” Gheit said, adding that a company like Shell is working very hard, making huge investment, and basically investing in a future transition away from oil to natural gas.

In the EIA outlook on January 5, in all cases but the High Oil and Gas Resource Technology case, which assumes substantial improvements in production technology and more favorable resource availability, US production declines in the 2030s, which slows or reverses projected growth in net energy exports.

“EIA’s projections show how advances in technology are driving oil and natural gas production, renewables penetration, and demand-side efficiencies and reshaping the energy future,” said EIA Administrator Adam Sieminski. “The variation across the analysis cases of projected net energy export levels—as well as other findings in AEO2017— demonstrates the importance of considering the full set of AEO cases.”

In all AEO cases, the electric power sector remains the largest consumer of primary energy.

Gheit told New Europe that technology and more awareness of climate change could accelerate the move away from oil into lesser harmful hydrocarbons. “Natural gas will be more preferred to oil and obviously more much more preferred to coal. That is all possible but no one really knows when and if it that is going to happen,” he said.

“Demand growth also continues to moderate, which means the economies of the world are much more energy efficient today than anytime in history. If there is going to be higher demand, it’s going to be at a much slower pace,” Gheit said.

 

Share on Facebook
Share on Twitter
Share on Google+
Share on LinkedIn
+