Annual Energy Outlook 2017: U.S. Energy Information Administration

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 EIAs 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

January 5, 2017 3
Overview

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 201640, 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 204050

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
140 2016
history projections High Economic
120 Growth
Low Oil Price
100 High Oil Price
High Oil and Gas
Resource and
80
Technology
Reference
60
Low Oil and Gas
Resource and
40
Technology
Low Economic
20
Growth
0
1980 1990 2000 2010 2020 2030 2040
Source: EIA, Annual Energy Outlook 2017

January 5, 2017 6
Domestic energy consumption remains relatively flat in the Reference
case, but the fuel mix changes significantly
Energy consumption (Reference case)
45 2016
history projections
40
35 petroleum and other
liquids
30 natural gas
25
20
other renewable
15
energy
10 coal
nuclear
5 hydro
0 liquid biofuels
1980 1990 2000 2010 2020 2030 2040

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
140 2016 High Oil and Gas
history projections Resource and
120 Technology
High Oil Price
100 High Economic
Growth
80 Reference
Low Economic
60 Growth
Low Oil Price
40 Low Oil and Gas
Resource and
20 Technology
0
1980 1990 2000 2010 2020 2030 2040

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)
2016
40
history projections dry natural gas
30
crude oil and lease

condensate
20
coal
other renewables
10
nuclear
natural gas plant liquids
hydro
0
1980 1990 2000 2010 2020 2030 2040

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
2016
40
history projections
Low Oil Price
30
Low Oil and Gas
Resource and
20
Technology
High Economic
10
net imports Growth
Reference case
0
Low Economic
-10 net exports Growth
High Oil Price
-20 High Oil and Gas
Resource and
-30 Technology
1980 1990 2000 2010 2020 2030 2040

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) Net energy trade (Reference case)
quadrillion British thermal units quadrillion British thermal units
2016 2016
40 30
history projections history projections
35 25
30 exports 20
25 15 petroleum
and other
20 10
imports net imports liquids
15 5
electricity
10 0
coal and
5 -5 net exports coke
natural gas
0 -10
1980 1990 2000 2010 2020 2030 2040 1980 1990 2000 2010 2020 2030 2040

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
7 2016
history projections No Clean Power Plan
High Economic Growth
6
Low Oil Price
High Oil and Gas
5 Resource and
Technology
4 Reference case
High Oil Price
3 Low Oil and Gas
Resource
2 and Technology
Low Economic Growth
1
0
1980 1990 2000 2010 2020 2030 2040

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
3.0 2016 3.0 2016

2.5 2.5 petroleum
2.0 transportation 2.0

natural gas
1.5 1.5
electric power
1.0 industrial 1.0

coal
0.5 0.5
residential
0.0 commercial 0.0

1980 1990 2000 2010 2020 2030 2040 1980 1990 2000 2010 2020 2030 2040

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
U.S. population Gross domestic product Energy intensity Carbon intensity
million people per capita thousand British thermal metric tons CO2 per billion
thousand dollars/person units per dollar British thermal units
2016 2016 2016 2016

400 80 14 70
350 70 12 60
300 60
10 50
250 50 Reference
8 40
200 40 case
6 30
150 30
100 4 20
20
history history history history
50 10 2 10
0 0 0 0
1980 2010 2040 1980 2010 2040 1980 2010 2040 1980 2010 2040

January 5, 2017 14
Petroleum and other liquids

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
North Sea Brent oil price Crude oil production
2016 dollars per barrel million barrels per day
2016 2016 High Oil and

250 18
history projections history projections Gas Resource
16 and Technology
200 14
12
High Oil Price
150 10 Reference case
8
100 Low Oil Price
6 Low Oil and Gas
Resource and
50 4
Technology
2
0 0
2000 2010 2020 2030 2040 2000 2010 2020 2030 2040

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
2016 2016 2016
18 projections projections
history projections
16
14
12 U.S. total
10
8
tight oil
6
4
non-tight oil
2
0
2000 2010 2020 2030 2040 2020 2030 2040 2020 2030 2040
Reference Low Oil and Gas Resource High Oil and Gas Resource
and Technology and Technology

January 5, 2017 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
80 2016
history projections
60
40 Low Oil Price

Low Oil and Gas
Resource and
20 Technology
net imports
Reference
0
High Oil Price
net exports
-20
High Oil and Gas
Resource and
-40
Technology
2000 2005 2010 2015 2020 2025 2030 2035 2040

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 Light-duty vehicle sales shares
miles per gallon percent
2016 2016
50 70% history projections
history projections
car
truck
40 fleet 60%
average
30 50%
truck
20 40%
car
10 30%
0 0%
20%
2000 2010 2020 2030 2040 2000 2010 2020 2030 2040

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 energy consumption
billion vehicle-miles traveled miles per gallon quadrillion British thermal units
2016 2016
450 2016 12 7
history projections history projections history projections
400 6
10
350
5
300 8
250 4
6
200 3
150 4
2
100
2 1
50
0 0 0
2000 2020 2040 2000 2020 2040 2000 2020 2040

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 Transportation sector consumption
35 2016 2016
35
30 30
25 25
motor light-duty
gasoline vehicles
20 20 medium-and
heavy-duty
15 15 vehicles
distillate
fuel oil air
10 10 commercial
jet fuel light trucks
5 electricity 5 rail
other marine
0 0 other
2000 2010 2020 2030 2040 2000 2010 2020 2030 2040

January 5, 2017 21
Natural gas

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 Dry natural gas production
trillion cubic feet trillion cubic feet
2016 60 2016
60
history projections history projections High Oil Price
High Oil and
50 50 Gas Resource
and Technology
40 40 Reference case
Low Oil Price
Low Oil and Gas
30 30
shale gas and Resource and
tight oil plays Technology
20 20
10 tight gas 10
other Lower 48 onshore
0 other Lower 48 offshore 0
2000 2010 2020 2030 2040 2000 2010 2020 2030 2040

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 billion cubic feet per day
2016
40
history projections
100
35
30 80
electric power
25
60
20
15 40 industrial
10 transportation
20 commercial
5
0 0 residential
2010 2016 2020 2030 2040

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 billion cubic feet per day
2016
8 22
history projections
liquefied natural gas (LNG) 16
6 exports 6
4 10
pipeline exports to
Canada 5
2 Mexico 2
0 0
-2 -5-2
pipeline imports from -10
-4
Canada
LNG imports -16
-6 -6
1980 1990 2000 2010 2020 2030 2040

January 5, 2017 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 Oil-to-natural gas price ratio
trillion cubic feet billion cubic feet per day energy-equivalent terms
2016 2016
10 8
25
7
8
20 6
6 5
15
4
4 10 3
2
2 5
1
0 0 0
2000 2010 2020 2030 2040 2000 2010 2020 2030 2040
Reference High and Low Oil and Gas High and Low
Resource and Technology Oil Price

January 5, 2017 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
12
history projections
Low Oil and
10 Gas Resource
and
Technology
8
High Oil Price
Reference
6 case
Low Oil Price
4 High Oil and
Gas Resource
2 and
Technology
0
2000 2010 2020 2030 2040

January 5, 2017 27
Electricity

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 Electricity use growth rate
billion kilowatthours percent growth (three-year rolling average)
2016
1,800 6
history projections
1,600
5
1,400
direct use
1,200 4
1,000
3
800 electricity
sales 2
600
400
1
200
0 0
1980 2000 2020 2040
-1
residential I commercial I Industrial I transportation -2


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 coals share
declines over time in the Reference case
U.S. net electricity generation from select fuels No Clean
billion kilowatthours Reference 2016 Power Plan
2016
2,500 projections
history projections
2,000 coal
natural gas
1,500
1,000
nuclear
renewable
500
energy
petroleum
0
1980 1990 2000 2010 2020 2030 2040 2020 2030 2040

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 Low Oil and Gas Resource High Oil and Gas Resource
2016 and Technology and Technology
2,500
history projections
coal
2,000 natural gas
1,500
1,000
renewable
500 energy
0
1980 1990 2000 2010 2020 2030 2040 2015 2025 2035 2015 2025 2035

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
30 additions
20 solar
wind
10
oil and gas
0 nuclear
other
-10 coal
retirements
-20
-30
2005 2010 2015 2020 2025 2030 2035 2040

January 5, 2017 32
Assumptions about license renewals in AEO2017 increase nuclear
retirements, leading to net nuclear capacity decreases
Nuclear electricity generating capacity Year-over-year nuclear capacity changes
gigawatts gigawatts
2016
120 3
history projections assumed uprates
Reference
new reactors
100 2
additions
1
80
Reference
0
60
-1
40 actual/announced
-2 retirements
20 projected
-3 retirements
retirements
0 -4
2010 2020 2030 2040 2015 2020 2025 2030 2035 2040

January 5, 2017 33
Coal production decreases, primarily in the Western region
Coal production Coal consumption in electric power sector
million short tons million short tons
2016 1,400 2016
1,400
total 1,200
1,200
No Clean Power Plan
Reference
1,000 1,000 No Clean
Power Plan
800 800
West
600 600
Appalachia
400 400
Interior Reference
200 200
0 0
2000 2010 2020 2030 2040 2000 2010 2020 2030 2040

January 5, 2017 34
Buildings and industrial

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 Commercial sector delivered energy consumption
2016 2016
heating heating
2040 2040
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

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
cooling 2016
2040
lighting
heating
water heating
refrigerators and freezers
laundry and dishwashing
cooking
TVs and PCs
other uses
0 1 2 3 4

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
2016
36 High Oil Price
history projections
34 High Economic
Growth
32 High Oil and
30 Gas Resource
and Technology
28 Reference
26 Low Oil and Gas
Resource and
24
Technology
22 Low Economic
Growth
20
Low Oil Price
//
18
1980 1990 2000 2010 2020 2030 2040

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 Industrial energy consumption
2016 2016 non-

35 history projections
history projections manufacturing
30 other non-energy
hydrocarbon
intensive
gas liquids
25 metal durables
petroleum
refining
20 bulk chemical
feedstock
15 natural gas
bulk chemical
heat & power
10
food
renewables iron & steel
5
electricity paper
0 coal other energy
1980 2000 2020 2040 2010 2020 2030 2040 intensive

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

January 5, 2017 40

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Annual Energy Outlook 2017

AEO2017 Rollout Presentation

U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

Source: EIA, Annual Energy Outlook 2017

Adam Sieminski, Johns Hopkins SAIS

crude oil and lease

Source: EIA, Annual Energy Outlook 2017

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

3.0 2016 3.0 2016

2.5 2.5 petroleum

2.0 transportation 2.0

1.0 industrial 1.0

0.0 commercial 0.0

Source: EIA, Annual Energy Outlook 2017

Adam Sieminski, Johns Hopkins SAIS

2016 2016 2016 2016

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

2016 2016 High Oil and

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

40 Low Oil Price

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

Source: EIA, Annual Energy Outlook 2017

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

Source: EIA, Annual Energy Outlook 2017

Adam Sieminski, Johns Hopkins SAIS

Source: EIA, Annual Energy Outlook 2017

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

Source: EIA, Annual Energy Outlook 2017

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

residential I commercial I Industrial I transportation -2

Adam Sieminski, Johns Hopkins SAIS

Source: EIA, Annual Energy Outlook 2017

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

Source: EIA, Annual Energy Outlook 2017

Adam Sieminski, Johns Hopkins SAIS

Source: EIA, Annual Energy Outlook 2017

Adam Sieminski, Johns Hopkins SAIS

Source: EIA, Annual Energy Outlook 2017

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

water heating water heating

Adam Sieminski, Johns Hopkins SAIS

Adam Sieminski, Johns Hopkins SAIS

Source: EIA, Annual Energy Outlook 2017

Adam Sieminski, Johns Hopkins SAIS

2016 2016 non-