Fracking to Drive Oil Boom Says Federal Report

This past week, the U.S. Energy Information Administration released its Annual Energy Outlook 2013 (AEO2013), which ”provides the basis for examination and discussion of energy market trends and serves as a starting point for analysis of potential changes in U.S. energy policies, rules, or regulations or potential technology breakthroughs.”

Notably, a number of the report’s findings relate to and/or are impacted by fracking.  For example, largely the result of a significant increase in onshore crude oil production, “particularly from shale and other tight formations,” domestic production of crude oil is projected to increase with an annual growth average of 234 thousand barrels per day (bpd) through 2019, when production is projected to reach 7.5 million bpd.

In addition, the report projects that relatively low natural gas prices, “facilitated by growing shale gas production,” will spur increased use of natural gas in the industrial and electrical power sectors, particularly over the next 15 years.  For example, natural gas use in the industrial sector is projected to increase by 16 percent, from 6.8 trillion cubic feet per year in 2011 to 7.8 trillion cubic feet per year in 2025. 

U.S. dry natural gas production is projected to increase throughout the projection period (through 2040), outpacing domestic consumption by 2020 and spurring net exports of natural gas.  The report states that ”[h]igher volumes of shale gas production in AEO2013 are central to higher total production volumes and an earlier transition to net exports than was projected in AEO2012.”

Finally, included in the report’s findings is that industrial production is projected to grow more rapidly “due to the benefit of strong growth in shale gas production and an extended period of relatively low natural gas prices, which lower the costs of both raw materials and energy, particularly through 2025.”

 

 


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