U.S. to be net energy exporter by 2026: report
The United States, a net energy importer since 1953, is on a path to become a net energy exporter in the next decade, the U.S. Energy Information Administration said Thursday in its 2017 energy outlook.
Growing U.S. production of tight oil and shale gas, combined with flat U.S. oil demand, is bad news for Canada, which will have no alternative export market until it builds new oil pipelines to the coasts and liquefied natural gas plants, and even faces new competition from U.S. imports.
“U.S. imports of natural gas from Canada, primarily from the West where most of Canada’s natural gas is produced, continue to decline, while U.S. exports to Canada — primarily to the East — continue to increase because of Eastern Canada’s proximity to abundant natural gas resources in the Marcellus basin,” the EIA said in its annual outlook.
According to the EIA, The U.S. will become a net energy exporter by 2026 under its base case, with exports boosted further if oil prices are high and extraction technologies keep improving.
U.S. gas exports are set to soar by 2020 thanks to the country’s growing LNG sector. Five LNG facilities are expected to be up and running by then — the Sabine Pass export facility began operations in 2016 and four more are expected to be completed by 2020.
Meanwhile, only a small LNG facility — Woodfibre LNG — is moving ahead in Canada’s west coast, while two dozen others that had been planned remain uncertain due to opposition, regulatory delays and changing market conditions.
The EIA projects oil prices will reach US$109 a barrel by 2040, but could soar to US$226 a barrel under a high-price case, or decline to US$43 a barrel under a low-price case. Natural gas prices are expected to remain relatively low, flattening out at about US$5 per million British thermal units in the 2030 to 2040 period.
Oil exports are aided by low U.S. oil consumption, which is expected to stay below 2005 levels. U.S. gas consumption is expected to increase thanks to growing industrial use.
“The industrial sector is the largest consumer of natural gas during most years in the reference case projections,” the EIA says. “Major natural gas consumers include the petrochemical industry (where natural gas is used as a feedstock in the production of methanol, ammonia, and fertilizer), other energy-intensive industries that use natural gas for heat and power, and liquefied natural gas producers.”
Total U.S. energy production is projected to increase by more than 20 per cent from 2016 to 2040, led by increases in natural gas, renewables and crude oil. Natural gas growth leads the way as it continues to replace coal for power generation, renewables gain on cost reductions and policies that promote wind and solar, and crude oil growth flattens out by 2025 as tight oil development moves into less productive areas.
Oil production is expected to peak at 10 million to 11 million barrels a day as development moves into less productive areas and well productivity decreases, the EIA says. Growth will come primarily from the Permian basin in the Southwest, the Bakken play in the Dakotas and Rocky Mountains regions, and in the U.S. Gulf Coast region from the Eagle Ford and Austin Chalk plays.
On the gas side, growth is driven by shale plays and associated gas from tight oil.
Still, the EIA says it’s hard to make projections about tight oil and shale gas production because large portions of the known formations have relatively little or no production history, and extraction technologies and practices continue to evolve.