Thursday, February 22nd, 2018
U.S. a Net Energy Exporter by 2022 Declares EIA
Extraction of crude and natural gas from shale fields across the United States continues to defy industry projections. Today, these production increases, the ability now to export crude, and the expectation that technological advancements will continue have led to the EIA projecting that the U.S. will become a net energy exporter in only a few years.
Domestic Energy Use More or Less Steady
With domestic focus continuing to turn more towards renewables and increased efficiency in fossil fuel extraction, domestic energy use isn’t seeing any large changes. Lack of substantial growth in domestic energy consumption is projected to continue with minimal variations in growth across a range of economic conditions as depicted by the EIA Chart below.
While domestic energy consumption is projected to remain flat through 2040, the EIA projects a 28% increase in world energy use by 2040, thus swinging the door wide open for the U.S. to become a net energy exporter. With the U.S. as a net energy exporter, this could go a long way to balancing the trade deficit.
Where Is the Crude and Natural Gas Going?
The U.S. has long enjoyed trade with its North American neighbors, Canada and Mexico. However, with the lifting of the crude oil export ban, foreign markets have opened for U.S. trade in many new and interesting ways. For example, the U.S. is now selling crude in the Middle East, which is something very few expected to ever happen.
Many other countries only just started receiving U.S. LNG exports for the very first time about a year ago. In addition, there’s a rise in exports of all natural gas products, refined products, and crude. It’s also worth pointing out the U.S. already captured the status of net exporter of natural gas.
The Path to Net Energy Exporter
The EIA, in its most recent Annual Energy Outlook, says the U.S. will become a net energy exporter by 2022, but that’s an estimated forecast. The forecast is based on having several predictions in the energy market remaining unchanged. The chart below depicts how the United States is predicted to become a net energy exporter by 2022 in all but two sets of conditions.
These forecasts can change every year depending on market performance and global activity. For example, a previous AEO report put the year at 2026, rather than 2022.
The projections of these reports typically center on a reference case and a few other sensitivity cases. According to the main reference case, the rapid development and production of shale resources will need to continue.
The domestic need for oil and gas has to remain modest. One sensitivity case shows increased production and higher oil pricing can allow the U.S. to become a net energy exporter even sooner.
by Randall Kenworthy
Related >> US Now a Net Exporter of Natural Gas