Domestic crude oil production rising

Domestic crude oil production will increase by an average 800,000 barrels each day through 2016, when it will approach a historical highpoint, according to updated projections released Monday by the U.S. Energy Information Administration.

The EIA’s Annual Energy Outlook, building upon projections released in June, is due to be finalized next spring. Released this week was an early overview of the analysis, which projects various energy-related metrics through 2040.

In 1970, domestic production reached 9.6 million barrels per day, a threshold that hasn’t been reached since. The EIA projected that the U.S. will approach that level in the next two years, before production levels off and starts a slow decline, which is in line with 2013 estimates.

EIA Administrator Adam Sieminksi pointed out that increased production reduces the nation’s need to import energy from foreign sources and aids the national economy.

“EIA’s updated Reference case shows that advanced technologies for crude oil and natural gas production are continuing to increase domestic supply and reshape the U.S. energy economy as well as expand the potential for U.S. natural gas exports,” Sieminksi said.

“With domestic crude oil production rising to 9.5 MMbbl/d in 2016, the import share of U.S. petroleum and other liquids supply falls to about 25 percent,” the report says. “Domestic production begins to decline after 2019, and the import share of total petroleum and other liquids supply grows to 32 percent in 2040, still lower than the 2040 level of 37 percent in the AEO2013 Reference case.”

Brent crude oil’s price is expected to continue declining through 2017, when the EIA anticipates it will reach $92 per barrel in 2012 dollars, a slight decrease from the June report’s projections. Growing demand in China, India, Brazil and elsewhere will require development of costly resources, eventually jolting the price of Brent crude to $141 per barrel in 2040, according to the report.

Natural gas prices, still low due to a rapid increase in extraction, are expected to rise by more than was previously anticipated. The Henry Hub futures price – at $4.27 per million British thermal units for January, 2014 – is expected to hit $4.80 in 2018, 77 cents per unit higher than the 2013 outlook. It is projected to reach $7.65 in 2040.

Liquefied natural gas will be exported at increasingly high levels throughout the next 26 years, according to the report. LNG exports to Mexico are expected to increase from 0.6 trillion cubic feet in 2012 to 3.1 tcf in 2040.

Overall, LNG exports will rise to 3.5 tcf by 2029 and remain stable through 2040, as specific markets ebb and flow. Imports from Canada are expected to fall by 30 percent over that same period, according to the report.

Energy-related carbon dioxide emissions will remain below their 2005 level through 2040. Such emissions were at 6 billion metric tons eight years ago, and they are anticipated to reach 5.6 billion metric tons at the end of the projection’s timeline.

The report is posted online at www.eia.gov.