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Natural Gas and America’s energy Future

Natural Gas and America’s energy Future. Rayola Dougher API Senior Economic Advisor. Oil & Natural Gas Industry: The Backbone of the American Economy. Supports more than 9 million jobs Supplies more than 60% of our energy needs

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Natural Gas and America’s energy Future

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  1. Natural Gas and America’s energy Future Rayola Dougher API Senior Economic Advisor

  2. Oil & Natural Gas Industry: The Backbone of the American Economy • Supports more than 9 million jobs • Supplies more than 60% of our energy needs • Generates hundreds of billions of dollars in government revenue

  3. Energy is the engine of our economic growth More energy means more jobs, higher incomes, greater economic growth

  4. Transition to Modern Energy/Technology Transition to Modern Energy/Technology

  5. Projected Changes in Indexes of GDP, Population, Energy and Carbon Intensity, 2008-2035 Source: EIA, AEO 2010

  6. Future U.S. Energy DemandThe U.S. will require 21 percent more energy in 2035 than in 2009

  7. EIA Forecast of U.S. Energy Demandby Fuel Type

  8. Role of Renewable Energy in the Nation’s Energy Supply, 2008

  9. Role of Renewable Energy in the Nation’s Energy Supply, 2035

  10. Energy Consumption by Sector, 2008

  11. Energy Consumption by Sector, 2035

  12. Natural Gas Demand & Supply

  13. Natural Gas Use, 2009 Source: EIA

  14. Changes in demand for natural gas has been driven by developments in the electricity sector trillion cubic feet History Projections Electric Power Industrial Residential Commercial Lease and Plant Fuel Transportation Pipeline Fuel Source: EIA, Annual Energy Outlook 2010

  15. Growth in electricity use continues to slow Period Annual Growth 1950s 9.8 1960s 7.3 1970s 4.7 1980s 2.9 1990s 2.4 2000-2008 0.9 2008-2035 1.0 3-year rolling average percent growth History Structural Change in Economy - Higher prices - Standards - Improved efficiency Projections Source: EIA, Annual Energy Outlook 2010

  16. Renewables gain electricity market share; coal share declines billion kilowatthours and percent shares History Projections 17.0 Renewable 9.1 20.8 Natural gas 21.4 Coal 43.8 48.5 Oil and other 1.4 1.5 Nuclear 19.6 17.1 Source: EIA, Annual Energy Outlook 2010

  17. Natural gas and renewables account for the majority of capacity additions from 2008 to 2035 Capacity additions 2008 to 2035 2008 capacity Hydropower* 99 (10%) Hydropower* 1 (0.4%) Nuclear 8 (3%) Nuclear 101 (10%) Coal 312 (31%) Coal 31 (12%) Other renewables 92 (37%) Other renewables 40 (4%) 250 gigawatts 1,008 gigawatts Other 119 (12%) Other 2 (1%) Natural gas 116 (46%) Natural gas 338 (33%) * Includes pumped storage Source: EIA, Annual Energy Outlook 2010

  18. U.S. Dry Gas(trillion cubic feet per year) 30% domestic gas production growth outpaces 16% consumption growth, leading to declining imports. History Projections 26.5 Tcf 1% Consumption 23.2 Tcf 26.1Tcf Net imports 11% Domestic supply 20.2 Tcf Source: EIA, Annual Energy Outlook 2011

  19. U.S. Net LNG Imports Over the past 5 years EIA has significantly lowered its projection of LNG imports into the U.S. History Projections AEO2005 AEO2010 Source: EIA, Annual Energy Outlook

  20. Four-fold increase in shale gas production offsets declines in other U.S. supply, meeting consumption growth and lowering import needs U.S. dry gas trillion cubic feet per year History Projections 2009 1% Net imports 11% 46% 14% Shale gas 20% Non-associated onshore 8% 9% Non-associated offshore 8% 22% 28% Tight gas 7% 8% Coalbed methane 7% 2% 9% Associated with oil Alaska 1% 20 Source: EIA, Annual Energy Outlook 2011

  21. Shale Gas Potential

  22. U.S. Dry Gas Resources(trillion cubic feet) Shale gas has been the primary source of recent growth in U.S. technically recoverable natural gas resources 2,552 Unproved shale gas 827 Unproved other gas (including Alaska* and offshore) 1,481 Proved reserves (all types & locations) 245 Source: EIA, Annual Energy Outlook 2011

  23. Technically Recoverable Shale Gas(trillion cubic feet) Estimates from multiple sources suggest a vast resource of technically recoverable shale gas. Jul 2008 Nov 2008 Dec 2009 Feb 2010 Jun 2010 Aug 2010 Source: EIA, Annual Energy Outlook 2011

  24. Worldwide Shale Potential Source: Schlumberger

  25. Shale Gas Plays, Lower 48 States

  26. Horizontal Drilling and Hydraulic Fracturing

  27. Active Drilling Rigs Fifty-five percent of active rotary rigs are now drilling horizontal wellbores. Source: Baker Hughes Oct 1, 2010

  28. Gas Well Completions in the Barnett Shale

  29. Increase in Production from the Barnett Field gas production billion cubic meters wells drilled thousands Source: EIA

  30. Production ImpactOnshore Texas Gas Production Source: Compiled by Seneca Resources from EIA State Gas Production and the Perryman Group, March 2008

  31. Annual Shale Gas Production(trillion cubic feet) Over the last decade, U.S. shale gas production has increased 14-fold and now comprises about 22 percent of total U.S. production. Source: EIA, Lippman Consulting (2010 estimated)

  32. Natural Gas Production(billion cubic feet per day) Since 2006 the 6 largest shale gas plays have provided essentially all gross gas production increases in U.S. lower-48 U.S. lower-48 (includes shale) Big 6 shale plays Source: Lower 48 from EIA. Big 6 Shales from HPDI.

  33. Marcellus Shale

  34. Marcellus Shale Formation • Marcellus fairway is 40,000 to 50,000 square miles • Estimates of recoverable reserves up to more than 50tcf; that’s equivalent to more than 40 years of NY’s current consumption • Barnett core is 5,000 square miles • Barnett is largest U.S. gas field, providing 6% of U.S. natural gas

  35. Marcellus Gas Drilling 2008: 604 wells 2009: 1,122 wells

  36. Northern Pennsylvania Marcellus drilling and New York State June 2008 Governor asked DEC to do a thorough review of environmental impact SGEIS; December 2010 Governor prohibits all new HF horizontally drilled wells until July 1, 2011.

  37. Estimated Natural Gas Production from Marcellus Development

  38. Estimated Value Added from Marcellus Development

  39. Estimated Federal Taxes Generated from Marcellus Development

  40. Estimated State and Local Taxes Generated from Marcellus Development

  41. Estimated Number of Jobs Created from Marcellus Development

  42. Economic Impact of Marcellus Shale on New York* *Medium to High Development Scenarios Source: Timothy J. Considine, “The Economic Impacts of the Marcellus Shale: Implications for New York, Pennsylvania and West Virginia,” July 2010

  43. Economies of Shale

  44. Natural Gas Spot Price (Henry Hub)(2009 dollars per million Btu) Natural gas price projections are significantly lower than past years due to an expanded shale gas resource base. History Projections 2009 AEO2009 AEO2010 AEO2011

  45. Shale gas production significantly lowers projected U.S. gas imports and price Imports No new U.S. shale scenario Reference scenario trillion cubic feet High U.S. shale scenario Source: EIA, Annual Energy Outlook 2010

  46. Energy is the engine of our economic growth More energy means more jobs, higher incomes, greater economic growth

  47. Thank You For more information visit www.api.org www.energytomorrow.org

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