Carpe Diem

Three charts of America’s bright energy future

energyprodcons

Here are three charts based on the new Annual Energy Outlook 2013 from the U.S. Department of Energy:

1. The first chart above shows that the U.S. is expected to produce domestically almost 83% of the energy consumed this year, which will be the highest level of energy self-sufficiency since 1991, more than two decades ago.  For a quarter century, U.S. energy production as a share of domestic energy consumed was on a gradual decline, falling from a peak production share of more than 91% of the energy consumed in 1982 to below a 70% share by 2005.

But then hydraulic fracturing, horizontal drilling and the shale revolution happened and dramatically changed the course of U.S. energy production for the 21st century.  Starting around 2008, advanced drilling technologies started accessing trapped hydrocarbons in shale rock and U.S. energy production started surging – to an all-time record high this year for natural gas and to a 14-year high in 2012 for domestic crude oil.  The new upward trend in energy self-sufficiency is expected to continue for at least the next three decades, and by 2033 America’s own domestically produced energy will provide more than 90% of the total energy consumed.

2. The chart above shows the impact of the shale revolution on America’s production of domestic natural gas.  Ten years ago, shale gas production was an insignificant 2% share of America’s total natural gas production.  Thanks to advances in hydraulic fracturing, that share has been rising and shale gas will provide more than one-third of the natural gas produced domestically this year.  By the year 2038 shale gas will represent more than half of U.S. natural gas production and will continue on an upward trajectory from there.

3. The chart above shows the Department of Energy’s estimates of CO2 emissions per capita from 1973 to 2040.  Total energy-related carbon emissions are expected to fall to a 20-year low this year, and on a per-capita basis will be the lowest since at least 1973 when the Department of Energy’s data begins.  From the current level of 17 tons per capita, we can expect CO2 emissions per capita to fall to 14 tons per capita in 2040, a 25.2% decrease.  One of the largest contributing factors in the reduction of CO2 emissions is the switch from coal to gas for electricity generation and the switch from fuel oil to natural gas as a fuel source for heating homes and commercial buildings.

MP: The new projections from the Department of Energy through the year 2040 paint a very bright picture for America’s energy, economic, and environmental future in the first half of the 21st century. Thanks to advanced drilling technologies and the shale revolution, we can expect ongoing increases in domestic oil and gas production, which will: a) keep adding thousands of new direct jobs for drilling activities and thousands of more indirect jobs throughout the energy supply chain, b) attract billions of dollars in new investment capital, and therefore, c) continue to generate energy-related prosperity in states like North Dakota, Texas, Oklahoma, Pennsylvania and Ohio.  As we access more of America’s bonanza of shale gas and oil, the country’s energy self-sufficiency will gradually increase to new high record levels, while at the same time we’ll see carbon emissions per person fall to new record low levels.  America’s bright energy future continues to provide one of the best reasons to be optimistic and bullish about the U.S. economy.

26 thoughts on “Three charts of America’s bright energy future

      • According to Baker-Hughes, the total number of rigs today (1,800) is the same as the number of rigs in December 2007, five years ago. And the U.S. is producing 30% more oil today than in 2007, and almost 20% more natural gas, with the same number of rigs.

        • It’s worth noting that the US land rig count dropped from 1,981 to 1,799 in the past year but the real story is that those that were oil directed were up 19% while gas directed rigs were down 49%. Clearly this change was a result of the commodity price.

          • It’s worth noting that the US land rig count dropped from 1,981 to 1,799 in the past year but the real story is that those that were oil directed were up 19% while gas directed rigs were down 49%. Clearly this change was a result of the commodity price.

            I agree that commodity prices were a driver but so is the availability of capital. Shale gas producers are nearing the end of the line as creditors will not give more loans to finance money losing production and asset sales can no longer close the funding gaps. This means that gas drilling will decline until prices go up to levels where the marginal cost of production is no longer higher than the sales price. That presents a huge problem for all those companies that are betting on cheap gas prices continuing forever. This is why Mark does a disservice to his readers when he concentrates on the hype and ignores the economics.

            On the other side we have new capital flowing to shale liquids drilling but that too has some serious headwinds given the massive depletion rates and the rapidly diminishing storage capacity at Cushing.

  1. One has to wonder how much of this decrease in pollution is because of reduced manufacturing in the steel plants and other heavy energy sectors that have moved overseas? So, instead of polluting here in the US where the pollution is managed, it’s now in China, India, and elsewhere where they have very lax pollution controls.

    • Eric

      It’s not clear what pollution you are talking about, but heavy industry didn’t just start leaving the US in the last few years.

      You’re correct, though, that if the business climate in the US becomes too restrictive and unpleasant, businesses will move to other parts of the world that welcome them.

      Be careful what you wish for.

    • There have been numerous announcements from chemical, steel and fertilizer companies regarding investment in capacity expansion in the US directly as a result of the low cost natural gas. The expectation is that natural gas will remain at a significant discount to the European & Asian markets. Nucor has even been buying gas reserves as have the Chinese in Canada.

  2. BTW, if you are wondering about the future of biofuels in America, look for the military and USDA to become even more involved.

    Already, by federal mandate and subsidy, 800,000 barrels a day of corn ethanol is made in the USA.

    But now the military could set about constructing biofuels plants for their use.

    “Biofuels: A Partnership Between Our Military and Our Department of Agriculture” at http://www.bigpictureagriculture.com/2012/12/biofuels-partnership-between-military-department-agriculture-301.html

    Gee, I wonder why AEI is not ranting against this government mandate, subsidy and intrusion into the energy sector?

    • Somebody should be ranting and screaming. And that somebody should be the taxpayer. The still-experimental fuels are extremely expensive — about $27 a gallon for the fuel used in a recent naval demonstration, compared with about $3.50 a gallon for conventional military fuels.

    • You are dead wrong on that one. Like all commodities, crude is dollar denominated. The value of the dollar vis a vis a very broad measure of 100 other currencies when trade weighted trade and adjusted for inflation is the lowest its been in HISTORY. ITS NEVER BEEN LOWER.

      What it says is that a dollar today buys less overseas than at almost any time in modern history.

        • Which is why more manufacturing will happen here. You cannot buy as much of it overseas for the same dollar.

          The problem for domestic production is the total disrespect for capital on the part of Congress. I would not be as optimistic as you seem to be because the headwinds are much stronger than you can imagine.

  3. MP: The new projections from the Department of Energy through the year 2040 paint a very bright picture for America’s energy, economic, and environmental future in the first half of the 21st century….

    The claims would be more credible if they showed that shale projects were self financing. Until then all the estimates are just hot air.

    • And a total domestic crude oil production peak in 2019 too.

      Just look up the recent EIA report if any doubt exists.

      There certainly is doubt. American oil production peaked in 1970. Shale will not bring production anywhere near that level.

      • It’ll be a secondary peak based on a tight oil peak, and also a grand total US secondary peak of crude. There’s little doubt about it except about how soon the whole world peaks on crude production.

        The silly optimists will have some BOHICA experiences way before 2040, and be wrong again even per the EIA.

        • It’ll be a secondary peak based on a tight oil peak, and also a grand total US secondary peak of crude. There’s little doubt about it except about how soon the whole world peaks on crude production.

          What gets to me is the fact that people refuse to see that the production of the higher quality light sweet crude has already peaked and that you need more than one barrel of unconventional crude to replace each barrel of light sweet.

          • Since time immemorial, people have believed what they want to and per their ideology worship – and eff the facts.

            It takes more than a little pain to get them to open their eyes and look beyond the propaganda.

          • It takes more than a little pain to get them to open their eyes and look beyond the propaganda.

            But the refusal to look beyond the propaganda produces opportunities for those that have no such problem. One can make a good living betting against unsustainable trends from continuing.

  4. This might be a terribly naive question, but is this what the article above is saying: As of today, in order to support just one American, American industry (and drivers of cars), throw into the atmosphere 17 tons of CO2? TONS???Have I read this right? If this is true, it’s a wonder there aren’t more Katrinas, Sandys and droughts in Texas/Arizona/New Mexico.

    • Ann

      Seventeen tons appears to be the correct number. To see that as a problem, however, one must believe that man made CO2 is a major contributor to increasing global temperatures – something not in evidence – and in addition that higher temperatures produce more frequent or more severe storms and other conditions, something that is demonstrably false.

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