Shale gas resources -- and growing output from shale oil -- will offset declines in other U.S. supplies through 2035, the Energy Information Administration (EIA) reported Thursday.
EIA's preliminary Annual Energy Outlook 2011 (AEO2011), which projects estimated domestic energy resources and consumption through 2035, reported that technically recoverable shale gas resources have doubled in a year's time (see Daily GPI, Dec. 15, 2009). The final report will be issued early next year.
Key shale gas resource additions in this year's report were from the Marcellus, Haynesville and Eagle Ford shales, said EIA.
"The technically recoverable unproved shale gas resource is 827 Tcf (as of Jan. 1, 2009) in the AEO2011 reference case, 474 Tcf larger than in the Annual Energy Outlook 2010 (AEO2010) reference case, reflecting additional information that has become available with more drilling activity in new and existing shale plays," the report stated.
"The larger resource leads to about double the shale gas production and over 20% higher total Lower 48 natural gas production in 2035, with lower natural gas prices, than was projected in the AEO2010 reference case."
According to AEO2011, shale gas will account for 45% of U.S. supply by 2035, up from about 14% in 2009. Nonassociated onshore gas is forecast to be 22% of total domestic gas supply, while tight gas would be 8%, and coalbed methane would be 7%.
Only 1% of gas supplies by 2035 are expected to be imported, 1% would be from Alaska, and about 7% is associated with oil production.
"Considerable uncertainty" exists concerning the amounts of recoverable shale gas in both developed and undeveloped areas. "Well characteristics and productivity vary widely not only across different plays but within individual plays."
In addition, "many shale formations, such as the Marcellus Shale, are so large that only a small portion of the entire formation has been intensively production-tested," said EIA. "Environmental considerations, particularly in the area of water usage, lend additional uncertainty. Although significant updates have been made to the estimates of undiscovered shale gas resources in newer areas, most of the resulting additions are not economically recoverable at AEO2011 prices and have little, if any, impact on the projection."
Onshore oil production also is higher in AEO2011 because of an increase in enhanced oil recovery (EOR) techniques, "as well as increased oil production from shale oil sources," EIA said.
"As with natural gas, the application of horizontal drilling together with [hydraulic fracturing] techniques have allowed significant increases in the development of shale oil resources (oil resident in shale rock)."
AEO2011 incorporated five key shale oil plays, up from two in last year's report, where production is expected to increase in the coming years: the Rocky Mountains (primarily the Bakken Shale) and along the Gulf Coast, particularly in the Eagle Ford Shale and Austin Chalk play in Texas. Also adding to domestic oil production in the coming years are the Avalon Shale in West Texas and California's Lower Monterey and Santos shales.