Production from the nation's shale plays will grow to 12.2 Tcf in 2035, when it will be 47% of total U.S. production, up from 16% in 2009, according to the Energy Information Administration's (EIA) "Annual Energy Outlook 2011" (AEO2011), which was released Tuesday.
"The combination of horizontal drilling and hydraulic fracturing technologies has made it possible to produce shale gas economically, leading to an average annual growth rate of 48% over the 2006-2010 period," according to the report. "Shale gas production continues to increase strongly through 2034 in the AEO2011 reference case, growing almost fourfold from 2009 to 2035."
Total domestic natural gas production will grow from 21.0 Tcf in 2009 to 26.3 Tcf in 2035, EIA said. The projected production for 2035 is 3.0 Tcf more than EIA had forecast in its previous annual outlook (see Daily GPI, Dec. 15, 2009). The increase will be driven in large part by shale gas production, which reached 4.87 Tcf (23% of total U.S. gas production) in 2010, compared with 0.39 Tcf in 2000, according to previously released EIA data (see Shale Daily, April 7).
The estimate for technically recoverable unproved shale gas resources in the EIA reference case is 827 Tcf. Estimates of technically recoverable resources and well productivity "remain highly uncertain," according to EIA, which used a variety of estimates in the outlook's 57 sensitivity cases.
As it had reported in a preliminary release of the AEO2011 in December (see Shale Daily, Dec. 17, 2010), EIA said the annual average natural gas wellhead price will remain under $5/Mcf through 2022, primarily because of the huge increase in the estimated amount of shale gas reserves. Gas wellhead prices (in 2009 dollars) are expected to hit $6.42/Mcf in 2035, well below the $8.19 projection of a year ago.
In addition to the strong growth expected in shale gas production, EIA forecasted growing use of natural gas and renewable energy sources in electric power generation, and a declining reliance on imported liquid fuels.
The AEO2011 projects oil prices to be about $125/bbl in 2009 dollars by 2035 and imports remaining a major, though declining, portion of the United States' energy mix. Rising fuel prices will also "spur domestic energy production across all fuels -- particularly, natural gas from plentiful shale gas resources -- and temper the growth of energy imports," according to EIA, which projects the net import share of total U.S. energy consumption in 2035 at 17%, compared with 24% in 2009.
"Much of the projected decline in the net import share of energy supply is accounted for by liquids. Although U.S. consumption of liquid fuels continues to grow through 2035 in the reference case, reliance on petroleum imports as a share of total liquids consumption decreases. Total U.S. consumption of liquid fuels, including both fossil fuels and biofuels, rises from about 18.8 million barrels per day in 2009 to 21.9 million barrels per day in 2035 in the reference case. The import share, which reached 60% in 2005 and 2006 before falling to 51% in 2009, falls to 42% in 2035."