The next quarter century will bring moderate growth in U.S. energy consumption, strong growth in shale gas production and increased use of renewable fuels, the Energy Information Administration (EIA) said in its latest Annual Energy Outlook (AEO2010) Tuesday.

Total U.S. energy consumption will increase 14% from 2008 to 2035, an average of 0.5% growth annually EIA said. Over the same period the energy intensity of the economy will decrease 1.9% annually as the most rapid growth in the economy comes in the less energy-intensive service sectors and as the efficiency of appliances, vehicles and structures improves. Total residential energy consumption will grow to 12.1 quadrillion Btu by 2035 in the AEO2010 reference case, assuming historical rates of technological progress in residential equipment and appliances.

While fossil fuels will continue to provide most of the energy consumed in the United States over the next 25 years, their share of overall energy use is forecast to fall to 78% by 2035 compared with 84% in 2008, EIA said. Growth in the consumption of renewable fuels will come primarily as a result of federal and state programs and rising fossil fuel prices. Renewables may grab an even bigger piece of the fuel mix pie if favorable policies are extended, EIA said.

The recent growth in shale gas production “is one of the most dynamic stories in U.S. energy markets,” EIA said. The level of shale production “will significantly influence U.S. natural gas prices, production, imports and consumption in the future,” EIA said. “However, there is considerable uncertainty regarding the size of low-permeability natural gas resources and concerns have also been raised regarding the environmental impacts of accessing those resources.” In the AEO2010 reference case, production from shale formations is forecast to grow 6 Tcf in 2035 and shale gas would provide 24% of the gas consumed in the United States compared with 6% in 2008. Total domestic natural gas production is forecast to grow from 20.6 Tcf in 2008 to 23.3 Tcf in 2035.

In alternative cases that examined the potential impacts of more limited shale gas development and more extensive development of a larger resource base, overall domestic natural gas production varied from 17.4-25.9 Tcf in 2035, compared with 23.3 Tcf in the reference case. EIA’s reference case forecast a wellhead price of $8.06/MMcf, while the alternative cases found wellhead prices ranging from $6.92-9.87/MMcf.

While EIA found “uncertainties about the potential role of natural gas in various sectors of the economy,” the use of natural gas for electricity generation continues growing in the reference case.

“However, over the next few years the combination of relatively slow growth in total demand for electricity, strong growth in generation from renewable sources, and the completion of a number of coal-fired power plants already under construction limits the potential for increased use of natural gas in the electric power sector,” EIA said.

EIA also expects to see carbon dioxide (CO2) emissions growth slow in coming years based on a combination of modest growth in energy consumption and an increasing reliance on renewable fuels. In the reference case, which assumed no new explicit regulations to limit greenhouse gas emissions, CO2 emissions from energy are forecast to grow on average by about 9% by 2035, or 0.3% annually.

U.S. energy markets last year continued to show the impacts of the economic downturn that began in late 2007, EIA said. After falling by 1% in 2008, total electricity generation dropped by another 3% in 2009. It was the first time that electricity use fell in two consecutive years in the 60 years that EIA has monitored such data.

The full EIA report is available at

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