U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov

Macro Industrial Working Group (MIWG)

Industrial Team: Kelly Perl, Team Leader; Peter Gross, Susan Hicks, Paul 

Otis, and Mark Schipper (OECEA)

September 29, 2014 | Washington, DC

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

Industrial team preliminary results for 

AEO2015
Overview AEO2015

2 Industrial Team Washington DC, 

September 29, 2014 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

• AEO2015 is a “Lite” year

– New ethane/propane pricing model only major update

– Major side cases released with Reference case in late 2014: price, resource 

and macro

• Macro model results have changed since first MIWG; growth 

not as robust for some industries, especially after 2025

• What you’ll see today

– Shipments

– Industrial energy use (total and excluding both refining and lease &plant fuel)

• AEO2015 Reference and selected side cases

• AEO2015 v. AEO2014

– New ethane/propane price model results
Side case definitions

3 Industrial Team Washington DC, 

September 29, 2014 

• Price cases relative to Reference case

– High Oil Price case: technology and policy half as effective in reducing demand 

in non-OECD countries, increasing demand; OPEC restricts production, 

reducing market share; higher production of tight oil; higher production of other 

liquid fuels as a result of technology development and increased development 

of previously uneconomic resources

– Low Oil Price case: technology and policy twice as effective in reducing 

demand in non-OECD countries, decreasing demand substantially; OPEC 

maintains market share; lower production of tight oil and other liquid fuels

– Economic growth the same in Reference, High and Low Price Cases

• High Resource case: substantially higher Estimated Ultimate 

Recovery of tight oil, tight gas, and shale gas, more 

resources 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

2010 2015 2020 2025 2030 2035 2040

AEO2015 Reference case

Macro model revision means lower growth for manufacturing 

2013-2040

4 Industrial Team Washington DC, 

September 29, 2014 

Manufacturing shipments in 2009 billion U.S. 

dollars

Source: ref2015.0922a, ref2015.0909a

AEO2015 Reference case before revision

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Full Industrial sector results

5 Industrial Team Washington DC, 

September 29, 2014 
Total Industrial delivered energy consumption AEO2015 

Reference case and AEO2014 Reference case

6 Industrial Team Washington DC, 

September 29, 2014 

22

24

26

28

30

32

2010 2015 2020 2025 2030 2035 2040

AEO2014 Reference case

AEO2015 Reference case

Energy consumption in quadrillion Btu

Source: AEO2015.0922a and AEO2014 Reference case – includes total industrial sector

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Total industrial natural gas consumption AEO2015 Reference case 

and AEO2014 Reference case

7 Industrial Team Washington DC, 

September 29, 2014 

8

9

10

11

12

2010 2015 2020 2025 2030 2035 2040

AEO2014 Reference case

AEO2015 Reference case

Energy consumption in quadrillion Btu

Source: AEO2015.0922a and AEO2014 Reference case – includes total industrial sector

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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IDM Results – excluding refining and 

lease and plant fuel

8 Industrial Team Washington DC, 

September 29, 2014 
18

20

22

24

26

2010 2015 2020 2025 2030 2035 2040

Reference case

High Price

Low Price

High Resource

Industrial delivered energy consumption, Reference case and 

selected side cases for AEO2015

9 Industrial Team Washington DC, 

September 29, 2014 

Energy consumption in quadrillion Btu

Source: AEO2015.0922a excludes refining and lease & plant fuel

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
Industrial delivered energy consumption AEO2015 Reference case 

and AEO2014 Reference case

10 Industrial Team Washington DC, 

September 29, 2014 

18

20

22

24

26

2010 2015 2020 2025 2030 2035 2040

AEO2014 Reference case

AEO2015 Reference case

Energy consumption in quadrillion Btu

Source: AEO2015.0922a and AEO2014 Reference case excludes refining and lease & plant fuel

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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5.0

5.5

6.0

6.5

7.0

7.5

8.0

2010 2015 2020 2025 2030 2035 2040

Reference case High Price

Low Price High Resource

Industrial natural gas consumption, Reference case and selected 

side cases for AEO2015

11 Industrial Team Washington DC, 

September 29, 2014 

Energy consumption in quadrillion Btu

Source: AEO2015.0922a excludes refining and least and plant fuel

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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More feedstock use, optimistic short run mean higher short run 

industrial natural gas consumption in AEO2015 than AEO2014

12 Industrial Team Washington DC, 

September 29, 2014 

5.0

5.5

6.0

6.5

7.0

7.5

8.0

2010 2015 2020 2025 2030 2035 2040

Consumption in quadrillion Btu

Source: AEO2015.0922a and AEO2014 Reference case excludes refining and lease and plant fuel

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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AEO2015 Reference case

AEO2014 Reference case
More domestic methanol and fertilizer production boosts 

proportion of natural gas feedstock consumption in AEO2015

13 Industrial Team Washington DC, 

September 29, 2014 

0%

2%

4%

6%

8%

10%

12%

14%

16%

2010 2015 2020 2025 2030 2035 2040

Natgas feedstock as % of industrial natgas 

consumption 

Source: AEO2015.0922a and AEO2014 Reference case excludes refining and lease and plant fuel

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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AEO2015 Reference case

AEO2014 Reference case
Industrial purchased electricity consumption, Reference case and 

selected side cases for AEO2015

14 Industrial Team Washington DC, 

September 29, 2014 

3.00

3.25

3.50

3.75

4.00

4.25

4.50

2010 2015 2020 2025 2030 2035 2040

AEO2015 Reference case

High Price

Low Price

High Resource

Consumption in quadrillion Btu

Source: AEO2015.0922a

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Industrial purchased electricity: Lower relative MBD shipments, 

less short term use lead to AEO2015 consumption

15 Industrial Team Washington DC, 

September 29, 2014 

3.00

3.25

3.50

3.75

4.00

4.25

4.50

2010 2015 2020 2025 2030 2035 2040

AEO2015 Reference case

AEO2014 Reference case

Consumption in quadrillion Btu

Source: AEO2015.0922a and AEO2014 Reference case excludes refining

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
Industrial CHP generation: lower long term growth in energy 

intensive industries lowers AEO2015 generation

16 Industrial Team Washington DC, 

September 29, 2014 

100

125

150

175

200

225

250

2010 2015 2020 2025 2030 2035 2040

Generation in billion kwh

Source: AEO2015.0922a and AEO2014 Reference case excludes refining

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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AEO2015 Reference case

AEO2014 Reference case
Industrial liquids consumption: Higher AEO2015 HGL 

consumption offsets lower liquids consumption in other categories

17 Industrial Team Washington DC, 

September 29, 2014 

6.0

6.5

7.0

7.5

8.0

8.5

9.0

2010 2015 2020 2025 2030 2035 2040

AEO2015 Reference case

AEO2014 Reference case

Consumption in quadrillion Btu

Source: AEO2015.0922a and AEO2014 Reference case excludes refining

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Ethane/Propane Price Modeling for 2015

18 Industrial Team Washington DC, 

September 29, 2014 

• Dynamic Linear Model (DLM) joint pricing model of ethane 

and propane

– Dependence of ethane and propane prices on oil and natural gas prices can 

vary over time

– Historically high wet gas discoveries increase the role of natural gas prices from 

very little to a larger amount

• Automated updating of parameters with new data as it arrives

• Drivers will also include exports, chemical shipments, and 

“total” ethane supply

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Liquid feedstock prices – ethane and propane HGL and 

petrochemicals - in bulk chemicals industry, AEO2015 v 

AEO2014

19 Industrial Team Washington DC, 

September 29, 2014 

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

2010 2015 2020 2025 2030 2035 2040

Ethane Ref 2015

Ethane Ref 2014

LPG Ref 2015

LPG Ref 2014

Price in 2013 $/MMBtu

Source: AEO2015.0922a and AEO2014 Reference case

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
Liquid feedstock consumption – HGL and petrochemicals - in bulk 

chemicals industry, AEO2015 v AEO2014

20 Industrial Team Washington DC, 

September 29, 2014 

0

1

2

3

4

5

2010 2015 2020 2025 2030 2035 2040

HGL Ref 2015 HGL 2014

Petchem Ref2015 Petchem 2014

Consumption in quadrillion Btu

Source: AEO2015.0922a and AEO2014 Reference case

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
Memo on this meeting and 

presentation can be found here in about 

a month: 

http://www.eia.gov/forecasts/aeo/workinggroup/macroindustrial/ 

21 Industrial Team Washington DC, 

September 29, 2014 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Thank you for your attention!

22 Industrial Team Washington DC, 

September 29, 2014 

Macro Team:

Kay Smith (lead) (202) 586-1132 | kay.smith@eia.gov

Vipin Arora (202) 586-1048 | vipin.arora@eia.gov

Russell Tarver (202) 586-3991 | russell.tarver@eia.gov

Elizabeth Sendich (202) 586-7145 | elizabeth.sendich@eia.gov

Industrial Team: EIA-OECEAIndustrialTeam@eia.gov

Kelly Perl (lead) (202) 586-1743

Peter Gross (202) 586-8822

Susan Hicks (202) 586-4388

Paul Otis (202) 586-2306

Mark Schipper (OECEA) (202) 586-1136

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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Bonus slides

23 Industrial Team Washington DC, 

September 29, 2014 
More domestic methanol and fertilizer production boosts natural 

gas feedstock consumption in AEO2015

24 Industrial Team Washington DC, 

September 29, 2014 

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2010 2015 2020 2025 2030 2035 2040

Consumption in quadrillion Btu

Source: AEO2015.0922a and AEO2014 Reference case excludes refining and lease and plant fuel

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

AEO2015 Reference case

AEO2014 Reference case