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

Assumptions and Expectations for Annual Energy 

Outlook 2016: 

Oil and Gas Working Group

AEO2016 Oil and Gas Supply Working Group Meeting

Office of Petroleum, Gas, and Biofuels Analysis

February 29, 2016| Washington, DC

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

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
Overview

• Natural gas markets

– Natural gas supply and delivered prices

– Natural gas consumption

– Pipeline imports/exports

– LNG exports

• Upstream

– Resources and technology

– Production

• Oil and natural gas

– Liquids imports

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change 2
Natural Gas Markets

3 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change
0

5

10

15

20

25

30

35

40

45

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Dry natural gas

Trillion cubic feet per year

Natural gas consumption, production, and trade, 1990-2040

Source: Preliminary AEO2016 runs, dated as of 02/25/16

4

History Projections Crude Export Study

AEO2016

Net Imports

Net Exports

Production

Consumption

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change
Henry Hub Natural Gas Spot Prices 

2014 dollars per million Btu

Henry Hub Natural Gas Spot Prices, 1990-2040

Source: Preliminary AEO2016 runs, dated as of 02/25/16

5

0

2

4

6

8

10

12

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

History Projections Crude Export Study

AEO2016

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change
0

2

4

6

8

10

12

14

16

18

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Natural Gas End-User Prices 

2014 dollars per million Btu

Natural Gas End-User Prices, 1990-2040

Source: Preliminary AEO2016 runs, dated as of 02/25/16

6

Crude Export Study History Projections

AEO2016

Residential

Industrial

Electric generators

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change
0

2

4

6

8

10

12

14

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Dry natural gas

Trillion cubic feet per year

Natural gas consumption by sector, 1990-2040

* Includes lease and plant fuel, and natural gas-to-liquids heat, power, and production

** Includes pipeline fuel

7

Crude Export Study History Projections

AEO2016

Residential

Commercial

Industrial*

Electric generators

Transportation**

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

Source: Preliminary AEO2016 runs, dated as of 

02/25/16
-8

-6

-4

-2

0

2

4

6

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Canada

Mexico

LNG

Dry natural gas

Trillion cubic feet per year

Net U.S. imports by source, 1990-2040

Source: Preliminary AEO2016 runs, dated as of 02/25/16

8

History Projections

Crude Export Study

AEO2016

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change
-6

-4

-2

0

2

4

6

8

2000 2010 2020 2030 2040

U.S. natural gas imports and exports

trillion cubic feet per year

U.S. natural gas gross exports exceed 6 tcf in 2025

9

-6

-4

-2

0

2

4

6

8

2000 2010 2020 2030 2040

Imports from 

Canada

LNG Imports

Exports to 

Canada

LNG Exports

Exports to 

Mexico

AEO2015/Crude Export Study AEO2016 preliminary

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

Source: Preliminary AEO2016 runs, dated as of 02/25/16
0

500

1000

1500

2000

2500

2005 2010 2015 2020 2025 2030 2035 2040

electric generation by fuel 

billion kwh

Source: Preliminary AEO2016 runs, dated as of 02/25/16

gas16

coal15

gas15

coal16

renew15

renew16

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change 10
OGSM / Upstream

11 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change
Resources and technology

– knowns and unknowns –

12 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change
1. Actively developing area in plays like the Barnett, Marcellus, etc. will be 

called “Tier 1” and the EUR given a 1% annual growth rate 

2. Area not yet at prime time will be called “Tier 2” and the EUR given a 3% 

annual growth rate until development begins then converts to “Tier 1”

– Large areas of the Marcellus, Utica, etc.

– Devonian has been produced with tiny vertical wells for 100+ years

13 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

There are two tiers of resource-technology plays which we assume will 

have different technology change rates

categories, 

AAGR%

Drilling 

cost

Operating 

cost

EUR

Tier 1

EUR

Tier 2

Conv Oil & Gas -0.25% -0.25% 0.25% 0.25%

EOR -0.25% -0.25% 0.25% 0.25%

CBM -0.25% -0.25% 0.25% 0.25%

Tight oil -1% -0.5% 1% 3%

Tight gas -1% -0.5% 1% 3%

Shale gas -1% -0.5% 1% 3%
Natural gas Technically Recoverable Resources by AEO Year 

Trillion cubic feet

Natural gas resources plus cumulative production has exhibited an 

AAGR of 3.3% between AEO1990 and AEO2015, and...

14 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

1990 2005 2015 1990 - 2015 

% change

1990-2005 

AAGR %

1990-2015 

AAGR %

2005-2015 

AAGR %

Proved Reserves 187 187 308 65% 0.0% 2.0% 5.1%

Unproved Resources 1,040 1,407 1,968 89% 2.0% 2.6% 3.4%

 Shale Gas 12 86 596 4685% 13.7% 16.7% 21.4%

Tight Gas 354

 Coalbed Methane 47 80 120 157% 3.7% 3.8% 4.1%

Other 323

 Conventional Unproved 691 952

L-48 offshore NA 305

 Alaska 291 289 271 -7% 0.0% -0.3% -0.6%

Subtotal Resources 1,228 1,594 2,277 85% 1.8% 2.5% 3.6%

Production 18 18 27 53% 0.1% 1.7% 4.2%

Cumulative Production 18 298 522

TRR + Production 1,245 1,612 2,798 125% 1.7% 3.3% 5.7%

y/y Change in TRR + Production, % 3.6% 1.4%
Crude oil Technically Recoverable Resources by AEO Year 

billion barrels

Oil has exhibited a nearly identical AAGR of 3.2%. This is a 

combination of discoveries and technology advancement.

Note: AEO1990 values highlighted in yellow are AEO2000 values as place holder estimates.

15 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

1990 2005 2015 1990 - 2015 

% change

1990-2005 

AAGR %

1990-2015 

AAGR %

2005-2015 

AAGR %

Proved Reserves 27 22 33 24% -1.3% 0.9% 4.3%

Unproved Resources 116 119 226 95% 0.2% 2.7% 6.7%

Unproved Other L48 Onshore 71 56 67

Unproved L48 Offshore (1) 34 39 48 39% 0.8% 1.3% 2.1%

Unproved Alaska 11 24 34 223% 5.7% 4.8% 3.4%

Unproved Tight Oil (reclassified from onshore)

Unproved Tight Oil (2) 78

Subtotal Resources 143 141 260 82% -0.1% 2.4% 6.3%

Production 2.7 1.9 3.4 28% -2.3% 1.0% 6.2%

Cumulative Production 3 37 60

TRR + Production 145 177 320 120% 1.3% 3.2% 6.1%

Change in TRR + Production, % -5.2% 7.8%
Crude oil production

million barrels per day

Lower prices pull production down in the earlier years and improved 

technologies push production up in the long-term

Source: Preliminary AEO2016 runs, dated as of 02/25/16

16 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

History Projections

0

2

4

6

8

10

12

2000 2005 2010 2015 2020 2025 2030 2035 2040

AEO2016P

AEO2015
0

2

4

6

8

10

12

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

U.S. crude oil production

million barrels per day

U.S. tight oil production leads a growth in domestic production to over 

11 mmbd in 2040

Source: Preliminary AEO2016 runs, dated as of 02/25/16

17 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

Tight oil

Alaska

Other lower 48 onshore

Lower 48 offshore

History Projections
0

1

2

3

4

5

6

7

8

2000 2005 2010 2015 2020 2025 2030 2035 2040

 Other

 Wolfcamp

 Monterey

 Avalon/Bone Springs

 Niobrara

 Spraberry

 Austin Chalk

 Woodford

 Eagle Ford

 Bakken

Crude oil production

million barrels per day

Projected crude oil production from tight oil plays in Reference case

Source: Preliminary AEO2016 runs, dated as of 02/25/16

18 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change
0.0

0.4

0.8

1.2

1.6

2.0

2.4

2.8

2000 2005 2010 2015 2020 2025 2030 2035 2040

 Bakken

 Eagle Ford

 Woodford

 Austin Chalk

 Spraberry

 Niobrara

 Avalon/Bone Springs

 Monterey

 Wolfcamp

 Other

Crude oil production

million barrels per day

Crude oil production by selected tight oil plays

Source: Preliminary AEO2016 runs, dated as of 02/25/16

19 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change
0

5

10

15

20

25

30

35

40

45

2000 2005 2010 2015 2020 2025 2030 2035 2040

AEO2016P

AEO2015

Dry natural gas production

trillion cubic feet

AEO2016 has higher supply: more production, lower costs

Source: Preliminary AEO2016 runs, dated as of 02/25/16

20 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

History Projections
0

5

10

15

20

25

30

35

40

45

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

U.S. dry natural gas production

trillion cubic feet

Shale gas production leads growth in production through 2040

Source: Preliminary AEO2016 runs, dated as of 02/25/16

21 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

Coalbed methane

Tight gas

Shale gas (includes natural gas from tight oil plays)

Alaska

Other onshore

Lower 48 offshore

History Projections
0

5

10

15

20

25

30

2000 2005 2010 2015 2020 2025 2030 2035 2040

 Bakken

 Utica

 Marcellus

 Antrim

 Eagle Ford

 Woodford

 Fayetteville

 Haynesville/Bossier

 Barnett

Natural gas production

trillion cubic feet

Shale gas production by play

Source: Preliminary AEO2016 runs, dated as of 02/25/16

22 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change
0

1

2

3

4

5

6

7

8

9

10

2000 2005 2010 2015 2020 2025 2030 2035 2040

 Barnett

 Haynesville/Bossier

 Fayetteville

 Woodford

 Eagle Ford

 Antrim

 Marcellus

 Utica

 Bakken

Natural gas production

trillion cubic feet

Source: Preliminary AEO2016 runs, dated as of 

02/25/16

Natural gas production by selected shale play

Source: Preliminary AEO2016 runs, dated as of 02/25/16

23 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change
0

1

2

3

4

5

6

2000 2005 2010 2015 2020 2025 2030 2035 2040

AEO2016P

AEO2015

Natural gas plant liquids production

million barrels per day

Source: Preliminary AEO2016 runs, dated as of 

02/25/16

NGPL production is significantly higher than last year’s AEO

24 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

History Projections
0

5

10

15

20

25

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

U.S. liquid fuels supply

million barrels per day

U.S. import share of liquid fuels declines due to increased production 

of tight oil and gas liquids, and greater fuel efficiency

Source: Preliminary AEO2016 runs, dated as of 02/25/16

25 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

History Projections

Natural gas plant liquids

Petroleum production

Biofuels excluding imports

Net petroleum and biofuel 

imports

26%

5%

7%

61%

5%

24%

53%

18%
0

50

100

150

200

250

300

2005 2010 2015 2020 2025 2030 2035 2040

ref2016

ref2015

highprice

lowprice

highresource

lowresource

Brent spot price

2014$ per barrel

Brent spot price by case

Source: Preliminary AEO2016 runs, dated as of 02/25/16

26 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

History Projections
0

2

4

6

8

10

12

14

16

18

2005 2010 2015 2020 2025 2030 2035 2040

ref2016

ref2015

highprice

lowprice

highresource

lowresource

U.S. crude oil production

million barrels per day

U.S. crude oil production by case

Source: Preliminary AEO2016 runs, dated as of 02/25/16

27 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

History Projections
Source: Preliminary AEO2016 runs, dated as of 02/25/16

28

Tight oil production by case

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

0

2

4

6

8

10

12

14

2005 2010 2015 2020 2025 2030 2035 2040

ref2016

ref2015

highprice

lowprice

highresource

lowresource

History Projections

Tight oil production

million barrels per day
Source: Preliminary AEO2016 runs, dated as of 02/25/16

29

Carbon dioxide enhanced oil recovery by case

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

0.0

0.5

1.0

1.5

2.0

2005 2010 2015 2020 2025 2030 2035 2040

ref2016

ref2015

highprice

lowprice

highresource

lowresource

History Projections

CO2 enhance oil recovery

million barrels per day
Source: Preliminary AEO2016 runs, dated as of 02/25/16

30

Other onshore crude oil production by case

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

0

1

2

3

2005 2010 2015 2020 2025 2030 2035 2040

ref2016

ref2015

highprice

lowprice

highresource

lowresource

History Projections

Other onshore crude oil production

million barrels per day
Source: Preliminary AEO2016 runs, dated as of 02/25/16

31

Lower 48 offshore crude oil production by case

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

0

1

2

3

2005 2010 2015 2020 2025 2030 2035 2040

ref2016

ref2015

highprice

lowprice

highresource

lowresource

History Projections

Lower 48 offshore crude oil production

million barrels per day
Source: Preliminary AEO2016 runs, dated as of 02/25/16

32

Alaska crude oil production by case

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

0.0

0.5

1.0

2005 2010 2015 2020 2025 2030 2035 2040

ref2016

ref2015

highprice

lowprice

highresource

lowresource

History Projections

Alaska crude oil production

million barrels per day
Source: Preliminary AEO2016 runs, dated as of 02/25/16

33

Henry Hub spot price by case

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

0

2

4

6

8

10

12

2005 2010 2015 2020 2025 2030 2035 2040

ref2016

ref2015

highprice

lowprice

highresource

lowresource

History Projections

Henry Hub spot price

2014$ per million BTU
Source: Preliminary AEO2016 runs, dated as of 02/25/16

34

U.S. dry natural gas production by case

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

0

10

20

30

40

50

60

2005 2010 2015 2020 2025 2030 2035 2040

ref2016

ref2015

highprice

lowprice

highresource

lowresource

History Projections

U.S. dry natural gas production

trillion cubic feet
Source: Preliminary AEO2016 runs, dated as of 02/25/16

35

Dry shale gas production by case

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

0

5

10

15

20

25

30

35

40

2005 2010 2015 2020 2025 2030 2035 2040

ref2016

ref2015

highprice

lowprice

highresource

lowresource

History Projections

Dry shale gas production (incl. tight oil plays)

trillion cubic feet
Source: Preliminary AEO2016 runs, dated as of 02/25/16

36

Lower 48 offshore dry natural gas production by case

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

0

1

2

3

4

2005 2010 2015 2020 2025 2030 2035 2040

ref2016

ref2015

highprice

lowprice

highresource

lowresource

History Projections

Lower 48 offshore dry natural gas production

trillion cubic feet
Source: Preliminary AEO2016 runs, dated as of 02/25/16

37

Alaska dry natural gas production by case

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

0.0

0.5

1.0

1.5

2005 2010 2015 2020 2025 2030 2035 2040

ref2016

ref2015

highprice

lowprice

highresource

lowresource

History Projections

Alaska dry natural gas production

trillion cubic feet
Source: Preliminary AEO2016 runs, dated as of 02/25/16

38

U.S. natural gas plant liquids production by case

Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change

0

1

2

3

4

5

6

7

2005 2010 2015 2020 2025 2030 2035 2040

ref2016

ref2015

highprice

lowprice

highresource

lowresource

History Projections

U.S. natural gas plant liquids production

million barrels per day
We welcome feedback on our assumptions and documentation

• The AEO Assumptions report http://www.eia.gov/forecasts/aeo/assumptions/

• Appendix 2.C and Appendix 2.D in the AEO Documentation 

http://www.eia.gov/forecasts/aeo/nems/documentation/ogsm/pdf/m063(2014

).pdf

• We have restarted our working papers series 

http://www.eia.gov/workingpapers/

• And these working group meetings 

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

39 Office of Petroleum, Gas, and Biofuels Analysis Working Group Presentation for Discussion Purposes Washington, DC, 

February 29, 2016 DO NOT QUOTE OR CITE as results are subject to change