WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

 DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE.

November 2021

MEMORANDUM FOR: Angelina LaRose

Assistant Administrator for Office of Energy Analysis

FROM: Jim Diefenderfer

Director for Office of Long-Term Energy Modeling

Subject: Summary of Oil and Gas Supply, Liquid Fuels Market, International 

Energy, and Natural Gas Market Modules Working Group Meeting held 

on September 29, 2021

This memorandum summarizes the presentation given during the Annual Energy Outlook (AEO) 2022 Oil 

and Gas Supply, Liquid Fuels Market, International Energy, and Natural Gas Market Modules Working 

Group meeting and the resulting discussions that took place. The meeting had three parts that focused 

on different modules:

• Oil and Gas Supply Module (OGSM)

• Liquid Fuels Market Module (LFMM) and International Energy Model (IEM) 

• Natural Gas Market Module (NGMM)

The presentation slides are available in a separate document on our website. All slides, charts, and 

discussions for AEO2022 were preliminary and, therefore, should not be quoted or cited. We will release 

final AEO2022 materials in early 2022.

OGSM

Will Sommer gave the first presentation, and he discussed two principal topics: data updates for 

AEO2022 and recent laws and regulations that affect oil and natural gas. He highlighted the following 

points:

Model and data updates 

• Updated assumptions for tight and shale estimated ultimate recovery (EUR) of crude and natural 

gas per well resulting in an increase of crude oil resource estimates relative to AEO2021

• Updated the Lower 48 states offshore and Alaska announced discoveries

• Updated historical production through 2020 and estimated production for 2021

• Updated the natural gas plant liquids (NGPL) factors used for plays in the Denver-Julesburg Basin

• Updated Canada’s natural gas supply (legacy declines and EURs)

• Started modifying code to handle revised oil and natural gas permitting rules in Colorado

Preliminary results

• We project West Texas Intermediate (WTI) crude oil prices to be lower than AEO2021

projections after 2027.
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WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

 DO NOT QUOTE OR CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

• We project U.S. crude oil production to be generally lower than AEO2021 projections.

• We project growth in U.S. crude oil production primarily as a result of tight oil from the Permian 

Basin.

• We project U.S. dry natural gas production to be less than in AEO2021 after 2025.

• We project Marcellus, Hayesville, and tight oil plays to be the primary drivers of growth in shale 

gas production.

• We project NGPL production to be generally higher than in AEO2021.

Discussion

Attendees had no questions specifically for OGSM modelers.

LFMM and IEM

Peter Colletti and Estella Shi gave the next presentation. Peter covered key data updates for AEO2022

about Brent crude oil prices, crude oil supply and exports, domestic petroleum consumption, gross 

product exports, and diesel price spreads. Estella covered biofuels supply and renewable diesel. They

highlighted the following:

Model and data updates

• Updated international crude oil and petroleum product curves

• Updated crude oil price differentials

• Updated pipeline capacity and transportation costs

• Updated state and federal fuel taxes

• Updated historical and Short-Term Energy Outlook (STEO) liquid fuels data

• Updated capacities for refinery, biofuels, and cogeneration

• Updated Renewable Fuels Standard (RFS) mandate levels

Preliminary results

• We project Brent crude oil prices to be higher early in the projection period and then be lower 

compared with AEO2021.

• We project the Brent-WTI price spread to remain similar to the AEO2021 projection.

• We project crude oil exports to decline slightly over the projection period.

• We project the total crude oil supply to be slightly lower than in AEO2021, but we project

refinery utilization to remain the same.

• We project consumption of domestic petroleum products to be slightly higher than in AEO2021 

through projection period.

• We project gross product exports to be lower than in AEO2021 to meet higher domestic product 

consumption.

• We project price spreads between gasoline and diesel to be narrower, compared with AEO2021.

• We project the diesel-jet fuel spread to narrow throughout projection period.

• We project biofuels supply to rise quickly to pre-pandemic levels and rise slightly above 

AEO2021 levels after 2040.

• We project renewable diesel supply to be higher than biodiesel supply throughout projection

period.
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WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

 DO NOT QUOTE OR CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

Discussion

One attendee asked about 2021 and 2022 renewable volume obligations (RVOs) in the AEO. We 

explained that we will most likely not include RVOs in the AEO2022 because we only apply existing laws 

and regulations and the U.S. Environmental Protection Agency (EPA) will likely not makes its final 

rulemaking until after we freeze the Reference case. Another attendee asked about RFS assumptions for 

beyond 2022. We stated that because EPA has not yet released a rulemaking beyond 2022, current 2022 

mandates are held constant throughout the projection period. An attendee asked about the separation 

of renewable diesel from other biomass-derived liquids in the AEO tables. We explained that we do not 

report renewable diesel separately from other biomass-derived liquids; however, most other biomassderived liquids consist of renewable diesel. 

An attendee asked about constraints on blend rates of biomass-based diesel. We stated that blend rates 

may be a constraint in the future but not at the moment. An attendee asked about volume thresholds 

for considering new fuels, specifically sustainable aviation fuel (SAF). We explained no specific volume 

thresholds currently exist and that we are investigating the introduction of SAF for future AEOs.

An attendee asked about the rapid recovery in liquid fuels demand and the recent Traffic Volume Trends 

data by the Federal Highway Administration (FHWA). We explained the near-term recovery in liquid 

fuels demand primarily reflects the most recent STEO forecast, which takes into consideration a number 

of different sources of consumption and demand data. LFMM does not explicitly use FHWA traffic 

volume trends data in its modeling.

An attendee asked about CO2 taxes in the projection. Carbon taxes are added onto product prices 

produced by the model.

NGMM

Stephen York presented updates for AEO2022 that were related to natural gas production and 

consumption, spot prices, trade with Canada, exports to Mexico, and liquefied natural gas (LNG) exports 

and facilities. He highlighted the following:

Model and data updates 

• Incorporated data from the Natural Gas Annual, released November 2020 (2019 annual data)

• Incorporated data from the Natural Gas Monthly through April 2021 (complete 2020 history)

• Updated pipeline capacity data, natural gas price data, and historical data for Mexico and 

Canada

• Updated in-service dates of LNG export facility projects

• Updated the natural gas spot price data

• Updated world oil price assumptions, economic recovery and related consumption changes, and 

STEO calibration

Preliminary results 

• We project U.S natural gas consumption and production to be higher in the short term and 

slightly lower in the long-term projections compared with AEO2021.

• We project Henry Hub natural gas spot prices to be higher in the near term compared with

AEO2021 but long-term prices approach $3.40/MMBtu by 2050.
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WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

 DO NOT QUOTE OR CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

• We project imports from Canada to decline, but we expect overall imports to remain unchanged 

compared with AEO2021.

• We project exports to Mexico to be lower than in AEO2021. We expect projected growth in 

exports to Mexico to peak near 2035.

• We have found that some LNG facilities are being completed much earlier than originally 

expected. Additionally we are exploring some export assumptions updates.

Discussion

An attendee asked for our renewable natural gas (RNG) production projections. We stated that we do

not separately account for RNG production in the NGMM because it is not accounted for separately in 

our Natural Gas Annual and Natural Gas Monthly data. We are exploring options to account for RNG 

production separately in the future.

Another attendee asked about current Henry Hub prices affecting our projections. We explained that 

short-term prices are forecast in the STEO and are used as exogenous inputs in the NGMM. Higher 

prices are likely to be reflected in the model after the NGMM is benchmarked to the October STEO.

An attendee asked if total natural gas disposition was visible on any charts. We replied that our chart 

shows consumption but does not include exports.

Attendees

Registered guests (Webex and phone) 

Abbas Abubakar Tafawa Balewa University Bauchi

Emil Attanasi U.S. Geological Survey

Ray Boswell U.S. Department of Energy

Robert Brooks RBAC Inc.

Ramses Omar Cabrales Federal Energy Regulatory Commission

Leonardo Delgado U.S. Department of Energy

Katharine Ehly Natural Gas Supply Association

Cory Forgrave Office of Natural Resources Revenue

Michael Godec Advanced Resources International

Kathy Gramp Congressional Budget Office

David Greene National Highway Traffic Safety Administration

Bryan Just American Petroleum Institute

Ben King Rhodium Group

Hannah Kolus Rhodium Group

Daniel Lerch Post Carbon Institute

Emily Newes National Renewable Energy Laboratory

John Powell U.S. Department of Energy

Gregory Powell U.S. Department of Transportation

Tony Radich U.S. Department of Agriculture

Aymeric Rousseau Argonne National Laboratory 

Isabella Ruble U.S. Department of Energy

Benjamin Schlesinger UMD Public Policy Center for Global Sustainability

Kristen Strellec Bureau of Ocean Energy Management

Morgan Summers National Energy Technology Laboratory
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WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

 DO NOT QUOTE OR CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

Amy Sweeney U.S. Department of Energy

Wyatt Thompson University of Missouri

Peri Ulrey U.S. Department of Energy

Boddu Venkatesh ICF

Ken Walsh Leidos Inc.

Alan Weber MARC-IV

Jamie Webster Boston Consulting Group: Center for Energy Impact

Jarrett Whistance University of Missouri: Food & Agriculture Policy Research Institute

EIA participants (Webex and phone)

Greg Adams

Erin Boedecker

Hannah Breul

Peter Colletti (presenter)

Troy Cook

Jim Diefenderfer

Michael Dwyer

Kathryn Dyl (presenter)

Joshua Eiermann

Mindi Farber-DeAnda (presenter)

David Fritsch

Adrian Geagla (presenter)

Peter Gross

Sean Hill

Thaddeus Huetteman

Mala Kline

Mary Lewis (presenter)

Elizabeth May (presenter)

Jim O'Sullivan

Albert Painter (presenter)

April Patel

James Preciado

Corrina Ricker

Estella Shi (presenter)

Nicholas Skarzynski

Andrew Smiddy

Will Sommer (presenter)

Courtney Sourmehi

John Staub

Manussawee Sukunta

Dana Van Wagener (presenter)

Neil Wagner

Stephen York (presenter)