Coal, natural gas and renewable energy sources continue to play a large role in US markets to 2040

Arlington, Va. – Energy markets will continue to play a role in agriculture, and Adam Sieminski, administrator of the U.S. Energy Information Administration (EIA), noted that oil, natural gas and renewable fuels will all play a role going forward.

Sieminski marked five major conclusions from the 2013 Annual Energy Outlook, published by the EIA.

“Growth in energy production is outstripping consumption growth in the United States,” he said. “Second, crude oil production is rising sharply and is likely to continue on that path for decades. Meanwhile, motor gasoline consumption is reflecting more stringent fuel economy standards and the introduction of biofuels and other nontraditional petroleum fuels, and that’s reducing demand for oil.”

He also marked U.S. export of natural gas as important, saying, “We think the United States is going to be a net exporter of natural gas, probably starting sometime around 2020. The United States is already a net exporter of coal, so we are getting closer and closer to a dream that six presidents have had for 50 years – energy independence.”

Lastly, Simeinski said that the U.S. is likely to remain below 2005 levels for carbon dioxide emissions through 2040, and important factor. 

Based on a reference case that projects oil near $100 a barrel, Sieminski noted that the U.S. expects to be importing only about 10 percent of energy consumption needs by 2040, compared to the 20 to 25 percent imported in 2005.

Future growth

Sieminski marked growth in renewable energy, including biofuels, as continually important through the coming years and noted that decreasing demand for oil is also likely. 

“Coal, interestingly, we think will hold on to a lot of its share because we project that natural gas prices are likely to go up and that will make coal economically competitive,” he said.

However, Sieminski cautioned listeners that the EIA makes its projections based on existing legislation, laws and regulations, noting that if laws and regulations change, outlooks may also be affected. 

Projections also mark domestic oil production as increasing from 5 million barrels a day to as high as 8 million barrels per day.

“On the demand side, because of the EPA and Department of Transportation, new fuel economy standards kicked into place,” he added. “It reduced our gasoline demand projection by 1.5 million barrels a days, so in 2035, instead of the U.S. consuming 9 million barrels a day of motor fuels, that number will likely be closer to 7.5 million barrels a day.”

For transportation, Sieminski noted that EIA is looking for growth in non-traditional fuels like ethanol, cellulosic ethanol, biodiesel, compressed gas and liquefied natural gas.

Natural gas

“In the last three years, we’ve had the sharp upturn in oil numbers, but proved natural gas reserves have been going up since the late 1990s,” explained Sieminski, “and if you plotted it, it would look like and exponential growth. That is because of this breakthrough in shale gas development.”

Because of the increased ability to horizontally drill, he noted that increased yields have been seen in natural gas.

Additionally, fracturing, commonly called fracking, has resulted in controversy. 

However, Sieminski said, “The Secretary of Energy has a big group looking at this, and their conclusion was that hydraulic fracturing, like almost any human activity, can potentially have problems, but these things are manageable.”

With increases in technology, he added, “We think gas from shale is going to dominate.”

“It’s about a third of our production now,” Sieminski continued. “In 2000, it was less than two percent, now it’s a third of the gas supply in the United States, and by 2040 it could be 50 percent.”

The next big development, said Sieminski, will come in the ability to utilize more liquefied natural gas.

Non-traditional fuels

Renewable fuels are another topic of interest for the U.S. energy industry, and Sieminski marked waterpower generation, wind, solar, biofuels, geothermal and waste energy products as being important.

“There will be quite a bit of growth, we believe, in biomass, although, just recently, EIA had to reduce estimates of cellulosic ethanol because the technology just hasn’t evolved as rapidly as we thought a year or two ago,” he explained. “Most of the growth, we think, really will not come in straight ethanol but will be in biodiesel, in cellulosic biofuels and other advanced biofuels.”

In motor fuel markets, Sieminski noted that biodiesel’s share of the market is just under two percent and, by energy content, ethanol accounts for about six percent of the current transportation market.

“We think those numbers will go up a bit, and they’d go up even more if we had a technological breakthrough,” he said.

Sieminski also noted that the growth in biofuels will likely be tax-incentive dependent.

“There’s a lot of talk in Europe about limiting carbon output, but it turns out the ‘walk is being walked’ in the United States,” summarized Sieminski. “It seems to be a combination of technology and movement to lower-carbon fuels, including natural gas and renewables, that’s played a huge role.”

Sieminski addressed the 2013 Agricultural Outlook Forum on Feb. 21. Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at saige@wylr.net.