The EIA recently released its Annual Energy Outlook 2017 (AE02017), in which it projects a rise of US production and exports through 2050 per most of its eight scenarios. In this post, we will examine the overarching takeaways from the report. For a nuanced analysis of each of the eight scenarios, click here to access the report.

In most of the AEO2017 cases, the US is projected to emerge as a net energy exporter as petroleum liquid imports fall and natural gas exports rise. Exports are highest, and grow throughout the projection period, in the High Oil and Gas Resource and Technology case, as technological developments and favorable geology join to produce oil and gas at lower prices. The High Oil Price case provides favorable economic conditions for producers while restraining domestic consumption, enabling the most rapid transition to net exporter status. In all but one of the scenarios, US. production declines in the 2030s, which slows or reverses projected growth in net energy exports.

These projections regarding the trajectory of US oil exports are especially important in light of President-elect Donald Trump’s pledges to move the US closer to energy independence. The EIA report indicates that the US could become a net energy exporter by 2026- even sooner if the broader economic picture brightens as some of the scenarios suggest they will. “The U.S. could be completely, [to use] the phrase that was used at one time, energy independent,” said EIA Administrator Adam Sieminski last week. These are similar words to those uttered by Donald Trump last May when he unveiled his “America First Energy Plan”: “America’s incredible energy potential remains untapped…Under my presidency, we’ll accomplish a complete American energy independence.”


Here are some of the other key findings of the EIA’s analysis:

  • Energy consumption is consistent across all scenarios. In the Reference case, total energy consumption rises 5% between 2016 and 2040. As a significant portion of energy consumption is related to economic activity, energy consumption is projected to increase by approximately 11% in the High Economic Growth case, over 2016-40, and remain nearly flat in the Low Economic Growth Case. In all AEO cases, the electric power sector remains the largest consumer of primary energy.
  • Energy production ranges from nearly flat to nearly 50% growth over 2016-40 in the scenarios.The EIA’s projections of energy production vary widely, as output growth is dependent on technology, resource, and market conditions. Total energy production rises by more than 20% in the Reference case, from 2016 through 2040, led by increases in O&G production.
  • The EIA’s projections for oil prices vary across the scenarios, due to a variety of variables. For instance, in the High Oil Price case, Brent reaches $226/bbl by 2040, compared to $109/bbl in the Reference case and $43/bbl in the Low Oil Price case.
  • Energy-related carbon dioxide emissions decline in all but one of the scenarios. 

Looking more closely at O&G production, oil output is expected to rebound from the recent lows caused by depressed oil prices. This growth will be catalyzed by tight oil development, as US producers successfully increase efficiency and cut costs as they acclimate to lower for longer prices. Moreover, with consumption flat to down compared to recent history, net crude oil and petroleum product imports as a percentage of US product supplied decline in most of the scenarios.

In the US Lower 48 onshore oil production will primarily occur in the Rockies (DJ Basin), Southwest (Permian), Dakotas (Bakken), and Gulf Coast (Eagle Ford).  Southwestern growth will be led by Permian tight and non-tight formations. Tight oil from the Bakken play will lead Dakota, while the Eagle Ford and Austin Chalk will comprise most of the increase in Gulf Coast production.

Further, per most of the scenarios, natural gas output rises despite relatively low and stable natural gas prices, supporting higher levels of domestic consumption and natural gas exports. “Natural gas production, we think, is actually going to go up quite a bit, with relatively low and stable prices, so that’s going to support higher levels of domestic consumption, especially in the electric power and industrial sectors, where we think there will be quite a bit of natural gas use,” EIA Administrator Sieminski said.

In terms of energy independence, there are other plans established by the incoming Trump administration not factored in by the AEO2017 that could impact the trajectory of US O&G production. Pledges to rollback and reduce regulations for drilling operations on federal lands is one example. However, it is significant that the US is already on track to emerging as a net energy exporter even without a major rollback and/or overhaul of federal regulations.

In summary, the EIA’s projections see the future of US O&G as being impacted by a variety of scenarios and unpredictable variables, chief among which is the movement of oil prices and the regulatory landscape going forward. However, as we noted above, the report does not factor in Trump’s pro-O&G policy agenda. In next year’s report, we may very well see “the Trump case” as an addition to the EIA’s model.

About The Author Jeff Reed

I specialize in analysis of the oil and gas sector- with emphasis on the Middle East, OPEC, and the politics of energy. I hold a BA in Political Science and MA in Theological Studies from the University of St. Thomas. Prior to a career in oil and gas journalism, I was a Roman Catholic priest serving churches in the Houston area. I also taught high school for a year in Oakland, California, and worked for two years in retail management. Among my other areas of interest are political philosophy, religion and society, culture and the arts, and philosophy.