Energizing America Facts for Addressing Energy Policy

Rayola Dougher

API Senior Economic Advisor

U.S. Crude Oil Production (millions of barrels per day)

4

5

6

7

8

9

10

19

70

19

75

19

80

19

85

19

90

19

95

20

00

20

05

20

10

20

15

U.S. Natural Gas Marketed Production (billions of cubic feet per day)

30

35

40

45

50

55

60

65

70

75

80

19

70

19

75

19

80

19

85

19

90

19

95

20

00

20

05

20

10

20

15

U.S. oil and natural gas production is increasing

as a result of technological innovations

Note: Bars in red show EIA’s Short-term Energy Outlook forecast.

Source: Energy Information Administration.

SHALE ENERGY PROVIDES A NATIONAL OPPORTUNITY

Current and prospective resources and basins in the continental US

Source: EIA based on data from various published studies – updated May 9, 2011

Current Shale Resources

Prospective Shale Resources

Basins

Shallowest/ Youngest

Mid-Depth/ Mid-Age

Deepest/Oldest

Shale Resources, Lower 48 States

Stacked Resources

U.S. shale gas production has increased rapidly

in recent years

0

5

10

15

20

25

30

35

De

c-0

0

De

c-0

1

De

c-0

2

De

c-0

3

De

c-0

4

De

c-0

5

De

c-0

6

De

c-0

7

De

c-0

8

De

c-0

9

De

c-1

0

De

c-1

1

De

c-1

2

De

c-1

3

Marcellus (PA & WV)

Haynesville (LA & TX)

Eagle Ford (TX)

Fayetteville (AR)

Barnett (TX)

Woodford (OK)

Bakken (ND)

Antrim (MI, IN, & OH)

Rest of US

Bill

ion

s c

ub

ic fe

et p

er

da

y (

dry

)

Source: EIA

Shale production is offsetting declining production

from other U.S. oil and natural gas resources

0

1

2

3

4

5

6

7

8

9

10

1990 2000 2010 2020 2030 2040

Alaska

Lower 48 Offshore

Lower 48 Onshore

Conventional

Tight Oil

0

5

10

15

20

25

30

35

40

1990 2000 2010 2020 2030 2040

Tight Gas

Coalbed methane

Shale

Gas

Lower 48 Onshore Conventional

Lower 48 Offshore

Alaska

U.S. Crude Oil Production by Source (millions of barrels per day)

U.S. Natural Gas Production by Source (trillion cubic feet per year)

Source: EIA, Annual Energy Outlook 2014

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Jan

-07

Ap

r-07

Jul-0

7

Oct-

07

Jan

-08

Ap

r-08

Jul-0

8

Oct-

08

Jan

-09

Ap

r-09

Jul-0

9

Oct-

09

Jan

-10

Ap

r-10

Jul-1

0

Oct-

10

Jan

-11

Ap

r-11

Jul-1

1

Oct-

11

Jan

-12

Ap

r-12

Jul-1

2

Oct-

12

Jan

-13

Ap

r-13

Jul-1

3

Oct-

13

Jan

-14

Ap

r-14

Jul-1

4

Oct-

14

Crude Oil (WTI) Natural Gas (Henry Hub)

The price of natural gas has fallen relative to

crude oil

Price I

ndex:

January

2007 =

1.0

Source: EIA

Changes in the price of crude oil and natural gas

Rising US natural gas output pushed natural gas prices

to record discounts against international gas prices

0

2

4

6

8

10

12

14

16

18

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Japan LNG

German Import Price

U.K

U.S. Henry Hub

Source: BP Statistical review of World Energy 2014.

$/Mmbtu

0

1

2

3

4

5

6

7

8

9

10

199

7

199

9

200

1

200

3

200

5

200

7

200

9

201

1

201

3

201

5

201

7

201

9

202

1

202

3

202

5

202

7

202

9

203

1

203

3

203

5

203

7

203

9

EIA forecasts relatively low natural gas prices

for decades

Source: EIA

Hen

ry H

ub

$/M

MB

TU

Forecast

1.3%

0.4%

1.0%

1.2%

1.2%

1.4%

1.5%

1.5%

1.7%

2.2%

3.5%

3.3%

5.8%

3.5%

6.9%

3.2%

4.1%

7.1%

6.0%

6.7%

3.9%

4.0%

6.5%

4.1%

7.7%

4.8%

4.6%

9.5%

8.1%

7.4%

Total Manufacturing

Machinery

Petroleum & Coal

Nonmetallic Mineral

Agricultural Chemical

Fabricated Metal

Plastics and Rubber

Basic Organic Chemicals

Resins & Synthetic Material

Iron & Steel

2012 2020 2025

Shale energy revolution has pronounced impact

on energy-intensive industries

Source: IHS Global, “America’s New Energy Future, Volume 3: A Manufacturing Renaissance.”

Percent Increase to Industrial Production Indices due to the Unconventional Activity Value Chain

American consumers’ annual savings due to lower gas

prices resulting from shale energy development (IHS Global Insight)

More energy can lead to American prosperity

Construction Industry Drilling Industry Chemical Industry

Trucking Industry Hospitality Industry Steel Industry

9.8 million jobs are supported by the oil and

natural gas industry

$49,700

$72,667

$81,696

$94,115

$116,425

$154,317

U.S.

Oil and gas pipeline construction

Support activities for oil and gas

Drilling oi and gas wells

Pipeline transportation

Oil and natural gas extraction

Oil and natural gas jobs pay well (average annual wages)

Source: U.S. Quarterly Census of Employment and Wages, 2013.

The industry contributes to the U.S. economy. This

represents 8% of the value added to the economy (PWC)

Oil and natural gas operations rippling through

the U. S. economy

Refineries and Fuels

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

0

50

100

150

200

250

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Operable Capacity* Number of Refineries

U.S. refining capacity continues to expand even

as the number of refineries contracts

*Operable as of January 1st of each year. Source: EIA

-5000

-4000

-3000

-2000

-1000

0

1000

2000

3000

4000

For the first time since 1949, the U.S. became a

net exporter of petroleum products in 2011

Source: EIA

(thousands o

f barr

els

per

day)

Expanding alternative fuels for transportation:

current laws

The Congressional

Budget Office

predicts the price

of diesel could rise

by up to 51 cents

per gallon and

gasoline by up to

26 cents per

gallon by 2017.

Factors Affecting Prices

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

Crude Oil $1.59 Gasoline $2.73 Diesel $3.54

Changes in gasoline and diesel prices mirror

changes in crude oil prices

Average prices as of December 4, 2014

Sources: NYMEX (WTI crude oil) and AAA (gasoline and diesel)

Many factors affect the price of oil, but in the end

it comes down to supply and demand

Source: EIA

Growth in Global Oil Supply

Disruptions (mmb/d)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Ja

n 2

01

1

Ju

l 2

01

1

Ja

n 2

01

2

Ju

l 2

01

2

Ja

n 2

01

3

Ju

l 2

01

3

Ja

n 2

01

4

Ju

l 2

01

4

OPEC

Non-

OPEC

Growth in U.S. Oil

Production (mmb/d)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Ja

n-2

01

1

Ju

l-20

11

Ja

n-2

01

2

Ju

l-20

12

Ja

n-2

01

3

Ju

l-20

13

Ja

n-2

01

4

Ju

l-20

14

Crude

Other

Growth in U.S. oil production has largely offset the

growth in global oil supply disruptions

Source: EIA * Other liquids include of hydrocarbon gas liquids, biofuels, and refinery processing gains.

-1.5

-1

-0.5

0

0.5

1

1.5

2

2013 2014 2015

OPEC North America Russia and Caspaian Sea

Latin America North Sea Other Non-OPEC

World crude oil and liquid fuels production growth

Mill

ion

ba

rre

ls p

er

da

y

Source: EIA, Short-term Energy Outlook, November 2014

-1

0

1

2

3

4

5

Un

ite

d S

tate

s

Can

ad

a

Bra

zil

Ch

ina

Su

da

n/S

. S

ud

an

Om

an

Ru

ssia

Ka

za

kh

sta

n

Co

lom

bia

Ma

laysia

India

Ga

bon

Vie

tna

m

Oth

er

Nort

h S

ea

Au

str

alia

Eg

yp

t

No

rwa

y

Me

xic

o

Syria

Azerb

aija

n

Unite

d K

ing

do

m

2015

2014

2013

Non-OPEC crude oil and liquid fuels production

growth

(mill

ion

ba

rre

ls p

er

da

y)

Source: EIA, Short-term Energy Outlook, November 2014

$680 $649

$2,354

$1,992

$955 $938

$2,267

$1,500

Winter 2013-2014 Winter 2014-2015

Natural Gas

Heating Oil

Electricity

Propane

EIA forecasts average consumer expenditures for

heating fuels will be lower this winter

Source: EIA, Short-term Energy and Winter Fuels Outlooks, October 7, 2014.

Power and Politics

0%

10%

20%

30%

40%

50%

60%

70%

Crude oil and petroleum product imports have

declined as a share of consumption

Source: EIA

Save consumers up

to $5.8 billion a year

in lower fuel costs

Add 300,000 jobs to

U.S. economy in

2020

Reduce America’s

trade deficit by $22

billion in 2020

Why export crude oil?

Crude oil exports yield economic benefit across all 50 states

Source: ICF International and EnSys Energy,

0

5

10

15

20

25

30

35

40

45

2011 2017 2023 2029 2035

Production

Consumption

2040

Natural gas

(quadrillion Btu)

EIA projects U.S. will be net exporter of natural

gas by 2017

Source: EIA, AEO 2014

Nine US facilities have been approved to export LNG, over 20

are awaiting approval and there are more than 60 competing

sites planned or under construction in foreign nations

Source: API LNG Export Facility Map

87% of federal offshore acreage is off-limits to

development

Development of Canadian oil sands would benefit

the U.S. economy

Filling America’s tank Within 10 years Canada and U.S. can provide all our liquid fuel needs

U.S. Oil

Production

Oil from Canada

Biofuels

Oil from

Rest of World

Sources of liquid

fuel supply

in 2024

53%

13%

10%

24%

72%

18%

10%

EIA Forecast Potential Sources: EIA; Wood Mackenzie

Source: Wood Mackenzie,” “U.S. Supply Forecasts and Potential Jobs and Economic Impacts,” September 7, 2011.

90% 86% 86% 85%

83%

72% 70%

65%

Lead to morejobs

Helpstrengthen

energysecurity

Helpstimulateeconomy

Help lowerenergy costs

SupportO&NG

development

SupportKeystone XL

pipeline

Supportoffshore

development

Increasingenergy taxes

may hurtconsumers

Harris Poll Results on Increased U.S. Oil and Natural Gas Development

Voters voice strong support for increased

domestic oil and natural gas development

Source: Harris Interactive telephone poll, November 5, 2014

For more information visit: www.api.org

www.energytomorrow.org

www.energycitizens.org