1. Outlook for U.S. shale oil and gas
Argus Americas Crude Summit
January 22, | Houston, TX By
Adam Sieminski, EIA Administrator

2. Six key plays account for nearly all recent growth in oil and natural gas production
Source: EIA, Drilling Productivity Report
Argus Americas Crude Summit January 22, 2014

3. Key insights on U.S. drilling productivity and production trends
The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources
The number of wells drilled nationwide that produce both oil and natural gas increased from 37% in 2007 to 56% in 2012
Higher drilling efficiency and new well productivity, rather than an increase in the rig count, have been the main drivers of recent production growth
Steep legacy production decline rates are being offset by growing production from new wells
Six shale plays account for nearly 90% of domestic oil production growth and virtually all domestic natural gas production growth over the last few years
The Bakken and Eagle Ford plays account for about two-thirds of oil production growth; the Marcellus play accounts for about three-quarters of natural gas production growth
Argus Americas Crude Summit January 22, 2014

4. The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources
Sources: EIA derived from state administrative data collected by DrillingInfo Inc. Data are through December 2013 and represent EIA’s official tight oil & shale gas estimates, but are not survey data. State abbreviations indicate primary state(s).
Argus Americas Crude Summit January 22, 2014

5. U.S. crude oil and natural gas production is up dramatically since 2010 and will continue to grow rapidly; this has strategic implications for the United States
Refinery operations/investment
Logistics infrastructure investment
Exports of petroleum products
Exports of crude oil and natural gas (LNG)
Operation of the Strategic Petroleum Reserve
Argus Americas Crude Summit January 22, 2014

6. U.S. natural gas prices remain well below crude oil prices
energy spot prices
2012 dollars per million Btu
History
Projections
2012
2018
2040
Ratio:
3.2
Brent crude oil spot price
Ratio:
7.1
Oil to gas price ratio:
3.4
Henry Hub spot price
Source: EIA, Annual Energy Outlook 2014 Early Release
Argus Americas Crude Summit January 22, 2014
real 2012 dollars per million Btu
1990
2000
2008
2012
2018
2025
2040
%change
AAGR, %
Brent Spot Price
6.6
6.5
18.0
19.5
16.2
19.1
24.8
26.7%
0.8%
Natural Gas at Henry Hub
2.6
5.6
9.4
2.8
4.8
5.2
7.7
178.3%
3.7%
Ratio (in energy-equivalent terms)
1.2
1.9
7.1
3.4
3.6
3.2
-54.5%
-2.8%

7. U.S. shale gas leads growth in total gas production through 2040 to reach half of U.S. output
U.S. dry natural gas production
trillion cubic feet
billion cubic feet per day
History
2012
Projections
Shale gas
Tight gas
Non-associated onshore
Non-associated offshore
Alaska
Associated with oil
Coalbed methane
Source: EIA, Annual Energy Outlook 2014 Early Release
Argus Americas Crude Summit January 22, 2014
trillion cubic feet
1990
2000
2012
2015
2025
2040
%change
AAGR, %
Coalbed methane
0.3
1.5
1.6
1.7
7.8%
0.3%
Associated with oil
2.7
2.8
2.5
3.2
2.6
3.4%
0.1%
Alaska
0.4
1.2
254.5%
4.6%
Non-associated offshore
4.7
4.1
2.2
89.6%
2.3%
Non-associated onshore
7.8
6.7
3.9
2.9
2.3
-59.2%
-3.1%
Tight gas
1.8
3.3
4.9
5.3
7.1
8.4
73.0%
2.0%
Shale gas
0.2
9.7
10.0
16.0
19.2
104.0%
2.6%
Total
17.8
24.1
24.6
31.9
37.5
56.0%
1.6% 7 7

8. U.S. natural gas consumption growth is driven by electric power, industrial, and transportation use
U.S. dry gas consumption
trillion cubic feet
History
Projections
11.0
Electric
power
8.5
11.2
Industrial*
9.1
1.7
Transportation**
0.7
2.9
3.6
Commercial
4.2
4.1
Residential
*Includes combined heat-and-power and lease and plant fuel
**Includes pipeline fuel
Source: EIA, Annual Energy Outlook 2014 Early Release
Argus Americas Crude Summit January 22, 2014

9. U.S. manufacturing output and natural gas use grows with low natural gas prices, particularly in the near term
manufacturing natural gas consumption
quadrillion Btu
billion cubic feet per day
Refining and
related
Bulk chemicals
Food
Iron and steel
Metal based
durables
Paper
Other
manufacturing
Glass
Aluminum
Source: EIA, Annual Energy Outlook 2014 Early Release
Argus Americas Crude Summit January 22, 2014

10. Freight rail and marine
U.S. natural gas use in the transportation sector grows rapidly with the largest share in freight trucks
natural gas use by mode
trillion Btu
billion cubic feet per day
Approximate crude oil equivalent, (thousand barrels per day)
Freight trucks
Freight rail and marine
Buses
Light-duty vehicles
290 71 38 9
Freight trucks
22%
Light-duty vehicles
Freight rail and marine
Buses
Source: EIA, Annual Energy Outlook 2014 Early Release
Argus Americas Crude Summit January 22, 2014 10 10

11. U.S. natural gas gross exports exceed 5 tcf in 2025
U.S. natural gas imports and exports
trillion cubic feet per year
billion cubic feet per day
History
2012
Projections
2025 25
5.4 tcf of exports
(14.8 bcf/day) 20
Pipeline exports to Mexico 15
Pipeline exports to Canada 10
Lower 48 states LNG exports 5
Alaska LNG exports
Pipeline imports from Canada -5
2.0 tcf of imports
(5.4 bcf/day)
LNG imports
-10
-15
Source: EIA, Annual Energy Outlook 2014 Early Release
trillion cubic feet
2000
2009
2012
2018
2025
2040
%change
AAGR, %
Exports to Mexico
0.1
0.3
0.6
1.0
1.5
3.1
405.5%
6.0%
Exports to Canada
0.7
1.2
1.4
40.9%
1.2%
Lower 48 LNG exports
0.0
1.3
2.7
9557.8%
17.7%
Alaska LNG exports
0.8 NA
Pipeline Imports from Canada
-3.5
-3.3
-3.0
-2.5
-1.8
-2.1
-29.9%
-1.3%
Liquefied Natural Gas Imports
-0.2
-0.5
-15.3%
-0.6%
Argus Americas Crude Summit January 22, 2014 11 11

12. U.S. becomes a net exporter of natural gas in the near future
U.S. dry natural gas
trillion cubic feet per year
billion cubic feet per day
History
2012
Projections
100 75
Consumption 50
Domestic supply 25
Net exports
-25
Source: EIA, Annual Energy Outlook 2014 Early Release
Argus Americas Crude Summit January 22, 2014
trillion cubic feet
1990
2000
2008
2012
2017
2025
2040
%change
AAGR, %
Consumption
19.2
23.3
25.5
26.3
28.4
31.6
24.0%
0.8%
Supply
17.7
19.8
20.3
24.0
31.8
37.4
56.1%
1.6%
Net Exports
-1.5
-3.5
-3.0
-1.6
0.0
3.4
5.8
481.7% NA

13. Growing tight oil and offshore crude oil production drive U. S
Growing tight oil and offshore crude oil production drive U.S. output close to historical high
U.S. crude oil production
million barrels per day
History
2012
Projections
U.S. maximum production level of
9.6 million barrels per day in 1970
Tight oil
Lower 48 offshore
Alaska
million barrels per day
1990
2000
2010
2012
2016
2025
2040
%change
AAGR, %
Other onshore
4.6
3.0
2.3
2.4
2.5
2.0
-13.2%
-0.5%
Alaska
1.8
1.0
0.6
0.5
0.3
-50.9%
-2.5%
Offshore
1.6
1.7
1.4
45.7%
1.4%
Tight oil
0.0
0.9
4.7
4.5
3.2
41.8%
1.3%
Total
7.4
5.8
5.5
6.5
9.5
9.0
7.5
15.2%
0.5%
Other lower 48 onshore
Source: EIA, Annual Energy Outlook 2014 Early Release
Argus Americas Crude Summit January 22, 2014 13 13

14. U.S. transportation sector motor gasoline demand declines, while diesel fuel accounts for a growing portion of the market
transportation energy consumption by fuel
quadrillion Btu
History
Projections
2012
2030
2040
59%
Motor gasoline
44%
47% 5% 5%
Ethanol 4%
31%
30%
Diesel
CNG/LNG
22% 1% 3%
12%
Jet fuel
13%
13%
Other* 3% 3% 4%
*Includes aviation gasoline, propane, residual fuel oil, lubricants, electricity, and liquid hydrogen
Source: EIA, Annual Energy Outlook 2014 Early Release
Argus Americas Crude Summit January 22, 2014 14 14

15. U.S. maintains status as a net exporter of petroleum products
U.S. petroleum product imports and exports
million barrels per day
History
2012
Projections
Distillate exports
Motor gasoline exports
Total petroleum product net exports
Other petroleum
product exports
Other petroleum
product imports
Motor gasoline imports
Distillate imports
Source: EIA, Annual Energy Outlook 2014 Early Release
Argus Americas Crude Summit January 22, 2014 15 15

16. U.S. dependence on imported liquids declines, particularly in the near term
U.S. liquid fuel supply
million barrels per day
History
Projections
2012
2005
2016
2040
Consumption
25%
32%
60%
40%
Net imports
Domestic supply
Source: EIA, Annual Energy Outlook 2014 Early Release
Argus Americas Crude Summit January 22, 2014
million barrels per day
1970
1977
2000
2005
2012
2016
2040
%change
AAGR, %
Supply
11.5
9.9
9.3
8.3
11.1
14.5
12.7
14.5%
0.5%
Consumption
14.7
18.4
19.7
20.8
18.6
19.4
18.7
1.0%
0.0%
Imports
3.2
8.6
10.4
12.6
7.5
4.9
6.0
-19.2%
-0.8%
Imports, %
22%
46%
53%
60%
40%
25%
32%
-19.9%

17. U.S. energy-related CO2 emissions remain below the 2005 level throughout the projection period
carbon dioxide emissions
billion metric tons
History
2012
Projections
2005
Energy-related carbon dioxide emissions are 9% below the 2005 level in 2020 and 7% below the 2005 level in 2040.
Source: EIA, Annual Energy Outlook 2014 Early Release
Argus Americas Crude Summit January 22, 2014

18. Top ten countries with technically recoverable shale resources
Shale oil
rank
country
billion barrels 1
Russia 75 2
United States 58 3
China 32 4
Argentina 27 5
Libya 26 6
Venezuela 13 7
Mexico 8
Pakistan 9
Canada 10
Indonesia
World total
345
Shale gas
rank
country
trillion cubic feet 1
China
1,115 2
Argentina
802 3
Algeria
707 4
United States
665 5
Canada
573 6
Mexico
545 7
Australia
437 8
South Africa
390 9
Russia
285 10
Brazil
245
World total
7,299
Note: ARI estimates U.S. shale oil resources at 48 billion barrels and U.S. shale gas resources at 1,161 trillion cubic feet.
Source: United States: EIA and USGS; Other basins: ARI.
Argus Americas Crude Summit January 22, 2014

19. Reproducibility of shale development may have limits
Many factors support production from U.S. shale resources that do not exist in many other countries:
Resource quality and geologic distribution details matter
Major private ownership of subsurface mineral rights, often by surface owners, provides a strong incentive for development
Availability of many independent operators and supporting contractors with critical expertise and advanced technology
Pre-existing gathering and pipeline infrastructure
Public acceptance of hydraulic fracturing as well as related activities, including transportation of material, and availability and disposal of water/wastewater; population density
Argus Americas Crude Summit January 22, 2014

20. Geopolitical implications of shale resources
Shale oil is both light and sweet — the rapid growth in its supply has implications for crude oil pricing relationships, the value of different refinery configurations, refinery output slates, and the correspondence between SPR holdings and U.S. crude imports
China’s success in shale development and its future LNG imports (and coal use) are inversely related
Russia’s share of Europe’s gas market could be reduced by increased European shale production
High volumes of shale oil production, with other drivers, could significantly diminish the market share and pricing power of OPEC producers
Shorter lead times for the ‘manufacturing’ model of production from shale resources may reduce price volatility (over an extended period) compared to the historical ‘exploration/development’ model for conventional resources
Argus Americas Crude Summit January 22, 2014

21. OPEC countries now account for most unplanned outages
estimated unplanned crude oil production outages
thousand barrels per day
Non-
OPEC
OPEC
Source: EIA, Short-Term Energy Outlook, January 2014
Argus Americas Crude Summit January 22, 2014

22. China is now the world’s largest net oil importer
net imports for China and the United States
millions of barrels per day
History
Jan-14
Forecast
United States net imports
China net imports
Note: Net oil imports are defined as total liquid fuels consumption less domestic production.
Source: EIA, Short-Term Energy Outlook, January 2014
Argus Americas Crude Summit January 22, 2014

23. U.S. liquids (petroleum) production projected to outpace both Saudi Arabia and Russia in 2014
(million barrels per day)
United States
Saudi Arabia
Russia
Crude oil
8.5
10.0
10.3
NGLs
2.5
1.8
0.8
Biofuels +
1.0
Refinery gain
1.1
0.1
Total (mmbl/d)
13.1
11.9
11.2
Source: EIA, Short-Term Energy Outlook; International Energy Outlook
Argus Americas Crude Summit January 22, 2014

24. There are many issues that cause uncertainty…
Unresolved long-term effects of economic issues in the United States, Europe, and China, and their impacts on demand
Social unrest in the Middle East and North Africa, and the potential for unrest elsewhere, and its impacts on supply
The timing of Japan’s full recovery from the impacts of the nuclear disaster at Fukushima
Global shale gas and shale oil production potential and OPEC market share decisions
Changing policies and regulations
Changing consumer preferences and technological breakthroughs
Argus Americas Crude Summit January 22, 2014

25. For more information
U.S. Energy Information Administration home page |
Annual Energy Outlook |
Short-Term Energy Outlook |
International Energy Outlook |
Monthly Energy Review |
Today in Energy |
State Energy Profiles |
Drilling Productivity Report |
Argus Americas Crude Summit January 22, 2014