U.S. Energy Information Administration Independent Statistics & Analysis The U.S. Oil and Natural Gas Production Outlook for PRG Energy Outlook Conference September 22, 2014 by Adam Sieminski, Administrator

U.S. energy use grows slowly over the projection reflecting steady growth in GDP offset by improving energy efficiency 2 U.S. primary energy consumption quadrillion Btu Source: EIA, Annual Energy Outlook 2014 Early Release history projections % 18% 27% 8% 1% nuclear oil and other liquids natural gas coal renewables (excluding liquid biofuels) 34% 19% 28% 8% 9% 2% liquid biofuels Shares of total U.S. energy PRG Energy Conference September 22, 2014

The U.S. has experienced a rapid increase in natural gas and oil production from shale and other tight resources 3 Sources: EIA derived from state administrative data collected by DrillingInfo Inc. Data are through July 2014 and represent EIA’s official tight oil & shale gas estimates, but are not survey data. State abbreviations indicate primary state(s). PRG Energy Conference September 22, 2014

Onshore natural gas production continues to grow, outpacing declines in offshore and causing net imports to shrink Source: Short-Term Energy Outlook, September PRG Energy Conference September 22, 2014

U.S. becomes a net exporter of natural gas in the near future 5 U.S. dry natural gas trillion cubic feet per year Source: EIA, Annual Energy Outlook 2014 Reference case PRG Energy Conference September 22, 2014 projections history 2012 consumption domestic supply net exports billion cubic feet per day

Source: EIA, Annual Energy Outlook 2014 Reference case and High Oil and Gas Resource case 6 PRG Energy Conference September 22, 2014 Projected U.S. natural gas trade depends on assumptions regarding resources and future technology advances Reference case trillion cubic feet per year exports to Mexico exports to Canada lower 48 LNG exports imports from Canada LNG imports High Oil and Gas Resource case trillion cubic feet per year billion cubic feet per day

Source: EIA, Annual Energy Outlook 2014 Reference case and High Oil and Gas Resource case 7 PRG Energy Conference September 22, 2014 Coal generation is reduced in a high gas availability case, but it does not gain much in a low gas availability case U.S. electricity net generation, Reference case trillion kilowatthours Natural gas Renewables Nuclear Coal % 12% 19% 37% Natural gas Renewables Nuclear Coal % 15% 17% 33% Petroleum and other 30% 15% 17% 37% projectionshistory projections history U.S. electricity net generation, High Resource case trillion kilowatthours

Production of crude oil and liquids is projected to grow by over 1.2 million barrels per day in both 2014 and 2015 Source: Short-Term Energy Outlook, September PRG Energy Conference September 22, 2014

Resource and technology assumptions have major implications for projected U.S. crude oil production beyond the next few years 9 Source: EIA, Annual Energy Outlook 2014 Reference case and High Oil and Gas Resource case; Short Term Energy Outlook, September 2014 Alaska tight oil other lower 48 states onshore lower 48 states offshore STEO September 2014 U.S. crude oil projection 2012 projectionshistory projections history 2012 Alaska tight oil other lower 48 states onshore Reference case million barrels per day High Oil and Gas Resource case million barrels per day lower 48 states offshore PRG Energy Conference September 22, 2014

U.S. oil production growth helping to offset unplanned outages 10 estimated unplanned crude oil production outages million barrels per day Source: EIA, Short-Term Energy Outlook, September 2014 *monthly production delta versus Jan production level Non- OPEC PRG Energy Conference September 22, 2014 U.S. Production growth*

Growing U.S. oil production and rising demand in China have together made China the world’s largest net oil importer PRG Energy Conference September 22, net imports for China and the United States million barrels per day Note: Net oil imports are defined as total liquid fuels consumption less domestic production Source: EIA, Short-Term Energy Outlook, September 2014 projections history Jul-14

Tight oil production will spread to nations outside of the United States and Canada over the projection tight oil production, Reference case million barrels per day Source: EIA, International Energy Outlook 2014 PRG Energy Conference September 22, MMbbl/d in MMbbl/d in 2014 (STEO) AEO2014 High Resource case 5.0 MMbbl/d in 2015 (STEO)

EIA Reference scenario shows world tight oil production increasing to almost 8 million b/d in 2025 tight oil production million barrels per day Source: EIA, Annual Energy Outlook 2014 and International Energy Outlook 2014 PRG Energy Conference September 22, projectionshistory 2012 U.S. (AEO2014 & IEO2014 Reference case) World (IEO2014 Reference case)

U.S. petroleum product net exports million barrels per day Source: EIA, Annual Energy Outlook 2014 Reference case and Short Term Energy Outlook PRG Energy Conference September 22, U.S. is already a major net exporter of petroleum products 2015(e)

Most of the growth in production between 2011 and 2015 consists of sweet grades with API gravity of 40 or above U.S. crude oil production by type million barrels of oil per day Source: EIA, DrillingInfo, Colorado DNR, Texas RRC. PRG Energy Conference September 22, forecast history

mixed hydrocarbon wells (gas, condensate, oil) dry gas (exportable with order/authorization) crude oil / lease condensate (exportable under limited conditions) wet gas EIA Refinery Survey plant condensate splitter complex distillation stabilizer finished product streams processed products for domestic use or exportable without license finished petroleum products and other processed hydrocarbon liquids separation via temperature gradients water separation via pressure changes field / lease separator flash drum heater treater Distillation processes and resulting products PRG Energy Conference September 22, other processed gas liquids fractionator separator gas processing plant processed condensate

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