Energy Production and Imports 

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Net imports of energy are expected to continue meeting a major share of total U.S. energy demand (Figure 5). The increased use of biofuels resulting from EISA2007, much of which is domestically produced, and the reduction in demand for transportation fuels due to the new CAFE standards both serve to moderate growth in energy imports. Higher fuel prices over the projection period also spur increased domestic energy production (Figure 6) and moderate energy demand growth, further tempering growth in imports. The projected net import share of total U.S. energy consumption in 2030 is 27 percent, a decline from the 30-percent share in 2006.

The projection for U.S. crude oil production in the AEO2008 reference case is higher than in the AEO2007 reference case, primarily as a result of more production from the expansion of enhanced oil recovery (EOR) operations and, to a lesser extent, higher crude oil prices. U.S. crude oil production in the AEO2008 reference case increases from 5.1 million barrels per day in 2006 to a peak of 6.3 million barrels per day in 2018, with production increases from the deep waters of the Gulf of Mexico and from onshore EOR projects. Domestic production subsequently declines to 5.6 million barrels per day in 2030, as increased production from new, smaller discoveries is inadequate to offset declines in production from large fields in Alaska and the Gulf of Mexico.

Total domestic liquids supply, including crude oil, natural gas plant liquids, refinery processing gains, and other refinery inputs (including ethanol, bio-diesel, BTL, and liquids from coal) generally increase through 2022 in the AEO2008 reference case, while imports of crude oil and other petroleum products remain flat. Total domestic liquids supply grows from 8.2 million barrels per day in 2006 to 10.4 million bar-rels per day in 2030.

In the AEO2008 reference case, the net import share of total liquids supplied, including crude oil and refined products, drops from 60 percent in 2006 to 51 percent in 2022 and then increases to 54 percent in 2030. Net imports of crude oil and net imports of petroleum products in 2030 each are about 2.0 million barrels per day lower in the AEO2008 reference case than in the AEO2007 reference case. The primary reasons for the difference between the AEO2008 and AEO2007 projections for net imports of liquid fuels are a lower level of total liquids consumption and a higher level of biofuels consumption in the transpor-tation sector in the AEO2008 reference case.

Total domestic production of natural gas (including supplemental natural gas supplies) increases from 18.6 trillion cubic feet in 2006 to 20.0 trillion cubic feet in 2022 before declining to 19.5 trillion cubic feet in 2030 in the AEO2008 reference case. The projections are lower than in the AEO2007 reference case, which showed production increasing to 20.6 trillion cubic feet in 2030, primarily because of higher costs associated with exploration and development and, particularly in the last decade of the projection, lower demand for natural gas in AEO2008. Onshore production of unconventional natural gas is expected to be a key contributor to the growth in U.S. supply, increasing from 8.5 trillion cubic feet in 2006 to a peak of 9.6 trillion cubic feet in 2018 and generally holding at about that level through 2030.

The Alaska natural gas pipeline is expected to be completed in 2020 (2 years later than in the AEO2007 reference case, because of delays in the resolution of issues between Alaska’s State government and industry participants). After the pipeline goes into operation, Alaska’s total natural gas production in the AEO2008 reference case increases to 2.0 trillion cubic feet in 2021 (from 0.4 trillion cubic feet in 2006) and then remains at that level through 2030.

Net pipeline imports of natural gas from Canada and Mexico fall from 2.9 trillion cubic feet in 2006 to 0.3 trillion cubic feet in 2030 in the AEO2008 reference case (compared with the AEO2007 projection of 0.9 trillion cubic feet in 2030). The difference between the 2030 projections in AEO2008 and AEO2007 is largely the result of a higher level of exports to Mexico and lower demand in the United States.

Total net imports of liquefied natural gas (LNG) to the United States in the AEO2008 reference case increase from 0.5 trillion cubic feet in 2006 to 2.8 trillion cubic feet in 2030, as compared with 4.5 trillion cubic feet in 2030 in AEO2007. The lower projection is attributable to two factors: higher costs throughout the LNG industry, especially in the area of liquefaction, and decreased U.S. natural gas con-sumption due to higher natural gas prices, slower eco-nomic growth, and expected greater competition for supplies in the global LNG market.

The future direction of the global LNG market is one of the key uncertainties in the AEO2008 reference case. With many new international players entering LNG markets, the competition for available supplies is strong, and the amounts available to the U.S. mar-ket may vary considerably from year to year. The AEO2008 reference case has been updated to reflect current market dynamics, which could change considerably as worldwide LNG markets evolve.

As domestic coal demand grows in the AEO2008 ref-erence case, U.S. coal production (excluding waste coal) increases at an average rate of 0.8 percent per year, from 23.8 quadrillion Btu (1,163 million short tons) in 2006 to 28.6 quadrillion Btu (1,455 million short tons) in 2030—15 percent less than in the AEO2007 reference case. Production from mines west of the Mississippi River provides the largest share of the incremental coal production. On a Btu basis, 59 percent of domestic coal production originates from States west of the Mississippi River in 2030, up from 49 percent in 2006.

Typically, trends in U.S. coal production are linked to its use for electricity generation, which currently accounts for 91 percent of total coal consumption. Coal consumption in the electric power sector in the AEO2008 reference case, at 27.5 quadrillion Btu in 2030, is less than in the AEO2007 reference case (31.1 quadrillion Btu in 2030). Slower growth in overall electricity demand, combined with more generation from nuclear and renewable energy, underlies the reduced outlook for electricity sector coal consumption. Another emerging market for coal is CTL. Coal use in CTL plants grows from 0.6 quadrillion Btu (42 million short tons) in 2020 to 1.0 quadrillion Btu (64 million short tons) in 2030.