Introduction

In preparing the AEO2011, EIA evaluated a wide range of trends and issues that could have major implications for U.S. energy markets. This overview focuses primarily on one case, the AEO2011 Reference case, which is presented and compared with the AEO2010 Reference case released in December 2009 (see Table 1). Because of the uncertainties inherent in any energy market projection, the Reference case results should not be viewed in isolation. Readers are encouraged to review the alternative cases when the complete AEO2011 publication is released in order to gain perspective on how variations in key assumptions can lead to different outlooks for energy markets.

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Key Changes from Previous AEO

Key updates that were made for the AEO2011 Reference case include:

• Significant update of the technically recoverable U.S. shale gas resources, more than doubling the volume of shale gas resources assumed in AEO2010, and also added new shale oil resources

• Revision of the methodology for determining natural gas prices to better reflect a lessening of the influence of oil prices on natural gas prices, in part because of the increase in shale gas supply and improvements in natural gas extraction technologies

• Update of the data and assumptions for off shore oil and gas production, pushing out the start of production for a number of projects as a result of the six-month drilling moratoria, and delaying Atlantic and Pacific off shore leasing beyond 2017

• Increase of the limit for blending ethanol into gasoline for approved vehicles from 10 percent to 15 percent, as a result of the waiver granted by the U.S. Environmental Protection Agency (EPA) in October 2010

• Expanded the number of electricity regions from 13 to 22, allowing better regional representation of market structure and power flow

• Update of the costs for new power plants

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