Annual Energy Outlook 2010
The Energy Information Administration just released their Annual Energy Outlook for 2010:
It is about 220 pages long, and therefore I haven’t had a chance to read it thoroughly. But in my skimming of it so far, there are a few interesting items to note. One of the things I was most curious about was whether they would show this scary graph that appeared in the 2009 Annual Energy Outlook:
Let that sink in for a just a minute. What that says is that global production in 2030 is forecast to be 43 million barrels, demand is forecast to be 105 million barrels, and we really don’t have any idea how we are going to cover 62 million barrels per day of demand by 2030. We are going to need a lot of oil to cover the depletion, so it is up to “unidentified projects” – or we will deal with huge shortages.
Certainly there will be plenty of projects that haven’t been identified that will contribute to supply. But the key question is “Will those be enough?” This is especially true in light of the current mess in the Gulf of Mexico, because a lot of that new oil was expected to come from offshore. But as I originally predicted, I think this blowout in the gulf really slows things down. A relevant news story on that theme from today:
A regulatory crackdown on offshore oil drilling after the fatal rig explosion in the Gulf of Mexico will delay development of U.S. deposits with billions of barrels of crude and may spawn industry job cuts.
“This oil spill was a disaster for the industry,” said Gianna Bern, president of Brookshire Advisory & Research in Flossmoor, Illinois, and a former BP crude trader. “It will ratchet up public debate on deep-water drilling by a couple of notches and put a lot of projects conceivably on the back burner.”
So this would seem to make last year’s graph even more ominous. But alas, so far I have not found that graph in this year’s report. In fact, for the most part this year’s report is pretty upbeat about future prospects. It suggests that CTL, GTL, and BTL will start to make significant contributions to global fuel supplies. It also suggests that in the U.S. high oil prices will finally make oil shale economical. This of course repeats the 100-year-old mantra about oil shale being just around the corner.
The report suggests that the 2022 cellulosic ethanol mandate will not be met “because economic and technological factors prevent cellulosic biofuel production from providing the credits that would be needed to meet the requirement.” They do forecast that by 2035 we will have figured it out and that “ultimately surpasses the RFS requirement as higher oil prices and lower production costs improve their competitiveness.”
Let me say that I have a lot of respect for the EIA, and use them extensively for data. I know they put a lot of hard work into this report. However, some of their predictions have become a running joke. If you want to have some fun reading, go back and look at some of their historical predictions from say, 2001. For instance, I always get a kick out of this graph, which makes an annual appearance:
It is always the same story. Sure, production has fallen in the U.S. for the past 35+ years, but starting next year things are going to turn around. You can see this same graph in every recent Energy Outlook. Then production falls for another year, and they move the line forward and forecast that the next year will be the turnaround year.
One other graph of note concerns their projections for growth of CTL, BTL, and oil shale.
I agree with them that there will be growth in CTL and BTL as conventional oil depletes, but I am still skeptical about whether oil can be produced from shale with a positive energy balance.
Anyway, lots of material to sort through, but I mainly wanted to call attention to the report so people can begin to digest it.