WASHINGTON, April 21, 2015 - Within the next 15 years, and possibly as early as 2019, the United States could become a net energy exporter for the first time since the 1950s, according to the federal Energy Information Administration’s Annual Energy Outlook.
One person eager to see the U.S. become an energy exporter is Senate Energy and Natural Resources Chair Lisa Murkowski, R-Alaska. In her keynote address at the CERAWeek conference of top energy industry leaders in Houston this week, she promised to help reform “deficient and outdated” U.S. energy policy by writing energy legislation – both a bill to end the ban on U.S. crude oil exports and a broad energy bill – “instead of allowing our policy and our future to be decided by regulators and courts.”
Murkowski said she will introduce a bill this year that “fully repeals our nation’s outdated export ban.” She explained that “We should not lift sanctions on Iranian oil while keeping sanctions on American oil” and charged that the 40-year-old export ban “hurts American producers, who have to sell oil at a significant discount to Brent [the world oil price], and it hurts American consumers, whose prices at the pump are higher than they would otherwise be.”
Releasing EIA’s Outlook report last week, EIA Administrator Adam Sieminski said that “With continued growth in oil and natural gas production, growth in the use of renewables, and the application of demand-side efficiencies, the projections show the potential to eliminate net U.S. energy imports in the 2020 to 2030 timeframe.”
In the first step toward net energy exports, under every scenario for a range of energy prices and economic growth considered in the EIA report, “the United States transitions from being a net importer of natural gas to a net exporter by 2017,” he said. Signaling the increased importance of renewable energy sources led by wind and solar power, Sieminski reported that “Renewables provide an increased share of electricity generation, reflecting rising long-term natural gas prices and the high capital costs of new coal and nuclear generation capacity.”
The report itself concludes that in addition to higher costs for natural gas, coal and nuclear power, “state-level policies, and cost reductions for renewable generation in a market characterized by relatively slow electricity demand growth favor increased use of renewables.”
U.S. primary energy consumption – quadrillion Btu
Sieminski noted that the prospect of the U.S. becoming a net energy exporter comes despite the EIA’s assumptions that the government’s current ban on crude oil exports will remain in force, that tax credits for renewables will be phased out as current law specifies, and that coal power plant emissions will remain unregulated rather than being limited by the EPA’s proposed Clean Power Plan. Changing any of those assumptions could boost renewables’ share of U.S. energy supplies. Sieminski added that the EIA will issue a separate report in May projecting possible effects from implementing the Clean Power Plan due to be finalized in June.
As debate continues, largely along party lines, over removing the 40-year-old ban on U.S. crude oil exports, Sieminski seemed to endorse ending the ban at a Senate Energy Committee hearing last week on the energy outlook. Responding to questions, he commented that “If more crude oil enters the global markets, whether it’s from U.S. exports or from Iran or from production anywhere, it would tend to lower the global oil price, which would tend to lower gasoline prices in the U.S.”
Sieminski’s comment undermined the concern expressed by Sen. Ed Markey, D-Mass., and others that removing the ban would drive U.S. fuel prices up and hurt consumers. Sieminski said an upcoming EIA report will address how ending the ban on U.S. crude oil exports would affect oil prices, oil production, and oil trade.
Writing in Foreign Policy magazine last week, Murkowski and GOP Sens. John McCain of Arizona and Bob Corker of Tennessee urged President Obama to authorize crude oil exports.
“We can help our allies and undermine our adversaries if we get rid of this antiquated policy,” they argued. “European allies, struggling to diversify away from Russia, would be able to receive U.S. domestic oil almost immediately.” At last week’s hearing, Murkowski welcomed the EIA forecast that the U.S. could become a net energy exporter soon and said the transformation could “enhance our geopolitical position around the world.”
Also at the hearing, Ranking Member Maria Cantwell, D-Wash., highlighted EIA’s projection that national electricity prices will rise 18 percent between 2013 and 2040, driven by 25 percent higher coal prices and 88 percent higher natural gas prices. She charged EIA with “continually underestimating the potential of renewable energy” and warned that by still using outdated “high-cost, low-growth scenarios” for renewable energy, EIA “can paint a misleading picture about the power of renewables.” She called on EIA to revise its models to recognize the fact that new technology has driven wind and solar costs down dramatically.
The report cautions that its projections cover a wide range of possible oil prices over the next 25 years. The baseline “reference case” assumes continued growth in U.S. crude oil production resulting in a Brent crude oil price at $56 a barrel in 2015, 43 percent below the 2014 peak. Based on projecting that growing world demand will be offset by continued increases in U.S. crude oil production, EIA’s reference case keeps the Brent price below $80/bbl through 2020 and below $100/bbl through 2028 before rising to $141/bbl by 2040.
EIA’s alternative cases using different assumptions for oil prices and economic growth show the Brent price dropping to $52/bbl in 2015, then recovering only to $76/bbl in 2040, 47 percent below EIA’s reference case forecast. In EIA’s High Oil Price case, the Brent price increases to $252/bbl in 2040 “largely in response to significantly lower OPEC production and higher non-OECD demand.” In the High Oil and Gas Resource case with more wells producing more oil and gas, U.S. crude oil production growth results in keeping the Brent price average at $129/bbl in 2040, 8 percent below EIA’s reference case forecast.
Introducing another layer of uncertainty, Sieminski told the Senate Energy Committee that if oil-related sanctions against Iran are ended, EIA’s baseline forecast for world crude oil prices in 2016 could be reduced by as much as $5 to $15 a barrel as Iran’s stockpiled oil is released into world markets.
For more news: www.agri-pulse.com