U.S. forecasts natural gas boom through 2040

Wendy Koch | USA TODAY

America's energy boom will continue for decades, and natural gas will replace coal as the largest source of U.S. electricity by 2035, the Department of Energy forecast today.

U.S. production of crude oil will increase through 2016, when it will approach the record set in 1970, before leveling off and then slowly declining after 2020. Natural gas production will grow steadily, jumping 56% from 2012 to 2040, according to an early release of an annual report by DOE's Energy Information Administration.

"Advanced technologies for crude oil and natural gas production are continuing to increase domestic supply and reshape the U.S. energy economy as well as expand the potential for U.S. natural gas exports," Adam Sieminski, EIA Administrator, said in releasing the Annual Energy Outlook 2014.

This energy bonanza is largely due to the combined use of horizontal drilling and hydraulic fracturing or fracking, which releases oil and gas from shale deposits by blasting chemical-laced water underground to break up the rock. Yet fracking faces growing criticism as some scientists link leftover fracking fluids to groundwater contamination.

EIA's 2014 forecast says low prices will make natural gas increasingly attractive so in some areas, it will replace power once supplied by nuclear or coal plants. In 2040, it expects natural gas will account for 35% of the nation's electricity generation while coal will account for 32%.

Two other trends will also intensify: more efficient cars and light trucks will reduce energy use while renewable sources such as solar and wind will produce more power. The result: The United States will export more energy and import less. The net import share of U.S. energy consumption could drop to as little as 4% by 2040 — down from 16% in 2012 and 30% in 2005..

The 2014 forecast sees a more robust U.S. energy market than did its 2013 counterpart. But it offers only one scenario, known as the "reference case," that assumes current laws and regulations will remain generally unchanged through 2040. Next year, EIA will release a complete forecast, offering varying scenarios that account for pending proposals.

For example, the U.S. Environmental Protection Agency has proposed to limit greenhouse gas emissions from new power plants — a rule that would disproportionately affect coal-fired plants and further impede their ability to compete with natural gas facilities.

The 2014 forecast has good news for U.S. energy-related carbon dioxide emissions. It says they'll remain below their 2005 level through 2040 because of the nation's growing reliance on wind and solar power, which emit no CO2, as well as natural gas-fired plants, which emit about half what coal plants do.

"Future policies will change in a way to decrease greenhouse gas emissions," says Richard Newell, former EIA chief and now director of the Duke University Energy Initiative. He expects EPA regulations, along with growth in wind and solar power, will more quickly reduce coal's share of the U.S. electricity market than the early 2014 report forecasts.

Newell also expects the production of oil from shale rock, commonly known as "tight" oil, could continue increasing beyond 2020 because of technological advances. He says such advances made it possible to cost-effectively produce this oil, which now accounts for nearly half of U.S. crude oil but barely existed a few years ago.

"It's hard for us to see too far into the future," Newell says, adding: "The history of energy production is the history of technology application...I wouldn't be surprised if the future tells a different story."