Econintersect: The U.S. will see a 'Twin Peaks' moment for crude oil production somewhere around 2020 according to the latest projections from the U.S. EIA (Energy Information Administration). The current estimates are that the previous production high of 9.6 million barrels of oil a day in 1970 will be approached again between 2016 and 2020. After 2020 crude oil production is expected to start declining once more.
The result of all the new technology for shale oil and gas extraction has been a surge in production since 2010, which will reduce net petroleum imports to 1970 levels within the next few years. However the production surge is expected to peak in less than a decade and net imports will start to increase again after about 2020. However, the current projection is that the import growth will be very modest and not approach the levels seen from the period between the mid-1970s to about 2008 for the forecast time frame ending in 2040.
The projection for total energy production and consumption going forward is very promising. The net imports of fuels for the U.S. will be reduced sharply from 2012 levels (16%) and reach a level of 3% to 4% in the decade 2030-2040. This is a significant economic tailwind by comparison to the net imports before the Great Financial Crisis, which peaked near 30% of consumption.
When natural gas is included in the energy picture it is clear how the promising energy projections are coming about, even though oil and liquid fuels production will have peaked again by 2020: Natural gas production is projected to keep expanding through the end of the analysis in 2040.
So the U.S. will have a deja vu moment with a second peak oil experience. But this time the combination of energy efficiency improvements and expanding natural gas production will provide a significantly different experience than the decades (especially the first decade) following the first peak oil year in 1970.
See also the GEI Investing article posted today: The US Energy Boom: More than Just an Oil Story
- AEO2014 Early Release Overview (U.S. Energy Information Administration, December 2013)