Cheap crude won’t slow U.S. oil fields by much, EIA says

HOUSTON — Cheap oil might only stall 6 percent of U.S. crude production by 2022, government researchers say.

Surging U.S. shale oil fields could hold the price of international crude below $80 a barrel for the next five years, the U.S. Energy Information Administration said in its annual energy outlook on Tuesday. It said low oil prices would only cut 700,000 barrels from the nation’s daily production in seven years, when U.S. oil fields would otherwise have pumped out 10.4 million barrels.

That’s because the regions where oil companies have stopped drilling produce just a small portion of the nation’s output.

If oil stays cheap, “poor investment returns lead to fewer wells being drilled in noncore areas of formations, which have smaller estimated ultimate recoveries than wells drilled in core areas,” the EIA said. “As a result, they have a more limited impact on total production growth in the near term.”

The report comes a day after the EIA’s monthly drilling update showed U.S. shale output is set to fall by 57,000 barrels a day in May, its first decline after several booming years. Oil prices rose slightly on the news this week.

Low oil prices might have a bigger impact over the next 25 years. Domestic daily production would be off by 2.3 million barrels by 2040, at 7.1 million barrels.

The EIA predicted even after U.S. crude production begins to taper off after 2020, oil exporting countries could bolster global supplies and keep Brent prices below $100 a barrel through most of the next decade. It says oil prices could rise to $140 a barrel by 2040 on growing global demand.

crude oil production

The nation’s rising oil and natural gas output, increased use of renewable resources and advances in fuel-efficient technology could also wean the United States off foreign energy around 2028, balancing imports and exports of such goods for the first time since the 1950s.

“Advanced technologies are reshaping the U.S. energy economy,” EIA Administrator Adam Sieminski said in a written statement. “The projections show the potential to eliminate net U.S. energy imports in the 2020 to 2030 timeframe.”

The EIA believes net imports of crude and petroleum products will see a 33 percent share of U.S. consumption in 2013 fall to 17 percent in 2040. U.S. energy consumption is set to grow roughly 9 percent over the next 25 years, with demand for renewables and natural gas growing the most, though the nation’s population is expected to conserve more energy. U.S. per-capita growth in energy use is set to shrink by 0.4 percent annually, the EIA said.