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2 The Domestic Energy Revolution
Pages 14-33

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From page 14... ... While their specific impacts on the transportation sector are discussed later in the report, this chapter provides background on the major developments in the oil, natural gas, and ethanol markets that spawned these impacts. The chapter begins with an overview of circumstances before 2009 when energy producers using hydraulic fracturing and horizontal drilling technologies started extracting increasingly larger quantities of oil and gas from the country's interior at about the same time that federal policies were spurring growth in the production and use of ethanol as a motor fuel. Read the entire page →
From page 15... ... Field Production of Crude Oil." 4 U.S. Energy Information Administration, "U.S. Read the entire page →
From page 16... ... It was around this time that The New York Times, CNN, and other news media began reporting that rural communities across eastern Montana, western North Dakota, Oklahoma, Pennsylvania, and western Texas had become oil and gas boomtowns, experiencing burgeoning demand for workers, housing, equipment, materials, transportation, and public services.10 Their observations coincided with market evidence of increasingly larger supplies of oil and gas originating in these regions -- a development that signaled the prospect of the United States not only becoming less dependent on imports but potentially a net exporter of oil and gas in the years ahead.11,12 The U.S. Energy Information Administration (EIA) Read the entire page →
From page 17... ... Energy Information Administration, "Annual Energy Outlook 2006." Table A1. Read the entire page →
From page 18... ... SOURCE: U.S. Energy Information Administration, "Review of Emerging Resources: U.S. Read the entire page →
From page 19... ... For instance, by 2015, Pennsylvania had become the second largest domestic producer among states of natural gas,23 North Dakota ranked second in domestic oil production,24 and top ethanol-producing states, such as Iowa, Nebraska, and South Dakota, had become the main suppliers of nearly 10 percent of the country's finished gasoline.25,26 A decade earlier, these states had originated a negligible share of the country's liquid and gas energy, and thus had accounted for a commensurately small percentage of the country's energy transportation infrastructure. The domestic energy revolution not only created new energy transportation routes, but it also disrupted traditional routings. Read the entire page →
From page 20... ... Lacking the specialized equipment to pro31 U.S. Energy Information Administration, "Louisiana Gulf Coast Refinery Utilization and Capacity," Petroleum & Other Liquids, accessed September 15, 2017, https://www.eia.gov/ dnav/pet/pet_pnp_unc_dcu_r3c_m.htm. Read the entire page →
From page 21... ... SOURCE: U.S. Energy Information Administration, "Much of the Country's Refinery Capacity Is Concentrated Along the Gulf Coast," Today in Energy, July 19, 2012, https://www.eia.gov/todayinenergy/detail.php? Read the entire page →
From page 22... ... SOURCE: U.S. Energy Information Administration, "Where Our Natural Gas Comes From," Natural Gas Explained, accessed September 15, 2017, https://www. Read the entire page →
From page 23... ... Whereas heavy, sour oil imports from Canada had been a main source of growth in North American supplies until the mid2000s, the oil extracted using hydraulic fracturing consisted of lighter, sweeter grades. As a result, the geographically stable base of refineries, whose oil-processing investments were made on the basis of past trends in crude oil supplies, was facing a dramatic change in both the location of producing regions and the grades and prices of oil available in the market. Read the entire page →
From page 24... ... 34 U.S. Energy Information Administration, "Europe Brent Spot Price FOB," Petroleum & Other Liquids, accessed September 15, 2017, https://www.eia.gov/dnav/pet/hist/LeafHandler. Read the entire page →
From page 25... ... Nevertheless, rail and barge transportation were holding onto some of their advantages by offering producers additional routing options, especially for moving shortterm supply surpluses and serving newly developed, lower-volume basins. Perhaps the most one can predict at this juncture is that these two modes will continue to account for a meaningful portion of the country's crude oil traffic, but at levels substantially lower than in recent years. Read the entire page →
From page 26... ... The most important policy development has been the Renewable Fuel Standard (RFS) , established by the U.S. Read the entire page →
From page 27... ... Energy Information Administration, "Corn Ethanol Yields Continue to Improve," Today in Energy, May 13, 2015, https://www.eia.gov/todayinenergy/detail.php? Read the entire page →
From page 28... ... 39 U.S. Energy Information Administration, "Table F4: Fuel Ethanol Consumption Estimates, 2015," U.S. Read the entire page →
From page 29... ... 40 U.S. Energy Information Administration, "Everywhere But Northeast, Fewer Homes Choose Natural Gas as Heating Fuel," Today in Energy, September 25, 2014, https://www. Read the entire page →
From page 30... ... Just 4 years later, in its Annual Energy Outlook for 2012, the agency predicted the country 42 U.S. Energy Information Administration, "Henry Hub Natural Gas Spot Price," Natural Gas, accessed September 19, 2017, https://www.eia.gov/dnav/ng/hist/rngwhhdm.htm. Read the entire page →
From page 31... ... 45 U.S. Energy Information Administration, "Most Natural Gas Production Growth Is Expected to Come from Shale Gas and Tight Oil Plays," Today in Energy, June 7, 2016, https:// www.eia.gov/todayinenergy/detail.php? Read the entire page →
From page 32... ... When the hydraulic fracturing boom began around 2008, dry natural gas prices were at an all-time high, creating incentives for the development of fields that produced more dry gas than wet gas. Interest in dry gas was particularly strong in the Marcellus Basin, which had access to natural gas pipelines but not substantial NGL pipeline and processing capacity. Read the entire page →
From page 33... ... 1 Natural Gas Plant Field Production," Petroleum & Other Liquids, April 28, 2017, https://www.eia.gov/dnav/pet/pet_pnp_gp_ dc_rap_mbblpd_m.htm. 2-11 0 25 50 75 100 125 150 175 200 225 250 275 300 Barrels per day (thousands) Read the entire page →

From page 14...

... While their specific impacts on the transportation sector are discussed later in the report, this chapter provides background on the major developments in the oil, natural gas, and ethanol markets that spawned these impacts. The chapter begins with an overview of circumstances before 2009 when energy producers using hydraulic fracturing and horizontal drilling technologies started extracting increasingly larger quantities of oil and gas from the country's interior at about the same time that federal policies were spurring growth in the production and use of ethanol as a motor fuel.

2 The Domestic Energy Revolution Pages 14-33

2 The Domestic Energy Revolution
Pages 14-33