More from the U.S. Energy Information Administration’s preview of its 2014 Annual Energy Outlook, released this week. EIA’s projections depict a United States gaining more control of its energy security with increased domestic oil and natural gas production. Let’s zero in on some of the things EIA says about natural gas.

First, domestic natural gas production is skyrocketing, thanks to output from shale. EIA:

Cumulative production of dry natural gas from 2012 to 2040 in the AEO2014 Reference case is about 11% higher than in AEO2013, primarily reflecting continued growth in shale gas production resulting from the dual application of horizontal drilling and hydraulic fracturing. Another contributing factor is ongoing drilling in shale and other plays with high concentrations of NGL and crude oil, which in energy-equivalent terms have a higher value than dry natural gas. Cumulative production levels for tight gas and onshore associated-dissolved gas from oil formations exceed those in AEO2013 through 2040 by 9% and 36%, respectively, making material contributions to the overall increase in production.

EIA’s chart, showing that the share of natural gas from shale is projected to grow dramatically and dominate U.S. production:

shale_gas

The impacts of the U.S. shale gas revolution are breathtaking. EIA predicts:

  • Natural gas will become the largest source of U.S. electric power generation, passing coal by 2035.
  • U.S. energy-related emissions of CO2 will stay below their 2005 level through 2040, in large part because of increased use of natural gas.
  • U.S. manufacturing output growth, helped by growing use of affordable natural gas.
  • Strong growth in domestic natural gas production will support increased exports of pipeline and liquefied natural gas (LNG).

Here’s what EIA says about natural gas and U.S. manufacturing:

Industrial shipments grow at a 3.0% annual rate over the first 10 years of the projection and then slow to 1.6% annual growth for the rest of the projection. Bulk chemicals and metals-based durables account for much of the increased growth in industrial shipments in AEO2014. Industrial shipments of bulk chemicals, which benefit from an increased supply of natural gas liquids, grow by 3.4% per year from 2012 to 2025 in AEO2014, as compared with 1.9% in the Annual Energy Outlook 2013 (AEO2013) Reference case.

EIA’s chart:

manufacturing_natgas

No impact of natural gas production is more dramatic than the lift it could give to the U.S. economy through free trade. EIA projects the U.S. will become a net exporter of LNG in 2016 and an overall net exporter of natural gas in 2018 – two years earlier than the agency forecast last year:

U.S. cumulative net LNG exports from 2012 to 2040 are up by 160% in AEO2014 compared with AEO2013, supported by increased use of LNG in markets outside America, strong domestic production, and low U.S. natural gas prices relative to other global markets.

Here’s how the natural gas export picture looks on EIA’s chart, with lines plotting domestic supply and consumption crossing and then rapidly separating – creating the opportunity for the export of a valuable U.S. commodity to trading partners overseas:

natgas_exports

The obvious benefit here is support for domestic natural gas production that would be provided by new markets – because the U.S. has plenty of natural gas to meet domestic demand and supply overseas customers. This translates into support for U.S. jobs and associated sectors. EIA Administrator Adam Sieminski:

“We see more growth for LNG exports from the lower 48 states this year than we did last year. … We just think that the economics of that, as show in our model, makes some sense.”

From here, exporting U.S. natural gas makes a lot of sense. The Energy Department has approved a number of export licenses over the past couple of years, but more than 20 remain under consideration. With EIA and others forecasting growing natural gas production, the U.S. has the opportunity to meet domestic needs and be a leader in the global LNG market. Government should approve the remaining applications so that the United States can serve that market – strengthening domestic industries and creating jobs in the process.