International Energy Module
The International Energy Module (IEM) performs two tasks in all NEMS runs.
First, the module reads exogenously global and U.S.A. petroleum liquids
supply and demand curves (1 curve per year; 2008-2030; approximated, isoelastic
fit to previous NEMS results). These quantities are not modeled directly
in NEMS. Previous versions of the IEM adjusted these quantities after reading
in initial values. In an attempt to more closely integrate the AEO2009
with IEO2008 and the STEO some functionality was removed from IEM while
a new algorithm was implemented. Based on the difference between U.S. total
petroleum liquids production (consumption) and the expected U.S. total
liquids production (consumption) at the current WTI price, curves for global
petroleum liquids consumption (production) were adjusted for each year.
According to previous operations, a new WTI price path was generated. An
exogenous oil supply module, Generate World Oil Balances (GWOB), was also
used in IEM to provide annual regional (country) level production detail
for conventional and unconventional liquids.
The second task of the IEM is to interact with the PMM module during runs
to determine changes in the WTI price and the supply prices of crude oils
and petroleum products for import to the United States in response to changes
in U.S. import requirements. As a result of the interaction with PMM,
this module also determines new values for oil production in the world,
along with a report for crude oil, light and heavy refined products imports
by source.
Key Assumptions
The level of oil production by countries in the Organization of Petroleum
Exporting Countries (OPEC) is a key factor influencing the world oil price
projections incorporated into AEO2009. Non-OPEC production, worldwide regional
economic growth rates and the associated regional demand for oil are additional
factors affecting the world oil price.
The world oil price is the annual average U.S. cost of imported low-sulfur
light crude oil in PADD2. For the low, reference, and high oil price cases,
prices reach $50, $130 and $200 per barrel in 2030, respectively, in 2007
dollars. The reference case assumes that OPEC producers will continue to
demonstrate a disciplined production approach. The low oil price case reflects
a market where all oil production becomes more competitive and plentiful.
The high oil price case could result from a more cohesive and market-assertive
OPEC that reduces overall production volumes. The three price scenarios
are shown in Figure 2.
OPEC oil production is assumed to increase throughout the reference case
projection, enabling the organization to maintain an approximately constant
market share over the projection period (Figure 3). OPEC is assumed to
be an important source of additional production because its member nations
hold a major portion of the world’s total reserves—exceeding 927 billion
barrels, about 70 percent of the world’s estimated total, at the beginning
of 2008.1
The reference case values for OPEC production are shown in Figure 3. Iraq
oil production is assumed to not maintain steady growth until after 2015.
By 2030, Iraq is expected to increase production capacity to 4 million
barrels per day with likely investment help from foreign sources. Non-OPEC
liquids production is expected to increase by just under one percent per
year over the projection period, as advances in both exploration and extraction
technologies result in an upward trend. The non-OPEC production path for
the reference case is shown in Figure 4.
The non-U.S. oil production projections in the AEO2009 begin with country-level
assumptions regarding oil resources. These resource estimates are taken
in part from the USGS World Petroleum Assessment of 2000 as well as from
PennWell Publishing Company Oil and Gas Journal, summary of which is shown
in Table 3.1.
The reference case growth rates for GDP for various regions in the world
are shown in Table 3.2. Except for the United States, the GDP growth rate
assumptions for non U.S. country/regions are taken from IEO2008.
The values for growth in oil demand in the International Energy Module,
which depend upon the oil price levels as well as GDP growth rates, are
shown in Table 3.3 for the reference case by regions.
[1] PennWell Corporation, Oil and Gas Journal, Vol. 105.48 (December 24,
2007). |
