2013

T h e O u t l oo k f o r E n e r g y : A V i e w to 2 0 4 0 U. S. E d i t i o n

Explore our complete Outlook for Energy, or download your own copy, at

exxonmobil.com/energyoutlook.

The Outlook for Energy: A View to 2040

The worlds energy landscape is always changing the result of new technologies, government policies, economic and population trends, and consumer choices. Today, nowhere is the energy landscape changing more than it is in the United States.
U.S. oil and natural gas production has risen to its highest level in three decades, as advances in technology have unlocked vast resources of oil and gas that are located in shale and other tight rock formations in many states, including Texas, North Dakota and Pennsylvania. This domestic energy renaissance has created significant economic benefits for the United States, including: lower energy costs for businesses and individuals; increased manufacturing activity; millions of new jobs; billions of dollars in taxes and government revenue; and new opportunities to expand Americas role in the global energy trade. ExxonMobils Outlook for Energy sees U.S. oil and gas production continuing to grow over the coming decades as shale and other unconventional resource output combines with new supplies from the deepwater U.S. Gulf of Mexico and elsewhere. ExxonMobil expects North Americas liquids and natural gas production to rise by about 45 percent from 2010 to 2040, boosted by U.S. activity. But rising energy production is only half of the story. The United States also continues to reduce its energy consumption. Largely because of ongoing efficiency improvements, from 2010 to 2040 energy usage in the United States the worlds second-largest energy consumer after China is projected to fall by about 5 percent, even as the U.S. population grows and economic output doubles. ExxonMobil expects that the combination of these two trends steep gains in energy production and modest declines in U.S. consumption will enable North America to become a net energy exporter by about 2025 and bring significant benefits to the U.S. economy, including opportunities associated with natural gas exports. Reduced U.S. energy consumption also will provide environmental benefits, especially when combined with another major energy trend under way in the United States: a pronounced shift away from coal in favor of less-carbon-intensive fuels such as natural gas. ExxonMobil expects that by 2040, Americas carbon dioxide (CO2) emissions will have fallen back to levels not seen since the 1970s. Of course, the United States is just one part of the global energy market, which must meet the needs of a population projected to rise from 7 billion today to close to 9 billion by 2040. ExxonMobil sees global energy demand rising by about 35 percent from 2010 to 2040, driven by growth in China, India and other fast-developing countries in Asia Pacific, Africa, the Middle East and Latin America. ExxonMobil has served Americas energy needs for 130 years. We hope this U.S. version of our global Outlook for Energy will shed light on the transformative changes that are reshaping Americas energy landscape, and the opportunities they present to further strengthen the countrys economy and its role in the global marketplace. Note: Excerpted from ExxonMobils 2013 global publication, The Outlook for Energy . The complete report can be found at http://www.exxonmobil.com/energyoutlook

The Outlook for Energy: A View to 2040

Energy demand
Access to energy remains vital not only to the lives of the more than 300 million Americans, but also to U.S. businesses and industries that use energy to support jobs, technologies and the provision of U.S.-made goods and services. But the relationship between Americas economy and its energy usage is changing. After climbing steadily for decades, U.S. energy demand will level off and begin to decline through 2040 even as its economy and population continue to grow. This fundamental shift will be driven by improvements to energy efficiency, especially in the transportation sector.

exxonmobil.com/energyoutlook

% 30
2010

Electricity demand, the single biggest driver of energy in the United States, grows 30 percent by 2040.

2040

The Outlook for Energy: A View to 2040

Population, economic growth drive energy demand, both globally and domestically
Global demand for energy is expected to rise by about 35 percent from 2010 to 2040, a significant increase that will require trillions of dollars in investment and ongoing advances in energy technology. One reason for rising energy demand is population growth. Although the rate of growth is slowing, by 2040 there will be nearly 9 billion people on the planet, up from about 7 billion today an increase equal to six times the current U.S. population. Another factor is rising prosperity and economic growth around the world, which will create new demands for energy. Global GDP is projected to expand by about 130 percent from 2010 to 2040. Improved efficiency, plus the shift to less-carbon-intensive Energy demand trends will vary greatly by country type. Among members of the Organization for Economic Cooperation and Development (OECD), which includes the United States, energy demand will be essentially flat through 2040. In these more mature economies, increased energy fuels, also will help curb greenhouse gas emissions; globally, energy-related CO2 emissions are expected to plateau around 2030. Trends will vary greatly by country, however, with emissions from OECD nations falling by about 20 percent and Non OECD emissions rising by 50 percent. demand from economic growth will be offset by improvements to efficiency. In Non OECD countries, such as China and India, demand is seen rising by 65 percent as rapid increases in economic output and prosperity levels outpace gains in efficiency. The expanded use of energy-saving technologies and practices in every country, and across all end-use sectors, will save a tremendous amount of energy an estimated 500 quadrillion British thermal units (BTU) a year by 2040. In fact, ExxonMobil projects that global energy demand growth through 2040 would be nearly four times the projected 35 percent were it not for expected gains in efficiency.

Global population
Billions of people
21

Global GDP
Trillions of 2005 dollars
120

Global energy demand

Quadrillion BTUs
1400

18

15

75

100

1200

12

75 percent of the worlds population will reside in Asia Pacific and Africa by 2040.

1000 80

Energy savings through efficiency gains

800

Energy saved ~500

60 600

40 6 400

Rest of world

20

200

United States
0

2000

2020

2040

2000

2020

2040

2000

2020

2040

XOM Energy Outlook US Ed. 2012

4 exxonmobil.com/energyoutlook

21000

Data as of 11/18/2012

For: GCG Data as of 11/18/2012 Scott Turner/ Brian Wilburn 817-332-4600 File name:

04A 2012 XOMEO US-GlobalPop.ai 1/1/00 96 320 0

Demand US

ROW

Savings

America will use less energy even as GDP doubles

After many decades of rising energy consumption, the United States appears to have reached a point where it can continue to expand its economy and prosperity while maintaining a fairly stable level of energy usage. As the worlds largest economy, the United States already has achieved relatively high living standards. The country also has relatively high per-capita energy use, as energy-related technologies everything from vehicles to air-conditioning are already widely deployed throughout the country. As a result, over the next few decades, underlying fundamentals that would tend to drive increases in U.S. demand for energy will be more than offset by gains in energy efficiency. Overall U.S. energy consumption is expected to gradually plateau and then decline by about 5 percent from 2010 to 2040, even as GDP doubles. One factor supporting U.S. economic expansion is its population. While populations in many OECD nations will shrink over the next 30 years, the U.S. population will expand by more than 20 percent, with steady gains in its working-age group (those 15 to 64 years of age). Broken down by sector, U.S. demand for fuel for electricity generation will rise slightly, but fall in the other major demand sectors: transportation, residential/commercial and industrial.

U.S. shifts to less-carbon-intensive fuels

The United States will continue its shift toward less-carbonintensive fuels, particularly in the electricity generation sector. U.S. demand for natural gas will rise by more than 25 percent to 2040. Technologies that have expanded production of shale gas across the U.S. will help meet this demand. Wind, solar and biofuels also grow sharply; by 2040, these renewable fuels will meet about 7 percent of U.S. demand. U.S. use of nuclear power is expected to rise by about 25 percent from 2025 through 2040. On the other hand, U.S. coal consumption is expected to drop by more than 65 percent; by 2040, coal will account for about 7 percent of U.S. energy, down from more than 20 percent in 2010. This is due in part to new policies and regulations that will effectively raise the price of more-carbon-intensive fuels. Because of improved efficiency and the increased use of natural gas, renewables and nuclear, ExxonMobil sees U.S. energy-related CO2 emissions falling by more than 25 percent from 2010 to 2040, reaching levels not seen since the 1970s. However, even by 2040 U.S. per-capita emissions still will be higher than in other countries.

U.S. energy demand by sector

Quadrillion BTUs
100

U.S. energy demand by fuel

Quadrillion BTUs
100

U.S. energy-related CO2 emissions by sector

Billion tons Other renewables
6

Biomass

Residential/commercial
5 80 80

Residential/ commercial

Nuclear Industrial Coal

60 60 4

Industrial

Transportation Gas
40 40

Electricity generation
2

20

Electricity generation

20

Oil

Transportation

2000

2020

2040

2000

2020

2040

2000

2020

2040

The Outlook for Energy: A View to 2040

XOM Energy Outlook US Ed. 2012

DATA as of Nov. 16, 2012

XOM Energy

Efficiency to curb demand in residential/commercial sector

The residential/commercial sector represents Americas singleand multi-family residences, plus commercial buildings such as offices, stores, schools and medical facilities. Nearly 30 percent of the energy used in the United States is directed to this enduse sector, counting both direct energy usage (e.g., natural gas for cooking and heating) plus net delivered electricity used in these structures. While direct energy use in the residential/commercial sector will fall by more than 15 percent over the Outlook period, total energy demand (including delivered electricity) in this sector is projected to rise slightly, by about 5 percent. In the residential subsector, demand is expected to peak in 2025, then decline through 2040. One reason is improved efficiency, the result of factors such as better insulation and energy-saving appliances. U.S. homes already have seen significant improvements in efficiency. While new U.S. homes One noteworthy growth area is hospitals. According to government data, in 2003 hospitals accounted for 4.3 percent of U.S. commercial energy demand; by 2007, that number had risen to 5.5 percent. In addition, hospitals tend to require about twice as much energy per square foot as most other types of commercial buildings. In the commercial subsector, total energy demand is expected to rise by more than 10 percent between 2010 and 2040, largely because of an expected steady increase in commercial square footage in the United States. built since 1990 are nearly 30 percent larger than homes built before 1990, total energy demand for residential use grew by only about 20 percent over the last 20 years.

Residential/commercial demand by sector

Quadrillion BTUs
20

Residential/commercial demand by fuel

Quadrillion BTUs
20

15

Commercial

15

Electricity

10

10

Residential

Gas Coal Other

2000

2020

2040

Oil
2000 2020 2040

exxonmobil.com/energyoutlook

XOM Energy Outlook US Ed. 2012

Industrial activity to expand, but energy demand stays flat

Domestic manufacturing and other industrial activity is expected to grow steadily over the next few decades, in conjunction with projected U.S. economic recovery and growth. The industrial sector which includes heavy industries such as steel and machinery as well as agriculture, chemicals and energy uses oil and natural gas not just as fuel but also in many cases as feedstock for the manufacture of other products, such as plastics and fertilizer. Over the coming decades, rising North American oil and gas production is expected to continue to support the expansion of U.S.-based industrial activity. North Americas chemicals production is expected to rise by more than 20 percent in just the years from 2012 to 2020, and fertilizer production is seen rising by nearly 50 percent from 2010 to 2040. By 2015, U.S. steel production is expected to return to 2007 levels, as the economy recovers and commercial construction and manufacturing expand. Demand for energy for the heavy industry and chemicals subsectors is projected to rise in the range of 5 to 10 percent over the Outlook period as economic opportunities exist to expand output. One of the biggest improvements in efficiency can be seen in the energy industry subsector (including U.S. oil and gas production and refining), where energy usage is expected to fall by more than 25 percent, mostly because of the expanded use of advanced energy-saving technologies such as cogeneration. ExxonMobil expects energy consumption in this sector will rise slightly through 2025 as industry responds to lower natural gas prices. Yet even as U.S. industrial activity increases, from 2025 to 2040 energy consumption will decline by about 5 percent, reflecting ongoing improvements in efficiency such as process intensification and energy-use management systems. In fact, the energy required for a constant level of industrial production will fall by about half over the Outlook period.

Industrial demand by sector

Quadrillion BTUs
30

Industrial production
Indexed to 2000 = 100
200

175 25

Energy industry
20

150

125

Chemicals
15 100

75 10

Heavy industry
5

50

25

Other
0

2000

2020

2040

2010

2025

2040

Data as of 11/16/2012
Other OtherIndustry Chem Tot EIUSE

Data as of 12/13/2012

The Outlook for Energy: A View to 2040

XOM Energy Outlook US Ed. 2012

New fuel-economy standards to curb transportation demand

Overall energy demand in the U.S. transportation sector is expected to peak shortly after 2015 and decline by 10 percent over the Outlook period. The United States will remain the largest consumer of energy for transportation, but by 2040 its share of global transportation demand will have fallen to about 15 percent, compared to about 25 percent in 2010. Federal Corporate Average Fuel Economy (CAFE) standards call for U.S. auto companies to raise the average EPA-rated fuel efficiency of the light duty vehicles they sell in the United States to 34.5 miles per gallon by 2016 and 54.5 mpg by 2025. These new rules will require significant changes in the U.S. light duty fleet, which in 2010 had an EPA-rated average of 28.4 mpg. While actual on-road mileage typically is lower, achieving these standards will have a dramatic impact on fuel consumption. Advanced vehicles are expected to account for more than 50 percent of the fleet and about 80 percent of U.S. newcar sales by 2040. Conventional vehicles also will need to become smaller and more fuel-efficient to meet the new Another change on the horizon is the potential use of natural gas as a transportation fuel, particularly for certain trucks and other heavy duty vehicles that can more readily recoup the higher up-front costs. ExxonMobil sees natural gas accounting for about 7 percent of U.S. heavy duty vehicle demand by 2040, compared with less than 1 percent today. However, ExxonMobil continues to expect very limited use of natural gas in light duty vehicles due to competing technologies, such as hybrids, having broader appeal to consumers. fuel-economy standards. As a result, the average on-road fuel economy of new U.S. light duty vehicles is expected to rise to about 45 mpg by 2040, or about twice the 22 mpg level in 2010. Nationwide demand for fuel for light duty vehicles will fall by one-third over the Outlook period, even as the number of these vehicles on U.S. roads rises by approximately 65 million. On the other hand, U.S. demand for fuel for commercial vehicles trucks, planes, ships and trains will rise by nearly 35 percent, as a recovering economy spurs increased movement of people and goods.

Transportation demand by sector

Millions of oil-equivalent barrels per day
15

Transportation demand by fuel

Millions of oil-equivalent barrels per day
15

Light duty vehicle fleet by type

Millions of vehicles
300

Natural gas/LPG

Rail

Marine

Fuel oil

Natural gas Other

250

Electric/Plug-in hybrid

Hybrid

Aviation
10 10

Jet fuel
200

Heavy duty

Biodiesel Diesel
150

Conventional diesel

100

Ethanol Light duty Gasoline Conventional gasoline

50

2000

2020

2040

2000

2020

2040

2000

2020

2040

exxonmobil.com/energyoutlook

XOM Energy Outloo XOM Energy Outlook US Ed. 2012

For: GCG Scott Turner/ Brian Wil

Vehicle efficiency: Costs influence consumer choices

When consumers set out to buy a new vehicle, cost and functionality are top concerns. Buyers consider not only purchase cost, but also the cost of fuel for the vehicle over its lifetime. So while making cars and other light duty vehicles more efficient and reducing vehicle emissions is a shared global goal, consumers generally will choose vehicles that meet that goal at the lowest cost to them. Through 2040, ExxonMobil sees most consumers gravitating to three options based on key decision criteria including functionality requirements of the vehicle for the users, the cost of various options, and the relative safety, performance and convenience afforded by various vehicles. Consumers also must consider other factors, such as driving range. Because gasoline and diesel are energy dense, they contain more energy per fill-up than ethanol, compressed natural gas (CNG) or electric vehicle batteries; this enhances consumer convenience by reducing the need for refueling stops.  Technologies that make conventional vehicles more efficient. Because it is relatively inexpensive to improve the efficiency of todays vehicles, this is the only option in which consumers fuel savings over the first five years of ownership equal or exceed their added costs. Technologies such as turbocharging, higher-speed automatic transmissions, improved aerodynamics and reduced weight can improve fuel economy and reduce CO2 emissions by more than 30 percent. ExxonMobil expects automakers will make increased use of these technologies as they seek to meet government fuel-efficiency mandates.  Advanced vehicles. Of all advanced-vehicle technologies, hybrids will offer by far the best value for consumers. By 2030, ExxonMobil expects that, on average, the cost of hybrid vehicles (like the Toyota Prius) will be about $2,000 higher than that of a similar-sized conventional vehicle, while a standard electric vehicle (like Nissans Leaf) will be about $7,000 higher and a plug-in hybrid electric vehicle (like the Chevrolet Volt) will be about $5,000 higher. In the case of the standard electric vehicle, consumers would not recoup that higher purchase cost within five years unless gasoline prices were more than $7 a gallon; with gasoline at $4 a gallon, it would take 11 years to break even. Additionally, the CO 2 emissions of electric vehicles vary significantly based on the fuel source used to generate their electricity.  Smaller vehicles. Whether they drive conventional or advanced vehicles, consumers can improve fuel economy by up to 35 percent by switching to smaller, lighter vehicles. The economics of consumer decisions will change as vehicle technology develops and as the prices of fuels rise and fall. Consumer decisions will naturally evolve over time as their particular needs change, vehicle technology develops, and the economics of buying and operating a vehicle change. Ultimately, the choices made by consumers will determine how the global vehicle fleet and related energy demand evolve in the coming decades.
The Outlook for Energy: A View to 2040 9

Power generation shifts to natural gas, nuclear and wind

The generation of electricity is the single biggest source of U.S. fuel demand today, accounting for about 40 percent of consumption. Over the next few decades, the use of less-carbon-intensive fuels (natural gas, nuclear and renewables) will grow substantially, while coal declines. Coal, which produced about 45 percent of Americas electricity in 2010, will account for only about 15 percent in 2040. This forecast reflects assumptions about the implied cost of CO2 in the United States, which serve as a proxy for a wide variety of potential policies that might be adopted to stem greenhouse gas emissions. The Outlook has implied CO2 costs in the United States and other OECD countries reaching about $60 per ton in 2030, rising to about $80 in 2040. The biggest growth for power generation will be in natural gas, which emits up to 60 percent less CO2 than coal when used for electricity generation. As in many other countries, natural gas is expected to be the fuel of choice for U.S. electricity generation for several reasons. New gas-fired generating units are efficient, easy In addition to curbing emissions, the shift away from older, coal-fired plants to more efficient natural gas facilities will also save the United States a substantial amount of energy. While U.S. electricity demand is expected to rise by about 30 percent through 2040, because of this improved efficiency, demand for fuel to generate electricity will remain largely unchanged. By 2040, about 85 percent of Americas electricity will likely come from natural gas, nuclear and renewable fuels, compared to about 50 percent in 2010. to build at a reasonable cost, flexible to operate, and supported by abundant U.S. gas supplies. Use of wind and solar also will grow substantially. However, wind and solar face challenges related to economics and reliability considerations (see page 11). Also, considering the costs of capturing, converting and storing wind and solar energy, these sources will require subsidies, mandates or a higher cost of CO2 to be competitive.

Electricity generation fuel consumption

Quadrillion BTUs
50

Average U.S. cost of electricity generation in 2030

Cost per kilowatt hour in 2012 cents
14 Reliability cost* At $60 per ton of CO2 Reliability cost*

Other Renewables Biomass

40 10

Wind and Solar

12

30

Nuclear
6 20

No CO2 cost

Coal
4

10

Gas Oil
0 0

Coal

Gas

Nuclear

Onshore Wind*

Solar PV*

2000

2020

2040

* Wind and solar exclude costs for backup capacity and additional transmission.

10

exxonmobil.com/energyoutlook

XOM Energy Outlook US Ed. 2012

Electricity 201: The challenges of harnessing wind and solar energy

Wind and solar energy comprise an important and growing part of the global energy mix and have an important role to play in meeting energy needs. However, for decades, people have been working to overcome the challenges associated with harnessing the wind and sun to generate energy. The key obstacle is the intermittent nature of these natural resources: The sun doesnt shine 24 hours a day and the wind doesnt blow continuously. To generate electricity from the sun, photovoltaic solar panels capture light energy, or photons. Various weather conditions can substantially impact the effectiveness of solar, for example when the air is humid or is of poor quality or when the skies are cloudy, making solar electricity generation intermittent. Wind power generation depends on how fast wind is blowing. If wind speed is too low or too high, the turbine cannot generate electricity. This makes wind electricity generation variable and intermittent. In fact, studies indicate that it is not uncommon for wind turbines to operate at only 5 to 15 percent of capacity during peak electricity demand. The availability of wind and sun at certain times of the day also factors into their use as reliable sources of energy. Solar power is best during mid-day. However, in many regions of the world, peak electricity demand occurs in the afternoon when air conditioning load is highest. In other regions, peak power demand occurs during winter evenings, when the sun has already set. Because solar and wind cannot be relied on to always generate power when electricity is needed, other more flexible types of generation, such as hydro, coal or natural gas, must remain on standby to ensure reliability of the power system. However, hydropower is limited in supply and coal power generation emits the highest amount of CO2 and is slow to start up. That makes natural gas the generation fuel of choice to complement wind and solar. Gas emits up to 60 percent less CO2 than coal when used for electricity generation. Gas plants are quick to start up and adjust to demand, are quicker and less costly to build, and have a smaller environmental footprint. Because gas generation produces minimal sulfur or particulates emissions, it can be located in populated areas. And unlike coal, onsite fuel storage is not required. The intermittency and variability of wind and solar generation limit their practical ability to meet electricity demand when required. The need to have additional generation to ensure a reliable electricity supply increases their cost relative to alternatives like gas and nuclear. Thats why, even though by 2040 wind-powered energy grows by seven times, it will only account for about 7 percent of global electricity supply. Likewise, solar power generation is expected to increase by more than 20 times, but will only account for about 2 percent of global electricity supply in 2040.
The Outlook for Energy: A View to 2040 11

Energy supply
The United States continues to enjoy access to an abundance of energy sources. Through 2040, oil will remain the countrys most popular fuel, but oil demand is expected to fall as American vehicles become more fuel-efficient. Natural gas usage will rise sharply as U.S. electricity generators shift away from coal. Expanding North American production of oil and natural gas the result of technologies that have enabled the development of energy from shale rock and other sources will help meet U.S. energy demand and reduce the need for imports.

12

exxonmobil.com/energyoutlook

Oil and gas will continue to supply about 65 percent of U.S. energy demand in 2040.

% 65

OTHER

The Outlook for Energy: A View to 2040

13

U.S. shale boom will help meet growing demand for natural gas
North America has abundant resources of natural gas a fuel used to generate electricity, heat homes and buildings, and power industries. Spurred by demand for less-carbon-intensive fuels, U.S. consumption of natural gas is projected to rise by more than 25 percent through 2040, when it will satisfy nearly one-third of Americas energy needs. In recent years, domestic supplies have been greatly expanded by advances in technology that have enabled the United States to tap the vast quantities of natural gas located in shale rock, which previously were considered too costly to produce. U.S. natural gas production is at its all-time high, and expected to rise by more than 45 percent over the Outlook period. This expansion in domestic gas production continues to have positive effects on the U.S. economy, including providing an abundance of reliable and affordable energy for consumers and businesses, the creation of millions of new jobs, billions of dollars in taxes and other revenues. It also will provide significant new economic opportunities for North America as it About 60 percent of the growth in global gas demand will be met by unconventional sources, which by 2040 will account for nearly one-third of global gas supply. Unconventional resources also include coal bed methane and tight gas. Even with the projected increase in its natural gas production through 2040, North America will continue to have significant gas resources in the ground an estimated 100 years supply at current consumption rates, a number that has the potential to expand as technology advances. transitions to a net natural gas exporter by about 2020. Shale and other unconventional supplies from North America will play an increasingly important role in meeting global demand for natural gas, which by 2025 will have overtaken coal as the worlds second-most-consumed fuel. Unconventional gas production also is expected to expand overseas, as the shale technologies developed in the United States are applied in other countries.

Global natural gas supply

Billions of cubic feet per day
600

North America natural gas resource

Thousand trillion cubic feet
6

500

Rest of world unconventional North America unconventional

400

Remaining resource

80%
By 2040, close to 80 percent of North America gas supplies will be produced from local unconventional resources.

300

200

Rest of world conventional

Cumulative production
100 1

North America conventional

2010 2025 2040

2040

14

exxonmobil.com/energyoutlook

XOM Energy Outlook US Ed. 2012

Rising oil production will reduce the need for imports

Oil and other liquid fuels are critical to economic growth, and to the transportation that moves people and goods. More than 95 percent of U.S. transportation relies on gasoline, diesel, jet fuel and other products refined from crude oil. U.S. liquids demand is expected to decline by about 15 percent through 2040. This will be largely the result of steep improvements in fuel efficiency for cars and other personal vehicles, which will more than offset continued strong gains in demand for fuel for heavy duty trucks and other forms of commercial transportation. At the same time, advances in technology are transforming oil production in the United States, Mexico and Canada. After decades of relatively flat production, output of oil and other liquid fuels in North America is projected to rise by about 40 percent from 2010 to 2040, as declines in conventional crude oil are more than offset by rising production of resources that until recently could not be Not only will these trends reduce the need for oil imports into North America, but ExxonMobil projects that by about 2030 North America will transition to become a net exporter of liquid fuels. produced economically. The biggest contribution will come from Canadas oil sands, where production is expected to triple over the Outlook period, reaching about 4.5 million barrels a day by 2040. Large gains also are expected in production of tight oil (oil extracted from shale in states like North Dakota), biofuels (oil produced from corn and other agricultural products) and natural gas liquids (NGLs) liquids associated with natural gas, including shale gas. Another major contributor will be a projected doubling in production from deepwater sources, mostly in the U.S. Gulf of Mexico. U.S. production of oil and other liquid fuels is projected to rise by 35 percent from 2010 to 2040, reaching about 12 million barrels per day of oil equivalent.

U.S. liquids supply and demand by type

Millions of oil-equivalent barrels per day
30

North America liquids supply and demand by type

Millions of oil-equivalent barrels per day
30

Liquids demand
25 25

Liquids demand
20 20

3 9 Net imports Canadian oil sands Biofuels

15

6 11 Net imports 4

15

Other petroleum

10

10

Crude and condensate

2000

2020

2040

2000

2020

2040

Data as of 11/18/2012
1/1/00 C&C 5868 Other 2715 Biofuels 71

XOM Energy Outlook US Ed. 2012

For: GCG The Outlook for Energy: A View to 2040 Scott Turner/ Brian 817-332-4600 C&CWilburn Other Biofuels Canada 1/1/00 10472 3910 71 608 File name: 15A 2012 XOMEO US-USLiqSupply.ai

Data as of 11/18/2012

15

S pecia l S ection

16

exxonmobil.com/energyoutlook

Global trade
Energy imports and exports have been an important part of international trade for more than a century. Over the next few decades, North America will play a new role in the global energy marketplace, as its rising oil and natural gas production will enable the region to transition from a net energy importer to a net exporter. But one fact will not change: Whether imports or exports, expanding trade opportunities for any product including energy helps economies grow and increases the prosperity of people in the United States and around the world.

Meeting global oil demand today requires about one-half of the worlds supplies to be traded internationally.

% 50

The Outlook for Energy: A View to 2040

17

Energy trade helps fuel economic growth

From ancient caravans to the e-commerce of today, people have long engaged in trade to meet their needs. Trading exchanging something you have for something others have that you need or would prefer benefits both buyers and sellers, and facilitates global economic growth, prosperity and constructive relationships between nations. Energy imports and exports are part of that picture, and they are fundamentally the same as the thousands of other products traded globally on a daily basis including grain, cars, computer products and steel. Expanding trade opportunities for U.S. products including energy creates economic value and strengthens the global supply chain upon which all consumers depend. One-half of the oil used every day around the world and one-quarter of the natural gas is traded internationally. In contrast, Europe and Asia Pacific are likely to continue to call on international markets to meet a substantial portion of their energy requirements. ExxonMobil expects that by 2040, Asia Pacific nations will be importing close to 40 percent of their total energy demand. The economic growth in that But the global energy market is dynamic, as evidenced by whats happening today in North America. North America region, and the energy required to fuel it, will open more opportunities for global trade. is capitalizing on advances in technology that have tapped huge energy resources shale oil and gas, oil sands, and deepwater, for example that previously were uneconomic to produce. At the same time, because of advances in energy efficiency and other trends, North Americas demand for energy is expected to be essentially unchanged from 2010. The net result is that ExxonMobil expects that North America which in 2010 imported 15 percent of its total energy and 35 percent of its oil is likely to transition to a net energy exporter by about 2025. ExxonMobil expects that by 2040, North America will have the opportunity to export about 15 percent of its natural gas production and about 5 percent of its oil production.

North America to become a net energy exporter

Regional energy balances

Quadrillion BTUs

120 121 113

Regional exports

15%
By 2040, North America will have the opportunity to export about 15 percent of its natural gas and 5 percent of its oil production.

Regional imports

94

94

89

Country imports In-country supplies

In-country supplies

2010 2025 2040

North America

2010 2025 2040

United States

18

exxonmobil.com/energyoutlook

XOM Energy Outlook US Ed. 2012

U.S. shale gas growth will provide expanding economic opportunities through LNG exports
For example, rising demand for natural gas in Asia Pacific and elsewhere will require the expansion of the global market for liquefied natural gas (LNG). LNG, which is transported on the water via tankers, enables natural gas to be shipped anywhere in the world not just to places reached by underground pipeline. The United States is emerging as an exporter of LNG into world markets, as projected growth in shale and other U.S. natural gas production will provide enough supply to not only meet domestic demand, but also additional supplies for export. As a study commissioned by the Department of Energy recently concluded, U.S. LNG exports will, under any scenario, have a positive effect on the U.S. economy and the real income of U.S. households.

support not just domestic needs for gasoline, diesel fuel and other products, but also make these products available to export elsewhere. The U.S. also imports crude and products from a host of countries around the world; this diversity strengthens U.S. energy choices and helps avoid the impact of supply disruptions. The single biggest source of net U.S. crude oil and product imports is Canada. The trading relationship between the United States and Canada continues to benefit both economies. Canadas oil production is projected to double from 2010 to 2040, in large part because of production from the vast oil sands resources in western Canada. Rising Canadian production coupled with growth in U.S. oil production will not only reduce the need for imports into North America, but also present an opportunity for both countries to further strengthen their relationship and create jobs and economic value.

U.S. benefits from access to global oil market

Even as North America approaches a time when it produces As the worlds largest oil consumer and its third-largest oil producer, the United States will continue to play an important role in global oil trading. Today, the United States is a net exporter of refined oil products, as refineries along the Gulf Coast and elsewhere more energy than it consumes, the region will continue to benefit from access to the global energy market. The value of free trade whether imports or exports is a fundamental principle of modern economics, and is critical to U.S. energy security, economic growth and competitiveness in the global marketplace.

2011 supply and net imports of crude oil and products

Canada 13%

Saudi Arabia 6%

Venezuela 5%

Nigeria 4%

U.S. supply 55%

U.S. net imports 45%

Mexico 3% Russia 3% Iraq 2% Colombia 2% Algeria 2% Angola 2% Kuwait 1% U.S. Virgin Islands 1% Ecuador 1% United Kingdom 1% Norway 1%

XOM Energy Outlook US Ed. 2012

For: GCG

The Outlook for Energy: A View to 2040

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Data table and glossary

Regions Energy Demand (Quadrillion BTUs unless otherwise indicated) 1990 2000 2010 2025 2040 Average Annual Change 2010- 2025- 2010- 2025 2040 2040 % Change 2010- 2025- 2010- Share of Total 2025 2040 2040 2010 2025 2040 UNITED STATES Primary 81 96 94 94 89 0.0% -0.4% -0.2% 0% -5% -6% 100% 100% 100% Oil 35 40 38 35 31 -0.5% -0.9% -0.7% -7% -13% -19% 40% 38% 35% Gas 17 22 22 27 28 1.3% 0.3% 0.8% 21% 5% 27% 23% 28% 32% Coal 18 22 20 13 6 -2.6% -4.7% -3.7% -33% -52% -67% 21% 14% 7% Nuclear 6 8 9 10 13 1.1% 1.5% 1.3% 17% 25% 46% 9% 11% 14% Biomass/Waste 2 3 3 3 3 0.6% 0.0% 0.3% 9% 0% 9% 3% 3% 3% Hydro 1 1 1 1 1 2.0% 0.3% 1.2% 34% 5% 41% 1% 1% 1% Other Renewables 1 1 2 4 7 5.3% 3.0% 4.2% 118% 57% 242% 2% 4% 7% End-Use Demand (including electricity) Total End-Use 61 72 70 71 68 0.1% -0.3% -0.1% 1% -5% -3% 100% 100% 100% Residential/Commercial 15 18 19 20 20 0.2% 0.0% 0.1% 3% 0% 3% 27% 28% 29% Transportation 22 27 27 26 25 -0.2% -0.5% -0.3% -3% -7% -10% 39% 37% 36% Industrial 24 27 24 25 24 0.3% -0.4% 0.0% 5% -6% -1% 34% 35% 35% Memo: Electricity Demand 9 12 13 16 17 1.1% 0.7% 0.9% 19% 11% 31% 19% 22% 26% Electricity Generation Fuel 29 37 38 39 39 0.2% -0.1% 0.1% 4% -1% 3% 40% 41% 44% 4.9 5.7 5.5 5.0 4.0 -0.7% -1.4% -1.1% -10% -19% -27% CO2 Emissions, Billion Tons NORTH AMERICA Primary 95 114 113 116 112 0.2% -0.3% 0.0% 3% -4% -1% 100% 100% 100% Oil 42 49 47 45 40 -0.3% -0.7% -0.5% -4% -10% -14% 42% 39% 36% Gas 21 26 27 34 36 1.6% 0.4% 1.0% 26% 6% 34% 24% 29% 32% Coal 20 23 21 14 7 -2.6% -4.7% -3.6% -32% -51% -67% 19% 12% 6% Nuclear 7 9 10 12 14 1.2% 1.3% 1.3% 20% 21% 45% 9% 10% 13% Biomass/Waste 3 4 3 4 3 0.5% -0.3% 0.1% 7% -4% 3% 3% 3% 3% Hydro 2 2 2 3 3 1.3% 0.3% 0.8% 21% 4% 27% 2% 2% 3% Other Renewables 1 1 2 5 8 5.3% 3.1% 4.2% 118% 59% 247% 2% 4% 7% End-Use Demand (including electricity) Total End-Use 73 86 86 90 88 0.3% -0.2% 0.1% 5% -2% 2% 100% 100% 100% Residential/Commercial 18 22 23 24 24 0.3% 0.0% 0.2% 5% 0% 5% 26% 26% 27% Transportation 25 31 32 32 31 0.0% -0.2% -0.1% 0% -3% -3% 37% 36% 35% Industrial 30 34 31 34 33 0.6% -0.2% 0.2% 9% -3% 5% 36% 38% 38% Memo: Electricity Demand 11 15 16 19 21 1.3% 0.7% 1.0% 21% 11% 34% 18% 21% 24% Electricity Generation Fuel 33 42 43 46 46 0.4% 0.0% 0.2% 6% 0% 6% 38% 39% 41% 5.6 6.6 6.4 6.0 5.1 -0.4% -1.2% -0.8% -6% -16% -21% CO 2 Emissions, Billion Tons WORLD Primary 360 416 522 654 705 1.5% 0.5% 1.0% 25% 8% 35% 100% 100% 100% Oil 137 158 178 208 223 1.1% 0.5% 0.8% 17% 7% 26% 34% 32% 32% Gas 72 89 115 160 189 2.2% 1.1% 1.7% 39% 18% 65% 22% 24% 27% Coal 86 90 134 156 131 1.0% -1.2% -0.1% 17% -16% -2% 26% 24% 19% Nuclear 21 27 29 41 59 2.4% 2.5% 2.4% 42% 45% 106% 5% 6% 8% Biomass/Waste 36 41 49 55 55 0.8% 0.0% 0.4% 13% 0% 14% 9% 8% 8% Hydro 7 9 12 16 19 2.3% 1.1% 1.7% 40% 18% 66% 2% 2% 3% Other Renewables 1 3 7 18 29 6.4% 3.3% 4.8% 152% 63% 311% 1% 3% 4% End-Use Demand (including electricity) Total End-Use 290 327 404 501 540 1.5% 0.5% 1.0% 24% 8% 34% 100% 100% 100% Residential/Commercial 87 98 116 138 148 1.2% 0.5% 0.8% 19% 7% 28% 29% 28% 27% Transportation 65 81 99 124 141 1.5% 0.9% 1.2% 25% 14% 43% 24% 25% 26% Industrial 138 149 189 240 250 1.6% 0.3% 0.9% 27% 4% 32% 47% 48% 46% Memo: Electricity Demand 35 45 63 94 117 2.7% 1.5% 2.1% 50% 24% 87% 15% 19% 22% Electricity Generation Fuel 118 144 192 258 292 2.0% 0.8% 1.4% 34% 13% 52% 37% 39% 41% 21.3 23.6 30.5 36.7 36.3 1.2% -0.1% 0.6% 20% -1% 19% CO2 Emissions, Billion Tons

Glossary
ExxonMobils Outlook for Energy contains global projections through 2040. In the Outlook, we refer to standard units for the measurement of energy: Billions of cubic feet per day (BCFD). This is used to measure volumes of natural gas. One billion cubic feet per day of natural gas can heat approximately 5 million homes in the U.S. for one year. Six billion cubic feet per day of natural gas is equivalent to about 1 million oil-equivalent barrels per day. BTU. British thermal unit. A BTU is a standard unit of energy that can be used to measure any type of energy source. It takes approximately 400,000 BTUs per day to run the average North American household. (Quad refers to quadrillion BTUs.) Watt. A unit of electrical power, equal to one joule per second. A 1-gigawatt power plant can meet the electricity demand of more than 500,000 homes in the U.S. (Kilowatt (KW) = 1,000 watts; Gigawatt (GW) = 1,000,000,000 watts; Terawatt (TW) = 10 watts). Three hundred terawatt hours is equivalent to about 1 quadrillion BTUs (Quad).
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Millions of oil-equivalent barrels per day (MBDOE). This term provides a standardized unit of measure for different types of energy sources (oil, gas, coal, etc.) based on energy content relative to a typical barrel of oil. One million oil-equivalent barrels per day is enough energy to fuel about 5 percent of the vehicles on the worlds roads today.

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exxonmobil.com/energyoutlook

Rounding of data in the Outlook may result in slight differences between totals and the sum of individual components.

The Outlook for Energy includes Exxon Mobil Corporations internal estimates and forecasts of energy demand, supply, and trends through 2040 based upon internal data and analyses as well as publicly available information from external sources including the International Energy Agency. This report includes forward looking statements. Actual future conditions and results (including economic conditions, energy demand, energy supply, the relative mix of energy across sources, economic sectors and geographic regions) could differ materially due to changes in technology, the development of new supply source, political events, demographic changes, and other factors discussed herein and under the heading Factors Affecting Future Results in the Investors section of our website at www.exxonmobil.com. This material is not to be used or reproduced without the permission of Exxon Mobil Corporation. All rights reserved.

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