U.S. forecasts natural gas boom through 2040

America's energy boom will continue for decades, and natural gas will replace coal as the largest source of U.S. electricity by 2040, the Department of Energy forecast today.

U.S. production of crude oil will increase through 2016, when it will approach the record set in 1970, before leveling off and then slowly declining after 2020. Natural gas production will grow steadily, jumping 56% between 2012 and 2040, according to an early release of an annual report by DOE's Energy Information Administration.

"Advanced technologies for crude oil and natural gas production are continuing to increase domestic supply and reshape the U.S. energy economy as well as expand the potential for U.S. natural gas exports," Adam Sieminski, EIA Administrator, said in releasing the Annual Energy Outlook 2014.

This energy bonanza is largely due to the combined use of horizontal drilling and hydraulic fracturing or fracking, which releases oil and gas from shale deposits by blasting chemical-laced water underground to break up the rock. Yet fracking faces growing criticism as some scientists link leftover fracking fluids to groundwater contamination.

Top 10 Casino Stocks To Own For 2015

EIA's 2014 forecast says low prices will make natural gas increasingly attractive so in some areas, it will replace power once supplied by nuclear or coal plants. In 2040, it expects natural gas will account for 35% of the nation's electricity generation while coal will account for 32%.

Two other trends will also intensify: more efficient cars and light trucks will reduce energy use while renewable sources such as solar and wind will produce more power. The result: The United States will export more energy and import less. The net import share of U.S. energy consumption could drop to as little as 4% by 2040 -- down from 16% in 2012 and 30% in 2005..

The 2014 forecast sees a more robust U.S. energy market than did its! 2013 counterpart. But it offers only one scenario, known as the "reference case," that assumes current laws and regulations will remain generally unchanged through 2040. Next year, EIA will release a complete forecast, offering varying scenarios that account for pending proposals.

For example, the U.S. Environmental Protection Agency has proposed to limit greenhouse gas emissions from new power plants -- a rule that would disproportionately affect coal-fired plants and further impede their ability to compete on price.

The 2014 forecast has good news for U.S. energy-related carbon dioxide emissions. It says they'll remain below their 2005 level through 2040 because of the nation's growing reliance on wind and solar power, which emit no CO2, as well as natural gas-fired plants, which emit considerably less than do coal plants.