Due to the ongoing surge of shale oil development, the U.S. Energy Information Administration sharply raised its annual output forecasts today with the release of its Annual Energy Outlook 2014 Reference Case report.

According to the EIA report, U.S. crude oil production will approach a record by 2016, reaching its highest level in 46 years as rising output from shale formations boosts domestic supplies, thereby diminishing the nation's need to import foreign oil.

Domestic output will grow annually by about 800,000 barrels a day and will reach 9.5 million barrels in 2016, nearly matching the record level produced in 1970, according to the report. In addition, natural gas production will grow 56% to 37.6 trillion cubic feet by 2040, boosting exports of liquefied natural gas to 3.5 trillion cubic feet.

EIA Administrator Adam Sieminski noted that the report "shows that 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 natural gas exports."

Sieminski said the growth in shale gas production "is going to allow for considerable increases in consumption in the industrial sector" and that some time during the 2030s, natural gas will surpass coal as the No. 1 source of electricity generation.

The report further notes that low natural gas prices will continue to boost natural gas-intensive industries. Industrial shipments are expected to grow at 3.0% per year over the first 10 years of the projection and then slow to 1.6% annual growth through 2040.

Bulk chemicals and metals-based durables account for much of the increased growth in industrial shipments, according to the report. Industrial shipments of bulk chemicals, which benefit from an increased supply of natural gas liquids, are projected to grow by 3.4% per year from 2012 to 2025.