U.S. crude oil production will surge faster than expected to a near historic high by 2016, according to the Energy Information Administration, which sharply raised its annual output forecasts due to the breakneck speed of shale oil development.

The EIA's forecasts show that shale will help oil output in the world's largest consumer increase by 800,000 barrels per day every year until 2016, when it will total 9.5 million, just below a 1970 record of 9.6 million. That is some 2 million higher than its forecast in last year's Annual Energy Outlook.

The agency maintained its view that output will start to decline after that, but said production would still be above 9 million in 2025, a million barrels a day more than current production. And the United States would be pumping 7.5 million in 2040, more than last year's 6.1 million forecast.

Crude oil production exceeded 8 million in November for the first time in over two decades.

The higher production will also help tamp down global benchmark Brent crude oil prices, which are now expected to fall to a low of $92 a barrel (in 2012 prices) in 2017, before resuming a rise to $141 in 2040. Last year the EIA forecast a decline to as low as $96 (in 2011 prices) in 2015.

MORE NATURAL GAS

The EIA raised its forecast on natural gas production, also undergoing a shale renaissance, to 31.9 trillion cubic feet by 2025 from the 28.7 it had forecast last year, and to 37.6 by 2040 against the 33.2 touted earlier.

The 2040 total annual gas production number equates to just over 100 billion cubic feet a day from around 70 now.

While oil production will plateau after 2016 and start to gradually fall after 2020, natural gas output will increase steadily, growing 56 percent between 2012 and 2040.

U.S. oil and gas output unexpectedly reversed a long decline after companies learned how to unlock production from the tightly-packed shale rock using horizontal wells that are fractured hydraulically.

"EIA's updated reference case 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 U.S. natural gas exports," said EIA Administrator Adam Sieminski.

"Growing domestic hydrocarbon production is also reducing our net dependence on imported oil and benefiting the U.S. economy as natural-gas-intensive industries boost their output," he said in a statement.

LIQUID FUEL IMPORTS

Imports of liquid fuels will fall to 25 percent of total U.S. consumption by 2016, far lower than the EIA's previous forecast of 34 percent by 2019. As oil production begins to fall, that share will increase to 32 percent by 2040, still lower than the 37 percent it expected a year ago.

The country currently imports about 40 percent of the crude and other liquid fuels that it consumes.

Consumption of petroleum and liquid fuels will rise to 19.3 million barrels per day in 2025, but then slip to 18.7 million from 18.5 million in 2012. Natural gas consumption will rise to 28.4 trillion cubic feet by 2025 and to 31.6 in 2040 from 25.6 last year.

And while crude oil exports remain severely limited by law, natural gas exports will continue to rise. The country will become a net natural gas exporter two years sooner than the EIA had previously judged, in 2018.

It will become a net exporter of liquefied natural gas by 2016 with sales abroad rising to 3.5 trillion cubic feet by 2029 and remaining at that level until 2040.

The rise in natural gas production will lower the percentage of electricity that is generated by dirtier coal to 32 percent in 2040 from 37 percent in 2012 and over 50 percent in 2000 as plants switch to using gas.