U.S. Natural Gas Exports:
New Opportunities, Uncertain Outcomes
Michael Ratner
Specialist in Energy Policy
Paul W. Parfomak
Specialist in Energy and Infrastructure Policy
Ian F. Fergusson
Specialist in International Trade and Finance
Linda Luther
Analyst in Environmental Policy
September 17, 2013
Congressional Research Service
7-5700
www.crs.gov
R42074
CRS Report for Congress
Pr
epared for Members and Committees of Congress

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U.S. Natural Gas Exports: New Opportunities, Uncertain Outcomes

Summary
As estimates for the amount of U.S. natural gas resources have grown, so have the prospects of
rising U.S. natural gas exports. The United States is expected to go from a net importer of natural
gas to a net exporter by 2020. Projects to export liquefied natural gas (LNG) by tanker ship have
been proposed—cumulatively accounting for about 41.4% of current gross U.S. natural gas
production—and are at varying stages of regulatory approval. Projects require federal approval
under Section 3 of the Natural Gas Act (15 U.S.C. §717b), with the U.S. Department of Energy’s
Office of Fossil Energy and the Federal Energy Regulatory Commission being the lead
authorizing agencies. Pipeline exports, which accounted for 98% of all exports of U.S. produced
natural gas in 2012, are also likely to continue rising.
What effect exporting natural gas will have on U.S. prices is a central question in the debate over
whether to export. A significant rise in U.S. natural gas exports would likely put upwards pressure
on domestic prices, but the magnitude of any rise is currently unclear. There are numerous factors
that will affect prices: export volumes, economic growth, differences in local markets, and
government regulations, among others. With recent natural gas prices relatively low compared to
global prices and historically low for the United States, producers are looking for new markets for
their natural gas. Producers contend that increased exports will not raise prices significantly as
there is ample supply to meet domestic demand, and there will be the added benefits of increased
revenues, trade, and jobs, and less flaring. Consumers of natural gas, who are being helped by the
low prices, fear prices will rise if natural gas is exported.
Electric power generation represents potentially the greatest increase in natural gas consumption
in the U.S. economy, primarily for environmental reasons. Natural gas emits much less carbon
dioxide and other pollutants than coal when combusted. Other types of consumption are not likely
to increase natural gas demand domestically for a long time. Use in the transportation sector to
displace oil is likely to be small because expensive new infrastructure and technologies would be
required. There is discussion of a possible revival of the U.S. petrochemicals sector, but the
potential extent of a change is unclear.
Getting natural gas to markets where it can be consumed, whether domestically or internationally,
may be the industry’s biggest challenge. Infrastructure constraints, environmental regulations, and
other factors will influence how the market adjusts to balance supply and demand.
Environmental groups are split regarding natural gas use, with some favoring increased use to
curb emissions of certain pollutants, while others oppose expanded use of natural gas because it is
not as clean as renewable forms of energy, such as wind or solar. The use of hydraulic fracturing
to produce shale gas has also raised concerns among environmental groups particularly concerned
with its possible impacts on water quality.
The possibility of a significant increase in U.S. natural gas exports will factor into ongoing
debates on the economy, energy independence, climate change, and energy security. As the
proposed projects continue to develop, policymakers are likely to receive more inquiries about
these projects. Proposals to expedite and expand LNG exports have been raised in the 113th
Congress, including in S. 192 and H.R. 580. Two other bills, H.R. 1189 and H.R. 1191, would
reform the DOE’s process for determining the public interest regarding LNG exports and prohibit
exports of natural gas produced on federal lands.
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U.S. Natural Gas Exports: New Opportunities, Uncertain Outcomes

Contents
Introduction: Things Have Changed ................................................................................................ 5
Background: Natural Gas Exports Are Not New ............................................................................. 6
U.S. Natural Gas Exports to Date .................................................................................................... 9
Pipeline Exports Increase ........................................................................................................ 10
LNG Activity on the Move ...................................................................................................... 11
LNG Re-Exports: A Temporary Fix .................................................................................. 11
Exports of Domestically Produced Natural Gas as LNG .................................................. 11
Trade: Agreements or Disagreements? .............................................................................. 14
The Global LNG Market................................................................................................................ 15
Authorizations to Export LNG ...................................................................................................... 17
DOE and the Public Interest Determination ............................................................................ 18
Compliance with NEPA and Additional Environmental Laws ................................................ 19
New Sources of Natural Gas: The Game Changer ........................................................................ 22
Projected Future Growth ......................................................................................................... 23
Natural Gas Liquids: A Production Driver .............................................................................. 24
Congressional Actions and Considerations .................................................................................... 24
Issues and Interests .................................................................................................................. 25

Figures
Figure 1. U.S. Natural Gas Production, Consumption, and Trade ................................................... 7
Figure 2. Select Global Natural Gas Prices ..................................................................................... 8
Figure 3. Annual U.S. Natural Gas Prices, 1990-2040 .................................................................... 9
Figure 4. U.S. Natural Gas Exports ............................................................................................... 10
Figure 5. Actual and Projected LNG Production Capacity ............................................................ 16
Figure 6. Natural Gas Resources and Reserves ............................................................................. 23
Figure 7. Projected U.S. Natural Gas Production .......................................................................... 24
Figure A-1. Select U.S. Natural Gas Import and Export Infrastructure ......................................... 28
Figure C-1. Natural Gas Hub and City Gate Prices ....................................................................... 30

Tables
Table 1. Proposed North American LNG Export Projects ............................................................. 12
Table B-1. 2012 U.S. Supply and Demand Balances..................................................................... 29

Appendixes
Appendix A. Select U.S. Natural Gas Import and Export Infrastructure ....................................... 28
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U.S. Natural Gas Exports: New Opportunities, Uncertain Outcomes

Appendix B. Supply/Demand Balance .......................................................................................... 29
Appendix C. Natural Gas Hub Map ............................................................................................... 30

Contacts
Author Contact Information........................................................................................................... 31
Acknowledgments ......................................................................................................................... 31

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U.S. Natural Gas Exports: New Opportunities, Uncertain Outcomes

Introduction: Things Have Changed
The United States has exported natural gas for close to 100 years, but has generally exported less
than it has imported (mostly from Canada).1 Within the next five years, the United States may
become a much larger exporter of natural gas, particularly liquefied natural gas (LNG), for the
first time. Increased development of U.S. natural gas resources—primarily shale gas—along with
low domestic prices in recent years and idle LNG import infrastructure, have driven the change in
the U.S. position. As recently as the mid-to-latter 2000s, the United States was projected to be a
growing natural gas importer. However, imports have been declining since 2005, while exports
have been climbing.
U.S. natural gas exports require federal approval pursuant to Section 3 of the Natural Gas Act
(NGA) (15 U.S.C. §717b), with the U.S. Department of Energy’s (DOE) Office of Fossil Energy
and the Federal Energy Regulatory Commission (FERC) being the lead authorizing agencies.
Historically, exports have been primarily via pipeline to Mexico and eastern Canada, but natural
gas companies are now considering exporting greater quantities of U.S. LNG by tanker ship to a
number of other countries. From 1969 to 2012, the United States exported Alaskan LNG almost
exclusively to Japan, but the volumes of those shipments have been relatively small. Furthermore,
Alaska’s natural gas market has been, and continues to be, isolated from the rest of the United
States. The prospect of the United States supplying a global market with large quantities of LNG
from the lower 48 states raises concerns in Congress, particularly about a potential rise in what
U.S. consumers pay for natural gas and effects on the economy.2
Developers of natural gas export projects and natural gas producers argue that domestic gas prices
will not rise much, or significantly, if U.S. natural gas exports increase because the United States
has ample gas resources to meet domestic demand. Further, they argue there will be economic
benefits such as increased employment and an improved trade balance. Other stakeholders
disagree, fearing that such exports could cause domestic natural gas prices to rise thereby hurting
the economy. Some environmental groups fear that increased exports will cause more shale gas
production, which they are against. DOE has used the results of two studies it commissioned
about the impact on domestic gas prices of exports and the effect on the U.S. economy to justify
the approval of projects.
U.S. natural gas prices are lower than those in other international markets, partly because of the
competitive nature of the U.S. market. Nevertheless, natural gas prices within the United States
vary by regional market because of transportation limitations, access to supplies, and differences
in demand. As new volumes of shale gas are developed, these supplies will seek markets where
little or no natural gas production has existed in the past. Over time, the U.S. natural gas market
will reconfigure itself to balance supply and demand regionally and nationally. But getting new
natural gas supplies to market may be an ongoing challenge for the industry, whether within the
United States or abroad. Infrastructure constraints, such as the availability of pipelines,

1 CRS held a seminar on LNG exports on March 1, 2013, for congressional staff. The seminar video is available for
staff on the CRS website, http://www.crs.gov/programs/Pages/RecordedEventDetail.aspx?PRODCODE=WRE00058.
2 Exports of natural gas from Alaska are viewed differently as those resources are isolated from the rest of the U.S.
market because natural gas prices in the lower 48 do not justify building the required infrastructure to transport natural
gas via pipeline or as LNG. Additionally, there may not be any, Jones Act-compliant LNG tankers to transport natural
gas to the market in the lower 48 states. In DOE’s analysis of U.S. LNG exports, it has not factored LNG exports from
Alaska into its analysis regarding impacts on the U.S. economy and domestic prices.
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U.S. Natural Gas Exports: New Opportunities, Uncertain Outcomes

environmental regulations, and other regulatory requirements will play a part in how the natural
gas market adjusts. Exports of natural gas either by pipeline or as LNG will be a factor as the
market seeks balance, especially on a regional basis. Hence the potential export of more U.S.
natural gas may have economic effects that vary significantly from region to region, and regional
impacts may diverge from impacts on the nation as a whole.
Other issues have also been raised regarding natural gas exports. Environmental groups are
divided on the desirability of greater use of natural gas at home and abroad. Advocates see it as
reducing emissions compared to other hydrocarbons, whereas opponents point out that natural gas
still emits carbon dioxide and other pollutants 
. Concerns about contamination of water supplies
during gas production have been raised because of the use of hydraulic fracturing (“fracking”),
the technique for extracting shale gas which uses water, sand, and chemicals to create fissures in
shale, allowing the trapped natural gas to be cost-effectively extracted.3 Other groups want to see
greater use of natural gas in the U.S. economy for economic and national security concerns before
it is exported overseas.4
The prospect of growing U.S. natural gas exports, particularly LNG, portends to be a factor as
Congress debates the economy, energy independence, climate change, and energy security. Bills
to expedite and expand LNG exports have been introduced in the 113th Congress, including S.
192 and H.R. 580. Two other bills, H.R. 1189 and H.R. 1191, would reform the DOE’s process
for determining the public interest regarding LNG exports and prohibit exports of natural gas
produced on federal lands. This report examines what has changed in the U.S. natural gas market
and the prospects and implications of the United States becoming a significant net natural gas
exporter.
Background: Natural Gas Exports Are Not New
Heading into the 2000s, the United States was expected to be a growing importer of natural gas
because domestic production was declining and demand was rising (see Figure 1). The U.S.
Energy Information Administration (EIA) in its 1999 Annual Energy Outlook forecasted that net
natural gas imports would grow between 1997 and 2020 from 12.9% of consumption to 15.5%,
based on consumption growing faster than production.5 To accommodate the potential increase in
imports, five new LNG import terminals were built by industry in the latter half of the 2000s and
some existing facilities were re-commissioned and expanded. The United States currently has
LNG import capacity of almost 14 billion cubic feet per day (bcf/d) or over five trillion cubic feet
(tcf) per year. However, higher domestic production—mainly from shale gas development—has
made imports largely unnecessary, leaving existing import capacity mostly idle. (See Table B-1
for the U.S. supply and demand balance.) In its Annual Energy Outlook 2013 Early Release, EIA
projects that the United States will be a net LNG exporter by 2016 and a net natural gas exporter
by 2020.6

3 For additional information and analysis of shale gas and fracking see CRS Report R41760, Hydraulic Fracturing and
Safe Drinking Water Act Regulatory Issues, by Mary Tiemann and Adam Vann.
4 For additional information about natural gas and the U.S. economy see CRS Report R42814, Natural Gas in the U.S.
Economy: Opportunities for Growth , by Robert Pirog and Michael Ratner
5 U.S. Energy Information Administration (EIA), Annual Energy Outlook 1999 with Projections to 2020, DOE/EIA-
0383(99), Washington, DC, December 1998, p. 71, http://www.eia.gov/oiaf/archive/aeo99/pdf/0383(99).pdf.
6 U.S. Energy Information Administration, Annual Energy Outlook 2013 Early Release, DOE/EIA-0383ER(2013),
(continued...)
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The abundance of new domestic natural gas supplies shifted industry interest from building LNG
import terminals to constructing LNG export terminals. As of September 2013, there have been
31 applications for permits to construct liquefaction facilities at existing LNG import terminals
(also known as regasification facilities) or for new LNG export facilities in order to export
domestically produced natural gas as LNG. (See Table 1.) The total capacity proposed is
approximately 33.8 bcf/d. Additionally, seven companies have active permits and one other has
been approved to re-export LNG cargos (take in foreign cargos, hold in storage, and then reload
onto LNG tankers to go to foreign markets) from import terminals. Increased pipeline exports to
Canada7 and Mexico may also continue to rise if their domestic demand continues to increase.
Figure 1. U.S. Natural Gas Production, Consumption, and Trade
Historical and Projected Data

Source: EIA natural gas databases, http://www.eia.doe.gov/naturalgas/data.cfm, and EIA’s Annual Energy Outlook
2013 Early Release, Natural Gas Section, reference case, http://www.eia.gov/oiaf/aeo/tablebrowser/.
Notes: Consumption equals Production, Net Imports, and Storage, but because of negative storage numbers for
injection of natural gas into facilities the Consumption line in the graph does not exactly align with the sum of its
parts. Exports of natural gas include the re-export of LNG cargos that comprise third-country natural gas
supplies. Units are billion cubic feet (bcf) per year. Historical data are from 2011 and earlier.
Low U.S. natural gas prices relative to other international markets have spurred interest in
exporting U.S. produced natural gas (see Figure 2). What effect exporting natural gas will have
on U.S. prices and the overall U.S. economy are central questions in the debate over whether to
export. DOE commissioned two studies as part of its evaluation of whether LNG exports to non-
free-trade-agreement (non-FTA) countries are in the public interest (see “DOE and the Public
Interest Determination”).

(...continued)
Washington, DC, December 5, 2012, http://www.eia.gov/oiaf/aeo/tablebrowser/#release=AEO2013ER&subject=8-
AEO2013ER&table=13-AEO2013ER&region=0-0&cases=early2013-d102312a.
7 For additional information on the U.S.-Canada energy relationship see CRS Report R41875, The U.S.-Canada Energy
Relationship: Joined at the Well, by Paul W. Parfomak and Michael Ratner.
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U.S. Natural Gas Exports: New Opportunities, Uncertain Outcomes

Figure 2. Select Global Natural Gas Prices
Nominal dollars

Source: BP Statistical Review of World Energy, 2013, June 2013, p. 27. http://www.bp.com/sectionbodycopy.do?
categoryId=7500&contentId=7068481.
Notes: The German Border Price is a proxy for European oil indexed prices. Units = U.S. dollar per million
British thermal units (MBtu). NBP is the market price in the United Kingdom referred to as the National
Balancing Point.
The most recent EIA projections show the United States becoming a net LNG exporter in 2016
and an overall net natural gas exporter in 2020. The price projections, which extend to 2040,
never reach the annual average high reached in 2008 (see Figure 3).
Lower natural gas prices since 2008 along with a large and growing resource base have prompted
calls for greater use of natural gas in the U.S. fuel mix. This is one of the key arguments against
exporting U.S. natural gas. Natural gas comprised about 30% of U.S. primary energy
consumption last year and has averaged 24% per year since 1973. Instead of exporting U.S.
natural gas, some say, the United States should increase use of natural gas in the electric power
sector to displace coal, as an alternative transportation fuel to displace oil, and to provide fuel and
feedstock to domestic industries such as petrochemicals. Some transition to natural gas is already
occurring, particularly in the electric power sector.8


8 For additional information about natural gas in electrical power generation, see CRS Report R42950, Prospects for
Coal in Electric Power and Industry, by Richard J. Campbell, Peter Folger, and Phillip Brown.
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Figure 3. Annual U.S. Natural Gas Prices, 1990-2040
Nominal dollars

Source: EIA’s natural gas price database, http://www.eia.gov/dnav/ng/hist/n9190us3a.htm and EIA’s Annual
Energy Outlook 2013 Early Release, Natural Gas Section, reference case, http://www.eia.gov/oiaf/aeo/
tablebrowser/.
Notes: Prices reflect the average price at the wellhead in the lower 48. Projections are for 2011 forward. Units
are dollars per thousand cubic feet ($/1,000 cu ft) in 2009 dollars.
U.S. Natural Gas Exports to Date
Total U.S. natural gas exports are relatively small but have grown since 1999, increasing more
than nine-fold through 2012. The United States has been exporting natural gas since at least the
1930s, primarily to Canada and Mexico.9 In 2012, 98% of exports were by pipeline to Canada
and Mexico. Starting in 1969, a small amount of natural gas was also exported as LNG via the
Kenai LNG terminal in Nikiski, Alaska. Kenai LNG operated continuously from its opening until
its idling in 2012, and remains the only LNG export facility in North America. Production of
natural gas in the Cook Inlet of Alaska that supplies natural gas to Kenai LNG has declined too
much to keep the facility operating.10
In 2010, the United States, through DOE’s Office of Fossil Energy, allowed LNG import
terminals to receive cargos of LNG, store the LNG, and to re-export the LNG to international
markets. Seven companies have received permits to re-export LNG with four pending. This
explains the “Other LNG” category that emerged in 2010 (see Figure 4). Prior to 2010, LNG
exports had declined steadily since 2005. Growing U.S. natural gas production, primarily from
shale gas, has decreased the demand for both pipeline imports and LNG imports, leaving the
import terminals mostly idle. Additionally, eight of the import terminals have applied for licenses
to construct liquefaction facilities to export domestically produced LNG, while there are 23

9 Data are unavailable earlier than the 1930s and distinguished by country since the 1950s.
10 The facility has not been dismantled, but is being maintained. It is possible that the facility could reopen if Alaskan
natural gas production increases in the future.
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applications for new liquefaction facilities, including floating facilities (see Table 1). In some
cases companies that have partnered in a facility have both applied for licenses, but the volumes
are only included once in DOE’s data.
Figure 4. U.S. Natural Gas Exports
1980-2012

Source: EIA natural gas exports database, http://www.eia.doe.gov/dnav/ng/ng_move_expc_s1_a.htm.
Notes: LNG exports by volume are negligible to other countries besides Japan. Other LNG includes volumes
that are re-exported from the United States after being imported from third countries. Units are billion cubic
feet (bcf) per year.
Pipeline Exports Increase
Natural gas exports by pipeline have risen since 1999, increasing over 16 times through 2012 and
accounting for about 98% of total natural gas exports last year. Canada and Mexico, both free
trade partners, are the only recipients of U.S. natural gas exports by pipeline. As countries with
which the United States has free trade agreements (FTAs), exports of natural gas to both are
assumed to be in the national interest by statute, thereby expediting the approval process for
projects. The St. Clair, MI, transit point to Canada and the Roma, TX, transit point to Mexico are
the busiest for U.S. natural gas exports (see Figure A-1).
Gross exports to Canada and Mexico have both increased since 1999, growing 25-fold and 10-
fold, respectively. In 2012, Mexico’s imports jumped almost 25% over the previous year.
Facilitated by the 1994 North American Free Trade Agreement, new cross border natural gas
pipelines have expedited the trade. Canadian natural gas production has declined almost 17%
since peaking in 2002, but still remains above the level of Canadian consumption. Some of
Canada’s imports of natural gas from the United States are from gas produced in Canada’s
western provinces, imported into the United States, and re-exported to Canada’s eastern
provinces. This is a cost-effective way to transport the natural gas given pipeline constraints
within Canada. Mexican natural gas consumption has increased about 80% since 2002, growing
more than production.
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LNG Activity on the Move
U.S. LNG exports started in 1969 with the opening of the Kenai LNG export terminal in Nikiski,
Alaska. Japan, the world’s largest LNG importer in 2011, received almost 100% of U.S. LNG
exports until recent years. The project has not been expanded from its inception and remains the
only U.S. LNG export facility. From 2005 to 2010, exports from Kenai LNG declined almost
50% due to depletion of its natural gas supply. The facility is being maintained, but no gas is
flowing through it.
LNG Re-Exports: A Temporary Fix
Starting in 2010, DOE’s Office of Fossil Energy, according to provisions in the Natural Gas Act,
authorized LNG import terminals to receive LNG cargos from foreign countries and then re-
export the LNG to other countries. Some LNG exporters try to take advantage of the idle U.S.
import terminals and storage to wait for higher world prices. This trend almost doubled U.S. LNG
exports to other countries, including new recipients Brazil, India, Spain, and the United Kingdom.
Using the facilities for re-export helps maintain their operating capabilities in light of
significantly decreased use to import LNG. Currently, seven companies have received permission
to re-export LNG cargos from foreign countries with four applications pending.11
In order to re-export LNG, minimal or no additional equipment may need to be added to an
import terminal. As mentioned above, DOE’s Office of Fossil Energy must approve the change as
does FERC.
Exports of Domestically Produced Natural Gas as LNG
There have been 31 applications for permits to export domestically produced natural gas as LNG,
with a cumulative capacity of almost 12,344 billion cubic feet (bcf) per year or almost 50% of
current U.S. production.12 Eight of these liquefaction projects plan to adapt an existing LNG
import terminal for export, which would require construction of liquefaction facilities at the
import terminals, a major financial investment, with cost estimates ranging from $6 billion to $10
billion per terminal, mostly depending on capacity size. The other projects would construct new
LNG export terminals, costing in the range of $20 billion each. Almost all the projects have
received approval to export to free trade countries, but only the Sabine Pass Liquefaction (only its
first application), Freeport LNG Expansion (only its first application), Lake Charles, and
Dominion Cove Point projects have received DOE approval to export U.S. produced natural gas
to non-free-trade countries.13 Of the FTA countries, only Canada, Chile, Dominican Republic,
Mexico, and South Korea have existing LNG import terminals. South Korea is the second-largest
importer of LNG globally.

11 Department of Energy, Office of Fossil Energy, Status of Short-Term Applications to Export Previously Imported
LNG, March 5, 2013, http://fossil.energy.gov/programs/gasregulation/reports/Previously_Imported_LNG.pdf.
12 DOE, Office of Fossil Energy, Authorizations Database, Washington, DC, January 30, 2013, http://fossil.energy.gov/
programs/gasregulation/reports/summary_lng_applications.pdf.
13 Free Trade Agreement countries that require national treatment include Australia, Bahrain, Canada, Chile,
Dominican Republic, El Salvador, Guatemala, Honduras, Jordan, Mexico, Morocco, Nicaragua, Oman, Peru,
Singapore, and South Korea.
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Table 1. Proposed North American LNG Export Projects


Status
Volume
DOE
FERC/
Company Location
(bcf/d)
FTA/non-FTA
MARAD
Construction
Sabine Pass
Louisiana 2.2 Approved/Approved
Approved
Approved
Liquefaction
Freeport LNG
Texas 1.4
plus
Approved/Approved
Pending
Expansion and FLNG
1.4
Liquefactiona
Approved/Pending
Lake Charles Exportsb Louisiana
2.0
Approved/Approved
Pending

Carib Energyc Not 0.03 to
Approved/Pending

Applicable
FTA
0.01 to
non-FTA
Dominion Cove Point
Maryland 1.0 Approved/Approved
Pending

LNG
Jordan Cove Energy
Oregon
1.2 to FTA
Approved/Pending Pending

Project
0.8 to
non-FTA
Cameron LNG
Louisiana
1.7
Approved/Pending
Pending

Gulf Coast LNG
Texas 2.8 Approved/Pending

Export
Gulf LNG Liquefaction
Mississippi
1.5
Approved/Pending


LNG Development
Oregon 1.25 Approved/Pending Pending
Company (Oregon
LNG)
SB Power Solutionsc Not
0.07 Approved/Not
Applicable

Applicable
Southern LNG
Georgia 0.5 Approved/Pending
Pending
Company
Excelerate Liquefaction
Texas 1.38 Approved/Pending
Pending
Solutions
Golden Pass Products
Texas
2.6
Approved/Pending
Pending

Cheniere
Marketing
Texas 2.1 Approved/Pending
Pending
Main Pass Energy Hubd Offshore
3.22 Approved/Not
Applicable

Louisiana
CE FLNG
Louisiana
1.07
Approved/Pending
Pending

Wal er LNG Services
Louisiana
0.16
Approved/Not Applicable


Pangea LNG (North
Texas 1.09 Approved/Pending

America) Holdings
Magnolia LNG
Louisiana
0.54
Approved/Not Applicable
Pending

Trunkline LNG Exportb Louisiana
2.0
Approved/Pending
Pending

Gasfin Development
Louisiana 0.2 Approved/Not
Applicable


USA
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Status
Volume
DOE
FERC/
Company Location
(bcf/d)
FTA/non-FTA
MARAD
Construction
Freeport-McMoRan
Offshore
3.22 Approved/Pending

Energyd
Louisiana
Sabine Pass
Louisiana 0.28 Approved/Pending


Liquefactione
Sabine Pass
Louisiana 0.28 Approved/Pending


Liquefactione
Venture Global LNG
Louisiana
0.67
Pending/Pending


Advanced Energy
Florida 0.02
Pending/Not
Applicable

Solutionsc
Argent Marinec NA 0.003
Pending/Not
Applicable

Eos LNGd Texas
1.6
Pending/Pending

Barca LNGd Texas
1.6
Pending/Pending
Source: Department of Energy, Office of Fossil Energy, Natural Gas Regulatory Responsibilities databases,
http://fossil.energy.gov/programs/gasregulation/reports/summary_lng_applications.pdf.
Notes:
a. DOE received a new application from FLEX to add 1.4 bcf/d of capacity at the Freeport LNG terminal for
both FTA and non-FTA countries.
b. Lake Charles Exports and Trunkline LNG Export have both filed to export LNG from the Lake Charles
Terminal. The 2.0 bcf/d volumes are not additive.
c. Project will use cryogenic containers to export LNG in smal amounts on cargo ships and does not need a
specialized export terminal like the other projects.
d. Main Pass Energy Hub, LLC (LCE) and Freeport McMoRan Energy LLC (FME) have both filed to export
from the Main Pass Energy Hub. The 3.22 bcf/d volumes are not additive and only FME includes exports to
non-FTA countries. As an offshore facility project, these companies have applied to the Maritime
Administration (MARAD), which improves offshore facilities instead of FERC.
e. This is an expansion of the Sabine Pass Liquefaction project at the top of the table.
Adding liquefaction capacity will require new infrastructure to be added to the existing import
terminals. The modification or expansion of existing facilities, including liquefaction trains,
storage tanks, compressors, piping, and other equipment, will require authorization from FERC.
Depending on the nature of individual facility modifications, compliance with additional state or
federal statutory or regulatory requirements may also be required. For example, facility
modifications would be subject to some level of environmental review pursuant to the National
Environmental Policy Act (NEPA). Potential regulatory requirements are discussed below (see
“Authorizations to Export LNG”).
Natural gas in Alaska is also attracting attention as a possible source for exports. The cost of
producing and transporting Alaskan natural gas to the lower 48 for consumption is high when
compared with current U.S. prices. As Alaskan oil production declines, companies may seek to
monetize or sell their natural gas, which is typically re-injected into oil wells to boost production.
There are also new potential natural gas supplies in Alaska that may be more conducive to export
compared to North Slope natural gas. Potential Alaskan projects have not been included in the
DOE-sponsored studies on exports as Alaska is considered an independent market from the
lower 48.
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Trade: Agreements or Disagreements?
Most companies seeking permits to export LNG have applied to export LNG to countries with
which the United States does not have a free trade agreement (FTA) in addition to those with
which the United States does have an FTA. As mentioned above, exports to FTA countries are
presumptively considered “in the national interest” under the Natural Gas Act, as amended. Five
of those applications are pending with DOE. Of the 33.8 bcf/d of capacity applied for export by
companies, 32.4 bcf/d or 96% is seeking or has received approval to export to non-FTA countries.
As noted above, South Korea is the only major importer of LNG of the countries with which the
United States has a free trade agreement. Of the other FTA countries, four have LNG import
terminals, while the rest export natural gas, receive natural gas via pipeline, or do not import
natural gas. In order for LNG export projects to be financially viable, they will likely need the
ability to export to non-FTA countries.
The United States is in negotiations on two multi-nation free trade agreements: the Trans-Pacific
Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).14 Both these
agreements would give the signatories free trade status when it comes to U.S. natural gas exports.
TPP includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru,
Singapore, and Vietnam. Japan is the largest LNG importer in the world and would add
significantly to potential markets for U.S. LNG exports. Of the four U.S. LNG export projects
that have received approval to export to non-FTA countries, Japanese companies have signed
contracts with two of the projects. Japanese companies also have signed contracts with at least
two of the pending export projects. Japan was a late participant in TPP process; one of its
motivations for joining was access to U.S. LNG exports.15 TTIP is a proposed agreement between
the United States and the European Union. Among other negotiating objectives, the EU may seek
to gain access to U.S. LNG through the TTIP to lessen its dependence on Russian and other
sources of natural gas.
The prospect of the United States limiting or restricting LNG exports has raised questions,
particularly as a member of the World Trade Organization (WTO). The General Agreement on
Tariffs and Trade’s (GATT) Article XI, General Prohibition Against Quantitative Restraints,
states:
No prohibition or restrictions other than duties, taxes or other charges made effective through
quotas, import or export licenses or other measures, shall be instituted or maintained by any
contracting party on the importation of any product of the territory of any other contracting
party or on the exportation or sale for export of any product destined for the territory of any
other contracting party.
There are exceptions to Article XI based on the conservation of exhaustible natural resources or
the necessity to protect human health, which may apply if the United States restricts LNG
exports.16 However, these exceptions may be dependent on a country restricting its own
production. Additionally, restricting LNG exports may put the United States in a contradictory

14 For additional information on the two agreements see CRS Report, The Trans-Pacific Partnership Negotiations and
Issues for Congress, by Ian F. Fergusson and CRS Report R43158, Proposed Transatlantic Trade and Investment
Partnership (TTIP): In Brief, by Shayerah Ilias Akhtar and Vivian C. Jones.
15 Discussion with Amb. Koji Tsuruoka, Chief Negotiator for the Trans-Pacific Strategic Economic Partnership, August
6, 2013.
16 See GATT Article XX.
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position vis-à-vis cases it has brought to the WTO, specifically against China for limiting the
export of rare earths and other metals. The position of the United States as a promoter of free
trade may also be challenged.
Natural gas imports and exports comprise a small fraction of overall U.S. international trade,
totaling about $22 billion in 2012, with about two-thirds of the value coming from imports.17 The
United States was a net importer of natural gas of almost $8 billion. LNG imports and exports
accounted for 13% of the trade. Since 2000, the value of exports has averaged almost $2.5 billion
per year while imports averaged over $20 billion.18
The Global LNG Market
If all the proposed U.S. LNG export projects were operational today, the United States would
rank first in the world for global export capacity. However, U.S. LNG exports will face
competition in the global LNG market. According to one study, global liquefaction capacity is
projected to rise by almost 50% by 2020 (see Figure 5), including only one of the U.S. projects.
Many non-U.S. projects are much further along than the U.S. projects. LNG trade slightly
dropped year-on-year in 2012, accounting for 32% of all natural gas traded internationally.19 Most
LNG sold in the world is under long-term contracts, indexed to oil prices. The long-term
contracts are needed to finance the liquefaction facilities, usually the most expensive part of the
LNG supply chain, which includes LNG tankers, storage, and LNG import terminals. U.S. natural
gas prices are market-based, which should give U.S. LNG export projects an advantage as the
differential with oil-indexed-priced natural gas can be more than double the U.S. price (see
Figure 2). U.S. LNG exports could add to the pressure for other countries to delink their natural
gas exports—either as LNG or by pipeline—from oil-indexed prices. Japanese companies have
been vocal about their interest in a natural gas-based pricing mechanism to reduce costs and
exposure to oil prices. However, U.S. LNG export projects will still need to enter into long-term
supply contracts, usually 20 to 30 years, to obtain financing, which may be a difficult hurdle to
overcome given existing market and financial conditions. Providing LNG to countries that use oil
for heating, industrial processes, or electricity generation could also decrease demand for
petroleum products, putting downward pressure on oil prices.

17 U.S. Energy Information Administration, U.S. Imports by Point of Entry and U.S. Exports by Point of Exit,
Washington, DC, January 31, 2013, http://www.eia.gov/naturalgas/data.cfm#imports.
18 Bureau of Economic Analysis, Department of Commerce, Trade in Goods databases, June 14, 2010,
http://www.bea.gov/agency/uguide1.htm#_1_19.
19 BP Statistical Review of World Energy 2013, June 2013, p. 29.
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Figure 5. Actual and Projected LNG Production Capacity
2000-2020

Source: PIRA Energy Group.
Notes: This graphic includes projects that are operating, under construction, or have reached a final investment
decision. The only new U.S. project included is Cheniere’s Sabine Pass terminal. The other proposed U.S.
projects are considered speculative at this point. Units = billion cubic feet per day (bcf/d).
The dip in 2012 in Figure 5 is due to major declines in Algeria, Trinidad & Tobago, Oman, and
Indonesia. Algeria’s two export terminals have been undergoing maintenance and one is being
rebuilt. Trinidad & Tobago’s decline is mostly because the United States is no longer a big
importer of LNG. Egypt and Libya declined because of the turmoil in those countries.
Many of the projected projects in Figure 5 are targeting the Asian LNG demand centers.
Although the locations of most of the proposed U.S. export terminals are on the U.S. Gulf Coast
and the East Coast, Asia may be the target market for U.S. LNG as it tends to pay higher prices
for its natural gas imports. The widening of the Panama Canal, scheduled to be completed in
2015, would contribute to U.S. competitiveness in Asia. Europe has a lot of LNG import capacity
and growing demand, but needs to continue to improve its infrastructure connections to transport
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gas to markets.20 Russia, the main supplier of natural gas to Europe, may be put under increasing
pressure by U.S. export projects to further delink its natural gas prices from oil. U.S. LNG
exports could also provide options for some countries that are highly dependent on one supplier.
Authorizations to Export LNG
Pursuant to provisions included under Section 3 of the NGA (15 U.S.C. §717b), both the export
of LNG and the construction or expansion of LNG terminals require authorization from DOE’s
Office of Fossil Energy and from the Federal Energy Regulatory Commission. With regard to
exports, any person seeking authorization to export LNG from the United States, or to amend an
existing import or export authorization, must file an application with DOE’s Office of Fossil
Energy.21 Denial of an authorization is dependent upon the export being deemed “not consistent
with the public interest.” That is, there is a presumption that exports to non-FTA countries are in
the public interest unless shown otherwise.22 If the United States has an FTA in effect with the
nation to which the LNG would be exported, that application will be automatically deemed
consistent with the public interest.23 LNG exports to non-FTA countries may also be authorized,
but require the Office of Fossil Energy to publish a notice of the application in the Federal
Register and seek public comments, protests, and notices of intervention as part of their public
interest determination. DOE also can limit the amount of cumulative LNG exports, so each
successive project may be contingent upon the volumes of previously approved projects.
Also under the NGA, any person proposing to site, construct, or operate facilities to be used for
the export of natural gas from the United States to a foreign country or to amend an existing
FERC authorization, including the modification of existing authorized facilities, must file an
application for authorization with FERC.24 In addition to FERC, the Department of Homeland
Security’s U.S. Coast Guard and the Department of Transportation’s Office of Pipeline Safety
(OPS), under the Pipeline and Hazardous Materials Safety Administration (PHMSA), may also be
responsible for exercising some level of regulatory authority over the siting, design, construction,
expansion, and operation of LNG facilities, and related land and marine safety and security
issues. Projects related to LNG exports or LNG terminals may be subject to requirements under
other federal law, including the Coastal Zone Management Act, the Clean Air Act, and the Clean
Water Act.
Compliance with one environmental law applies to all DOE authorizations required under Section
3 of the NGA—the National Environmental Policy Act (NEPA, 42 U.S.C. 4321 et seq.). Pursuant

20 For more information on Europe’s natural gas situation, see CRS Report R42405, Europe’s Energy Security: Options
and Challenges to Natural Gas Supply Diversification, coordinated by Michael Ratner.
21 Requirements applicable to LNG exports are specified under Section 3 of the NGA (15 U.S.C. §717b). Regulations
implementing requirements applicable to the export authorization application process were established under 10 C.F.R.
Part 590, the “Administrative Procedures with Respect to the Import and Export of Natural Gas.”
22 Applicants seeking authorization to export LNG may seek either a blanket or a long-term authorization. The blanket
authorization enables the applicant to export on a short-term or spot market basis for up to two years. The long-term
authorization is used when an applicant has, or intends to have, a signed gas purchase or sales agreement/contract for a
period of time longer than two years.
23 See 15 U.S.C.§717b(c). Regulations implementing this section of the NGA were promulgated under 18 C.F.R. Part
153, “Applications for Authorization to Construct, Operate, or Modify Facilities Used for the Export or Import of
Natural Gas.”
24 Pursuant to 15 U.S.C. §717b(e)(1).
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to NEPA, DOE and other agencies are required to identify and document the environmental
impacts of an action before a final agency decision is made. For projects related to LNG exports,
the level of environmental review and documentation required will generally depend on whether
the proposed action or project will require the construction of major new natural gas pipelines or
related facilities or minor modifications of existing pipelines or related facilities.
DOE and the Public Interest Determination
As part of its process in determining whether LNG exports to non-FTA countries are “not
consistent with the public interest,” DOE’s Office of Fossil Energy commissioned two studies: (1)
a domestic price impact study by EIA and released in January 2012,25 and (2) an economic impact
study by NERA Economic Consulting (NERA) and released in December 2012. On February 25,
2013, DOE closed the comment period regarding the NERA study.26 Almost 200,000 comments
were received on the two DOE studies.27 However, the results of these studies are only part of
DOE’s criteria for determining whether LNG exports to non-FTA countries are or are not in the
public interest. In its approval of Cheniere Energy’s non-FTA permit, DOE listed other criteria it
used to make that determination: domestic need, adequacy of supply, the environment,
geopolitics, and energy security. DOE has also provided insights into the “public interest”
evaluation in a set of Policy Guidelines issued in 1984, Order No. 1471, and Delegation Order
No. 0204-111. These were mostly to assess imports, but DOE has held that they also apply to
exports.28
DOE has not laid out a specific timetable for when it will process the pending applications. In
March 2013, the acting Assistant Secretary for Fossil Energy at DOE, Christopher Smith,
declined to comment on a timetable for approving the non-FTA permits at a hearing before the
House Oversight and Government Reform’s Energy Policy, Health Care and Entitlements
Subcommittee.29 DOE has stated that it would begin “processing” the non-FTA applications
according to:
1. All pending DOE applications where the applicant has received approval (either
on or before December 5, 2012) from the FERC to use the FERC pre-filing
process, in the order the DOE application was received,
2. Pending DOE applications in which the applicant did not receive approval (either
on or before December 5, 2012) from FERC to use the FERC pre-filing process,
in the order the DOE application was received,
3. Future DOE applications, in the order the DOE applications are received.30

25 For the complete EIA report follow this link, http://www.fossil.energy.gov/programs/gasregulation/LNGStudy.html.
26 For the complete NERA report follow this link, http://www.fossil.energy.gov/programs/gasregulation/reports/
nera_lng_report.pdf.
27 E-mail from DOE’s Office of Fossil Energy, February 27, 2013.
28 Department of Energy, Office of Fossil Energy, Opinion and Order Conditionally Granting Long-Term
Authorization to Export Liquefied Natural Gas from Sabine Pass LNG Terminal to Non-Free Trade Agreement
Nations, FE Docket No. 10-111-LNG, Washington, DC, May 20, 2011, pp. 28-29.
29 U.S. Congress, House Oversight and Government Reform, Energy Policy, Health Care and Entitlements, The
Department of Energy’s Strategy for Exporting Liquefied Natural Gas, 113th Cong., 1st sess., March 19, 2013.
30 Office of Oil Gas Global Security Supply, Pending Long-Term Applications to Export LNG to Non-FTA Countries -
Listed in Order DOE Will Commence Processing, Office of Fossil Energy, U.S. Department of Energy, Washington,
(continued...)
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The December 5, 2012, date coincides with when the NERA study was publicly released. The
basic conclusion of the NERA study was that LNG exports would benefit the overall U.S.
economy. The study acknowledged that there would be parts of the economy that would be hurt
by LNG exports, mainly large consumers of natural gas, but that on a net basis the U.S. economy
would be better off in all export cases. The net benefits would be highest if the United States
could produce large quantities of low cost shale gas and that global demand for natural gas
increases rapidly.
Both the NERA economic study and the EIA price analysis have been criticized. When EIA
released its price analysis, the scenarios it examined per DOE’s request were viewed as
unrealistic. The high export scenario EIA examined was for 12 bcf/d, which is now well below
the cumulative volumes for which companies have applied to DOE. According to EIA’s analysis,
the range of increases to domestic prices was 9.6% to 32.5%. Proponents of exports emphasized
the former figure, while opponents focused on the latter. Both reports left enough latitude in their
results for supporters and opponents of exports to promote their opinions.
The NERA report has attracted most of the attention in the 113th Congress, given the timing of its
release. The NERA study, which used the EIA results, factored in international market parameters
and macroeconomic impacts on the U.S. economy from increased LNG exports. In all the
scenarios NERA examined, 63 in total, there were net economic gains to the United States, in
spite of higher domestic natural gas prices, and the greater the exports the greater the benefits.
The trade benefits from LNG exports outweighed the higher costs to the domestic economy.
Criticism of the NERA report from some Members of Congress has focused on the narrowness of
its results, the use of outdated data, and incomplete market information, among other things.31
Although the criticism is open to debate, it is important to remember that the NERA study is just
one part of DOE’s analysis of determining which projects may be in the public interest. In its
conditional approval to export to non-FTA countries for the Cove Point LNG terminal, DOE
defended its data use from EIA’s Annual Energy Outlook 2011 due to timing, but also noted that
critics often cite the subsequent rise in demand projected in EIA’s Annual Energy Outlook 2012
and the Early Release data from EIA’s Annual Energy Outlook 2013, but neglect to highlight the
corresponding rise in domestic production.32 Similar to EIA, NERA was given a set of parameters
to examine and asked for the impact on the overall U.S. economy. A full analysis of the NERA
and EIA studies, as well as the myriad of other studies that have also been undertaken by other
groups, is beyond the scope of this report.
Compliance with NEPA and Additional Environmental Laws
Both the Office of Fossil Energy’s requirement to authorize LNG exports and FERC’s obligation
to authorize LNG terminal facility siting, construction, or expansion are considered federal
actions subject to compliance with the National Environmental Policy Act. Broadly, NEPA

(...continued)
DC, September 10, 2013.
31 Office of Senator Ron Wyden, “Wyden Highlights Flaws in DOE Export Study,” press release, January 10, 2013,
http://www.wyden.senate.gov/news/press-releases/wyden-highlights-flaws-in-doe-export-study-.
32 U.S. Department of Energy, Office of Fossil Energy, Order Conditionally Granting Long-Term Multi-Contract
Authorization to Export Liquefied Natural Gas by Vessel from the Cove Point LNG Terminal to Non-Free Trade
Agreement Nations, DOE/FE Order No. 3331, Washington, DC, September 11, 2012, pp. 86-87, http://energy.gov/
sites/prod/files/2013/09/f2/Order%203331.pdf.
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requires federal agencies to identify and consider the environmental impacts of an action and to
inform the public of those impacts before a final agency decision is made.33
To ensure environmental impacts are indeed considered, before an authorization required under
Section 3 of the NGA can be issued, DOE agencies must conduct the appropriate NEPA review.
The level of documentation and analysis required for a given NEPA review will vary depending
on the anticipated level of impacts of that project. Regulations implementing NEPA, promulgated
by the Council in Environmental Quality (CEQ),34 require federal agencies to—
• Prepare an environmental impact statement (EIS)—a full-scale review of the
potential environmental impacts. An EIS is required when it is known that a
proposed action will significantly affect the quality of the environment.
• Prepare an environmental assessment (EA)—a concise public document
prepared when the significance of a proposed action is unclear. If it is determined
that project impacts will be significant, an EIS must be prepared. Otherwise, a
Finding of No Significant Impact (FONSI) may be issued.
• Determine whether a Categorical Exclusion (CE) may be applied—a
category of actions that, based on agency experience, normally have no
cumulatively significant impacts and, hence, are categorically excluded from the
requirement to prepare an EIS or EA.
DOE supplemented the CEQ regulations to specify NEPA compliance requirements applicable to
actions undertaken by its agencies.35 Generally, the level of NEPA review required for
authorizations related to LNG exports will depend on whether granting a request for authorization
will result in the construction of major new natural gas pipelines or related facilities (such as
siting and constructing a new LNG terminal) or a significant expansion and modification of
existing pipelines or related facilities.
To date, the Office of Fossil Energy has determined that applications for authorizations to export
LNG may be processed as categorical exclusions.36 To make that determination, applicants must
demonstrate that the project, among other requirements, will not violate applicable statutory,
regulatory, or permit requirements for environment, safety, and health, or similar requirements of
DOE or Executive Orders or involve extraordinary circumstances that may affect the significance
of the environmental effects of the proposal.37

33 Under Section 102 of NEPA, all federal agencies are required to include in “every recommendation or report on
proposals for legislation and other major Federal actions significantly affecting the quality of the human environment, a
detailed statement by the responsible official on—the environmental impact of the proposed action” (42 U.S.C.
§4332(2)(C)(i)).
34 CEQ regulations, at 40 C.F.R. §§1500-1508, are broadly applicable to all federal agency actions.
35 DOE promulgated “National Environmental Policy Act Implementing Procedures” at 10 C.F.R. Part 1021. Those
procedures apply to all organizational elements of DOE, except FERC. “Regulations Implementing the National
Environmental Policy Act,” at 18 C.F.R. Part 380, apply specifically to FERC actions.
36 See the U.S. Department of Energy’s Office of Fossil Energy webpage “Natural Gas Import & Export Regulation,
NEPA: Records of Categorical Exclusions,” at http://fossil.energy.gov/programs/gasregulation/
nepa_cx_determination.html.
37 See the Office of Fossil Energy “Categorical Determination Form,” issued February 6, 2013, for ENI USA Gas
Marketing, LLC, application seeking authorization to export previously imported LNG from the Cameron LNG
terminal in Cameron Parish, Louisiana, available at http://fossil.energy.gov/programs/gasregulation/cx_documents/
Cat_Ex_12_161_LNG.pdf.
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In regulations implementing NEPA applicable to FERC, DOE has identified the authorizations
required under Section 3 of the NGA for the siting, construction, and operation of new LNG
export facilities as actions that normally will require an EIS.38 However, under certain conditions,
FERC may first prepare an EA to determine whether an EIS is necessary. For example, for an
application to authorize the modification of an existing LNG import terminal to allow for LNG
export, FERC may prepare an EA and determine that the required modification will not result in
significant environmental impacts. Such a determination might be made if, for example, the
modification would require adding liquefaction and related equipment, but remain within the
terminal’s existing footprint.
To prepare the appropriate NEPA documentation for an LNG export-related authorization, the
Office of Fossil Energy or FERC would be required to identify any other compliance
requirements applicable to the authorization.39 Applicable requirements may involve some level
of input, analysis, or approval from another federal agency, or possibly a tribal or state agency.
Following are selected federal statutes, including agencies that may have some jurisdiction over
those requirements that may apply to the construction of a new LNG export terminal or the
expansion of an existing LNG import facility to include export operations:
• Clean Water Act—the U.S. Army Corps of Engineers, the Environmental
Protection Agency (EPA), the U.S. Coast Guard, and state environmental
protection agencies;
• Clean Air Act—EPA and state environmental protection agencies;
• Endangered Species Act—the Department of the Interior’s U.S. Fish and Wildlife
Service, the National Oceanic and Atmospheric Administration (NOAA)
Fisheries Service, and state natural resource agencies;
• National Historic Preservation Act—the Advisory Council on Historic
Preservation, the State Historic Preservation Officer, or Tribal Historic
Preservation Officer; and
• Rivers and Harbors Act—the U.S. Coast Guard.
In addition to meeting appropriate environmental requirements, an authorized project may require
compliance with additional safety or security-related requirements implemented by agencies
including, but not limited to:
• The Department of Transportation’s Office of Pipeline Safety (OPS) within the
Pipeline and Hazardous Materials Safety Administration (PHMSA);
• National Fire Protection Association (NFPA); and
• Federal Emergency Management Agency (FEMA).

38 See 18 C.F.R. §380.6(a)(1).
39 For additional information on siting a liquefied natural gas terminal see CRS Report RL32205, Liquefied Natural
Gas (LNG) Import Terminals: Siting, Safety, and Regulation, by Paul W. Parfomak and Adam Vann.
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New Sources of Natural Gas: The Game Changer
The growth in U.S. natural gas resources, particularly from shale gas, and the projected continued
growth are what make increased natural gas exports a possibility. U.S. natural gas reserves have
climbed 72% since 2000 and 49% since 2005. These data include reductions for natural gas
extracted during the period and so are net increases. In recent years, the increase in reserves is
mostly attributed to development of shale gas, which has grown from 10% of U.S. natural gas
reserves in 2007 to 32% in 2010. By comparison, conventional U.S. natural gas reserves declined
between 2007 and 2008, and fell again in 2010. Though the decline was marginal, it highlights
the importance of shale gas to future U.S. natural gas production. Many industry analysts expect
shale gas reserves to continue to rise and make up a greater portion of U.S. natural gas reserves
unless new restrictions are placed on the industry, such as rules related to hydraulic fracturing,
power plant emissions, etc.
In 2012, the United States produced and consumed more natural gas than it ever has—24 trillion
cubic feet (tcf) and 24 tcf, respectively—while paying some of the lowest market prices for
natural gas in the world.40 The production figure of 24 tcf is of dry gas, which has been processed
for consumption purposes, but the United States actually produced 29.8 tcf of raw natural gas in
2012. The United States is the world’s leading producer of natural gas, surpassing Russia in 2009,
and the world’s leading consumer. After declining for the first half of the last decade, U.S. natural
gas production rose 18% in the latter half, with shale gas accounting for 30% of production by
2011.41
Reserves and production data do not tell the whole story when looking at the U.S. transformation
regarding natural gas supply. The term reserves has a specific industry definition that includes a
technological component, an economic factor, and a probability of success among other criteria.
To more fully understand the changes to the U.S. natural gas sector it is more appropriate to look
at reserves and estimates for undiscovered, technically recoverable resources (UTRR) (see Figure
6). UTRR is an estimate of what can be extracted using current technology regardless of price.
Using UTRR plus reserves, the United States has a natural gas resource base of 1,809 tcf or
enough gas for approximately 79 years of production at 2011 levels. Compared with data from
2006, U.S. UTRR for natural gas has jumped almost 25%. Even this measure may not accurately
reflect what will be extracted from the ground as technology is constantly changing. Just over the
last few years, industry has been able to improve its shale gas extraction rate from about 5% to
about 15%, thereby tripling what is recoverable.

40 Many producing countries subsidize natural gas consumption, so their consumers do not pay a market price.
41 2011 is the latest year for which data are available for this metric.
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Figure 6. Natural Gas Resources and Reserves
2006 vs. 2011

Source: Department of the Interior’s U.S. Geological Survey and Bureau of Ocean Energy Management (BOEM)
and U.S. Energy Information Administration.
Notes: The data for unconventional include some but not al of the shale basins, as some have not been
assessed to date by the U.S. Geological Survey. Unconventional shales are fine grained, organic rich sedimentary
rocks. The shales are both the source of and the reservoir for oil and natural gas, unlike conventional petroleum
reservoirs. Undiscovered technically recoverable resources (UTRR) refers to amounts of natural gas estimated
to exist by examining geologic characteristics of unexplored areas and recoverable using current technology. All
the figures in the graphic above are UTRR except Proved Reserves, defined as a 90% probability of recovery
using existing technology and at current prices. Units = trillion cubic feet (tcf).
Projected Future Growth
In 2012, natural gas was the most produced fuel, on an energy equivalent basis, in the United
States, surpassing coal for the first time. This change was driven by the success of shale gas
development. EIA, which makes projections based on current policy and information, estimated
in its Annual Energy Outlook 2013 Early Release that overall U.S. natural gas production will
grow 55% between 2010 and 2040. Shale gas will comprise over 50% of that production, up from
23% in 2010. During that time period, the United States is expected to go from a net importer of
natural gas by pipeline and LNG to a net exporter by 2020, which is a change from EIA’s 2011
Annual Energy Outlook when there was no time period in which the United States was forecast to
be a net exporter of natural gas. The United States is forecast to be a net LNG exporter by 2016,
according to EIA.
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Figure 7. Projected U.S. Natural Gas Production

Source: EIA Annual Energy Outlook 2013 Early Release, Reference Case, http://www.eia.gov/oiaf/aeo/
tablebrowser/#release=AEO2013ER&subject=8-AEO2013ER&table=14-AEO2013ER&region=0-0&cases=
early2013-d102312a.
Note: Units = trillion cubic feet (tcf) per year.
Natural Gas Liquids: A Production Driver
Natural gas liquids (NGLs) have taken on a new prominence as shale gas production has
increased and prices have fallen. NGL is a general term for all liquid products separated from
natural gas at a gas processing plant and includes ethane, propane, butane, and pentanes. When
NGLs are present with methane, which is the primary component of natural gas, the natural gas is
referred to as either “hot” or “wet” gas. Once the NGLs are removed from the methane the natural
gas is referred to as “dry” gas, which is what most consumers use. Each NGL has its own market
and its own value. As the price for dry gas has dropped because of the increase in supply and
other reasons such as the warm winter of 2011, the natural gas industry has turned its attention to
producing more wet gas in order to bolster the value it receives. Some companies have shifted
their production portfolios to tight oil formations, such as the Bakken in North Dakota, to
capitalize on the experience they gained in shale gas development. Historically, the individual
NGL products have been priced against oil, except for ethane, and as oil prices have remained
higher since 2005 relative to natural gas, it has driven an increase of wet gas production, thereby
maintaining the amount of dry gas as a production “byproduct” despite its low price.
Congressional Actions and Considerations
There have been four bills introduced in the 113th Congress directly related to LNG exports,
primarily to expand the list of countries that would get automatic approval beyond FTA countries.
Other bills have been introduced that affect natural gas fundaments and infrastructure.
The Senate Energy and Natural Resources Committee conducted a hearing on natural gas,
including exports, on February 12, 2013, and the House Oversight and Government Reform’s
Energy Policy, Health Care and Entitlements Subcommittee held a hearing on the DOE’s
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permitting process on March 19, 2013. There may be additional hearings in the coming months.
Some congressional representatives from the states where the LNG facilities are planned have
submitted letters of support for the different projects to various regulatory agencies. Additionally,
other Members have mentioned the possibility of natural gas exports in public statements, and
some of those have expressed concerns about the potential effect on domestic prices, supplies,
and the environment, among other issues.
Issues and Interests
The public focus on U.S. exports of natural gas has been on the applications to export LNG,
despite the United States exporting much more natural gas by pipeline. Groups such as the
Industrial Energy Consumers of America (IECA), a national association of manufacturing
companies, and the American Public Gas Association (APGA), a national association of publicly-
owned natural gas distribution systems, have filed motions to intervene against various projects.42
Both of these organizations represent firms that use natural gas and would be negatively affected
if natural gas prices rose. Natural gas producers and certain local businesses have supported the
projects as they would benefit from access to new overseas markets and higher international
prices. Analyses of the price effects of potential natural gas exports likely will receive continued
attention as companies move forward with their projects. The Sierra Club has filed against
projects on environmental grounds, particularly related to the source of natural gas for export.
Expectations about the economic impacts of greater U.S. natural gas exports depend on
assumptions about the volume of exports, economic growth, market segmentation, and
environmental regulations, among other market parameters. Some initial estimates projected a
modest rise in absolute terms in domestic natural gas prices if all the proposed export projects are
built, premised on a relatively flat supply curve for natural gas. These estimates also projected
that U.S. natural gas prices would stay relatively low in historic terms as well as in comparison to
global prices. Those in favor of exports add that increased production could result in increased
revenue for local, state, and federal governments (through taxes, royalty payments, and economic
development), more employment, an improved international trade balance, and reductions in
natural gas flaring.43 Natural gas consumers counter that higher natural gas prices abroad could
eventually lead to higher prices in the United States, and possible supply shortages, as producers
seek to maximize profits by diverting more and more U.S. natural gas to overseas markets.44

42 Letter from Paul N. Cicio, President of Industrial Energy Consumers of America, to U.S. Department of Energy,
Office of Fossil Energy, Office of Oil and Gas Global Security and Supply, December 13, 2011, http://www.ieca-
us.com/documents/121310.pdf.
American Public Gas Association, “APGA Files Motion to Intervene and Protest Freeport Export Application,” press
release, March 28, 2011, http://www.apga.org/files/public/Press%20Releases/2011/Press%20Release%20-
%20Motion%20to%20Intervene%20in%20Freeport%20Application,%202011.pdf.
American Public Gas Association, “APGA Files Motion to Intervene in Sabine Pass LNG Export Facility Application,”
press release, March 4, 2011, http://www.apga.org/files/public/Press%20Releases/2011/Press%20Release%20-
%20Comments%20Sabine%20Pass-%20March%203,%202011.pdf.
43 Flaring is combusting natural gas as a means to eliminate it because it may be impracticable to use, capture, or
transport. Flaring is usually done as a safety or health precaution, during the exploration and development phases
leading to production.
44 Margaret Ryan, “USAEE Notebook: DOE Weighing LNG Export Price Effect,” AOL Energy, Internet blog, October
10, 2011, http://energy.aol.com/2011/10/10/usaee-notebook-doe-weighing-lng-export-price-effect/.
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In the near term, increased use of natural gas in the U.S. economy is limited, primarily to electric
power generation.45 Natural gas-fired electric power plants account for a significant and growing
share of U.S. natural gas demand. Although coal remains the dominant fuel for U.S. electric
power generation, environmental concerns regarding atmospheric emissions is limiting its use and
prompting the retirement of older coal plants that are less equipped to curtail emissions.
Switching from coal to natural gas in electric power generation may consume incremental U.S.
natural gas supply increases before exports do. There are many proposed petrochemicals projects,
but these are at various stages of development and will take a number of years to come to fruition.
Other sectors such as transportation, industrial, commercial, and residential are not likely to see a
substantial rise in natural gas demand in the next couple of years. This could change if
technologies can be improved to increase the use of natural gas in transportation, such as gas-to-
liquids, natural gas vehicles, or electric vehicles (assuming the electricity is generated by natural
gas). Although proponents see strategic value in such fuel-switching as a means to reduce U.S.
dependence on imported oil, high technology costs diminish this prospect in the near term.
Although much less attention is paid to natural gas exports by pipeline, it is anticipated that these
will continue to increase as more shale gas is developed. Canada’s natural gas production has
been declining, but it is possible this will be reversed as Canada develops its own shale gas
resources, which are estimated to be large. However, Canadian consumption may also increase as
production from oil sands is projected to rise. Natural gas is heavily used in the extraction of
petroleum from oil sands. Canada also has at least two of its own LNG export projects being
considered. A recent EIA study estimated Canada’s technically recoverable shale gas resources at
573 trillion cubic feet, over 100 years’ worth at the country’s current production rate. 46 If Canada
develops these resources, they could be an additional source of natural gas for the United States
as well.
Mexico’s natural gas production has been rising steadily for the last decade, but not quickly
enough to keep up with consumption. Imports now account for almost 27% of consumption
compared to under 10% in 2000, and imports from the United States made up over three-quarters
of all natural gas imports to Mexico in 2012.47 Although Mexico may have significant technically
recoverable shale gas resources , 545 trillion cubic feet or 364 years at their current production
level, Mexico is much further behind in developing these resources than the United States and
Canada,48 and will likely remain dependent on U.S. supplies to meet growing demand.
Receiving permits to export natural gas by pipeline to Canada and Mexico is typically easier than
receiving a permit to build an LNG export facility, even though pipeline projects require
authorization from the Secretaries of Defense and State. Both Canada and Mexico are FTA
countries and exports are assumed to be in the U.S. national interest by statute. Pipeline export

45 For additional information on natural gas in the U.S. economy, see CRS Report R42814, Natural Gas in the U.S.
Economy: Opportunities for Growth , by Robert Pirog and Michael Ratner
46 U.S. Energy Information Administration, Technically Recoverable Shale Oil and Shale Gas Resources: An
Assessment of 137 Shale Formations in 41 Countries Outside the United States, Washington, DC, June 2013, p. 6,
http://www.eia.gov/todayinenergy/detail.cfm?id=11611.
47 BP, BP Statistical Review of World Energy 2012, June 2012, pp. 23, 28, http://www.bp.com/sectionbodycopy.do?
categoryId=7500&contentId=7068481.
48 U.S. Energy Information Administration, Technically Recoverable Shale Oil and Shale Gas Resources: An
Assessment of 137 Shale Formations in 41 Countries Outside the United States, Washington, DC, June 2013, p. 6,
http://www.eia.gov/todayinenergy/detail.cfm?id=11611.
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projects tend to be less costly and easier to finance than LNG export projects may be; none of the
latter have been built in the United States in 40 years.
As highlighted above, the development of shale gas resources will be a key factor in the United
States becoming a net natural gas exporter. Infrastructure constraints within some of the major
shale gas producing areas may limit the amount of natural gas that can reach markets and be
available for export. Changes to the regulatory environment would also have an impact on natural
gas production.
Environmental groups differ on the desirability of greater natural gas use in general. Although
burning natural gas produces less pollution than burning other fossil fuels, it still emits
greenhouse gases and other atmospheric pollutants. Some environmental groups view natural gas
as a necessary bridge fuel to a zero carbon economy, while others want to go to the zero carbon
economy directly. Some environmental groups see natural gas exports raising domestic natural
gas prices, making renewables more viable. Additionally, there are concerns about risks to water
supplies associated with hydraulic fracturing, the technique for extracting shale gas which uses
water, sand, and chemicals to create fissures in shale, allowing the trapped natural gas to be cost-
effectively extracted. The possibility of increased shale gas development and pipeline
construction in the United States to supply overseas LNG buyers troubles some environmental
advocates.
With natural gas prices low and projected to remain so, producers want new markets for their
product. Exports represent one alternative outlet for natural gas.


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Appendix A. Select U.S. Natural Gas Import and Export Infrastructure
Figure A-1. Select U.S. Natural Gas Import and Export Infrastructure

Source: Compiled by CRS from EIA sources.
Notes: Hawaii is not shown on this map because it has very limited natural gas infrastructure.
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Appendix B. Supply/Demand Balance
Table B-1. 2012 U.S. Supply and Demand Balances

Volume (bcf)
Percentage of Consumption
Consumption
25,457 100%
Commercial 2,905
11%
Electric Power
9,137
36%
Industrial 7,100
28%
Residential 4,177
16%
Other 2,138
8%
Productiona
24,048 94%
Net Imports
1,516
6%
Imports 3,135
12%
- Canada
2,960
12%
- LNG
175
1%
Exports 1,619
6%
- Canada
971
4%
- LNG (Alaska)
14
<1%
- Re-Export
14
<1%
Change in Inventories
107
<1%
Source: U.S. Energy Information Administration databases, http://www.eia.gov/naturalgas/data.cfm
Notes: Units = bil ion cubic feet (bcf). Table shows data for major sub-categories, which may not equal the
section total, and sums may not total due to rounding.
a. Dry natural gas production.


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Appendix C. Natural Gas Hub Map
Figure C-1. Natural Gas Hub and City Gate Prices

Source: Natural Gas Week, July 2, 2012.
Notes: The figures along the dotted lines indicate transportation costs between hubs and city gates. Alaska and Hawaii are not included on this map as their markets are
distinct from the lower 48 states.
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Author Contact Information

Michael Ratner
Ian F. Fergusson
Specialist in Energy Policy
Specialist in International Trade and Finance
mratner@crs.loc.gov, 7-9529
ifergusson@crs.loc.gov, 7-4997
Paul W. Parfomak
Linda Luther
Specialist in Energy and Infrastructure Policy
Analyst in Environmental Policy
pparfomak@crs.loc.gov, 7-0030
lluther@crs.loc.gov, 7-6852

Acknowledgments
Elizabeth Roberts, Laura Hanson, and James Uzel of CRS’s Knowledge Services Group contributed to the
research for this report. Amber Wilhelm in CRS’s Publishing and Editorial Resources Section contributed
to the completion of this report.

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