The United States has exported natural gas for close to 100 years, but has generally exported less natural gas than it has imported. U.S. gas exports have been primarily via pipeline to Mexico and eastern Canada. Historically, the United States has also exported liquefied natural gas (LNG) from Alaska—almost exclusively to Japan—but the volumes of those shipments have been relatively small and Alaska's natural gas market has been isolated from the rest of the United States. Natural gas companies are now considering exporting greater quantities of U.S. LNG by tanker ship to a number of other countries. Increased development of U.S. natural gas resources—primarily shale gas—along with low domestic prices and idle LNG import infrastructure, have driven the change in the U.S. position. Within the next several years, the United States may become a much larger natural gas exporter, particularly in the form of LNG. However, natural gas exports from the United States require federal approval pursuant to Section 3 of the Natural Gas Act (NGA, 15 U.S.C. §717b). The Department of Energy's (DOE's) Office of Fossil Energy and the Federal Energy Regulatory Commission (FERC) must authorize the export of the commodity and related facilities, respectively. This overarching federal role in the expansion of U.S. natural gas exports has been the subject of ongoing oversight and debate in Congress. 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 consumers pay for natural gas and effects on the economy. Developers of natural gas export projects and natural gas producers argue that domestic gas prices will not rise significantly if U.S. natural gas exports increase because the United States has ample gas resources to meet both export and domestic demand. They argue that any domestic gas price increases due to exports would be more than offset by benefits from the increased gas production, such as higher employment and an improved trade balance. DOE has used the results of several studies it commissioned about the impact on domestic natural gas prices of exports and the effect on the U.S. economy to justify the approval of LNG export proposals. However, some stakeholders disagree with the agency's conclusions. U.S. natural gas prices are lower than those in other international markets, partly because of the nature of the natural gas resources and partly due to competition in the U.S. market. Nevertheless, natural gas prices within the United States vary by region because of transportation limitations, access to supplies, and differences in demand. As new volumes of shale gas are developed, these supplies seek markets where little or no natural gas production has existed before. Over time, the U.S. natural gas market is reconfiguring 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 limited pipeline capacity, 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. (For an illustration of regional natural gas price differentials in the lower-48 states, see Appendix B ). 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, especially coal, 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 hydraulic fracturing ("fracking")—which uses water, sand, and chemicals to create fissures in shale, allowing the trapped natural gas to be cost-effectively extracted. 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. The prospect of growing U.S. natural gas exports, particularly LNG, continues 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 114 th Congress, including the LNG Permitting Certainty and Transparency Act ( H.R. 351 and S. 33 ), the American Job Creation and Strategic Alliances LNG Act ( H.R. 287 ), the Crude Oil Export Act ( H.R. 156 ), the Domestic Prosperity and Global Freedom Act ( H.R. 89 ), and the Export American Natural Gas Act of 2015 ( H.R. 428 ). This report examines what has changed in the U.S. natural gas market and the prospects and implications of the United States becoming a larger net exporter of natural gas. Heading into the 2000s, the United States was expected to be a growing importer of natural gas because domestic gas production was declining and demand was rising ( Figure 1 ). The U.S. Energy Information Administration (EIA) in its 1999 Annual Energy Outlook forecasted that net natural gas imports between 1997 and 2020 would grow from 12.9% of consumption to 15.5%, based on consumption growing faster than production. 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 LNG import facilities were re-commissioned and expanded. The United States currently has LNG import capacity of almost 14 billion cubic feet per day (bcfd) or over 5 trillion cubic feet (Tcf) per year. However, higher domestic production has made imports largely unnecessary, leaving existing import capacity mostly idle. In its Annual Energy Outlook 201 4 , EIA projects that the United States will be an overall net natural gas exporter by around 2016, when U.S. production exceeds domestic consumption ( Figure 1 ). The abundance of new domestic natural gas supplies shifted industry interest from building LNG import terminals to constructing LNG export terminals. As of the beginning of January 2015, there have been 48 applications for permits either 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. The total capacity proposed is approximately 42 bcfd. In addition, companies have active permits to re-export LNG cargos from existing import terminals, which involves taking in foreign LNG cargos, holding them in storage, and then reloading them onto LNG tankers for shipment to foreign markets. Increased pipeline exports to Canada and Mexico may also continue to rise if their domestic demand continues to increase. Low U.S. natural gas prices (especially in the Gulf of Mexico) relative to other international markets have spurred interest in exporting U.S. produced natural gas ( 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 has commissioned several studies as part of its evaluation of whether LNG exports to non-free-trade-agreement (non-FTA) countries are in the public interest, further discussed later in this report. Lower U.S. natural gas prices since 2008 along with a large and growing resource base have also prompted calls for greater use of natural gas in the nation's overall fuel mix. Natural gas comprised about 27% of U.S. primary energy consumption last year and has averaged approximately 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. However, the EIA's annual average projected prices to 2040 (which assume no changes in U.S. policy) never reach the price peaks of the latter 2000s ( Figure 3 ). Total U.S. natural gas exports are relatively small but have grown since 1999, increasing more than 15-fold through 2012 ( Figure 4 ). The United States has been exporting natural gas since at least the 1930s, primarily to Canada and Mexico. In 2013, over 99% of exports were by pipeline to these two countries. Starting in 1969, a small amount of natural gas was also exported as LNG to Japan via the Kenai LNG terminal in Alaska. Kenai LNG operated continuously from its opening until its temporary idling in 2012. In April 2014, the facility's owner announced that it would reopen the Kenai LNG terminal because the local area gas supply forecast had increased, providing a renewed opportunity to export Alaskan natural gas production in excess of local demand. It remains the only completed LNG export facility in North America although it is currently not shipping any LNG. In 2010, the United States, through DOE's Office of Fossil Energy, allowed LNG import terminals to re-export foreign-sourced LNG to international markets. LNG volumes that are re-exported from the United States after being imported from third countries are not treated the same way as exports of domestically produced natural gas for the purposes of federal regulation. LNG re-export volumes are small, but have exceeded U.S. LNG export volumes in recent years due to the steady decline of LNG exports since 2005 ( Figure 4 ).