In the past, the oil and natural gas industry considered resources locked in tight, impermeable formations such as shale uneconomical to produce. Advances in directional well drilling and reservoir stimulation have dramatically changed this perspective. It is production from these unconventional formations that has changed the U.S. energy posture and global energy markets. U.S. oil and natural gas production is on the rise, primarily driven by resources from tight formations. The techniques developed to produce shale gas—directional drilling and hydraulic fracturing —have migrated to the oil sector. The United States is the third-largest oil producer in the world but also the fastest-growing producer. The United States surpassed Russia in 2009 as the world's largest natural gas producer. Production from tight formations is expected to make up a significant part of production of each commodity well into the future (see Figure 1 ). This report focuses on the growth in U.S. oil and natural gas production driven primarily by tight oil formations and shale gas formations. It does not address other types of unconventional production such as coalbed methane or tight gas, as their contributions to overall U.S. production have not changed as dramatically as shale gas. There has been continued congressional interest related to unconventional natural gas and oil production. In March 2015, the House Natural Resources Committee's Subcommittee on Energy and Mineral Resources held a hearing addressing the new Bureau of Land Management (BLM) hydraulic fracturing rule. Among actions in the 113 th Congress, the Senate Energy and Natural Resources Committee held three roundtable discussions on natural gas supply and use ; the House Natural Resources Committee held a hearing on hydraulic fracturing legislation and the BLM proposed rule; and the House Energy and Commerce Committee's Subcommittee on Energy and Power held a hearing in June 2013 on U.S. energy abundance. Unconventional formations are fine-grained, organic-rich, sedimentary rocks—usually shales and similar rocks. The shales and rocks are both the source of and the reservoir for oil and natural gas, unlike conventional petroleum reservoirs. The Society of Petroleum Engineers describes "unconventional resources" as petroleum accumulations that are pervasive throughout a large area and are not significantly affected by pressure exerted by water (hydrodynamic influences); they are also called "continuous-type deposits" or "tight formations." In contrast, conventional oil and natural gas deposits occur in porous and permeable sandstone and carbonate reservoirs. Under pressure exerted by water, the hydrocarbons migrated upward from organic sources until an impermeable cap-rock (such as shale) trapped it in the reservoir rock. Although the unconventional formations may be as porous as other sedimentary reservoir rocks, their extremely small pore sizes and lack of permeability make them relatively resistant to hydrocarbon flow. The lack of permeability means that the oil and gas typically remain in the source rock unless natural or artificial fractures occur. Historically, natural gas prices in the United States have been volatile. From 1995 to 1999, the spot price of natural gas averaged $2.23 per million British thermal units (MBtu, sometimes noted as mmBtu) but increased to an average price of $4.68 per MBtu, in nominal dollars, during the 2000-2004 period, an almost 110% rise. Prices hit a peak in December 2005 at $15.38 per MBtu but remained relatively high through July 2008, as can be seen in Figure 2 . Along with the rise in prices, U.S. net imports of natural gas also rose, increasing 32% between 1995 and 2000 and 41% between 1995 and 2007. As U.S. prices and imports continued to trend up, the industry undertook two competing solutions to meet the need for more natural gas—increased liquefied natural gas (LNG) imports and development of techniques to produce shale gas. The LNG import facilities were much higher profile and were cited extensively in industry and popular press. Approximately 50 import projects were proposed, and 8 were eventually constructed during the mid- to late 2000s, along with the recommissioning of older facilities. Although horizontal drilling and hydraulic fracturing have been industry techniques for some time, their application to shale gas formations is relatively new. Advances in directional drilling, particularly steerable down-hole motors, allowed drilling operators to better keep the well bore in the hydrocarbon-bearing shale formations. Well stimulation was also required, and improvements in hydraulic fracturing techniques, particularly multistage hydraulic fracturing and the ability to better control the fractures, contributed to making shale gas production a profitable venture. In 2007, the Energy Information Administration (EIA) first recorded shale gas production, when it accounted for just 7% of U.S. natural gas production. In 2013, shale gas production accounted for almost 40% of U.S. production (see Figure 1 ), while almost all the LNG import terminals were idle and many applied to become export terminals. The application of advances in directional drilling and hydraulic fracturing were first applied to shale gas formations, particularly as natural gas prices increased in the mid-2000s. Methane molecules and those of natural gas liquids (NGLs) are smaller than crude oil molecules and therefore tend to be more responsive to hydraulic fracturing. The success of shale gas development has driven U.S. natural gas production to increase almost every month on a year-on-year basis (see Figure 3 ) from 2008 through May 2014. The rise in shale gas development has also resulted in natural gas prices declining, as shown in Figure 2 . The decline in prices and production in the latter half of 2008 was mainly the result of the economic downturn. However, as the economy picked up in 2009, natural gas resumed its upward production trajectory while prices stayed low. Overall U.S. natural gas production grew, as did the contribution from shale. The continued increase in production can be attributed, in part, to industry improvements in extracting more of the natural gas from the shale formations. Continued progress in hydraulic fracturing and directional drilling techniques has enabled companies to drive down production costs while increasing output. NGLs have taken on a new prominence as shale gas production has increased and prices have fallen. As natural gas prices have stayed low, company interests have shifted away from dry natural gas production to more liquids-based production. 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 in areas with more wet gas in order to bolster the value it receives (see Figure 4 ). Some companies have shifted their production portfolios to tight oil formations, such as the Bakken in North Dakota and Montana, to capitalize on the experience they gained in shale gas development. Historically, the individual NGL products have been priced against oil, except for ethane. As oil prices have remained higher since 2008 relative to natural gas, they have driven an increase of wet gas production. Because of its low price, dry gas is often treated as a "byproduct" of wet gas and oil production. The prospect of U.S. energy independence is grounded in the production growth from tight oil formations such as the Bakken Formation in North Dakota and Montana and the Eagle Ford Formation in Texas. Relative to other fuels, the United States is more dependent upon imports for its oil requirements, still accounting for about 47% of consumption. Canada is the largest supplier of U.S. oil imports, which is why energy independence is usually mentioned as North American energy independence. The United States added almost 1 million barrels per day (b/d) of oil production between 2012 and 2013 (see Figure 5 ). U.S. oil production has reached levels not seen in more than a decade but is almost 2 million b/d short of the highs in the 1970s. Since 2005, when crude oil imports reached a peak, they have dropped almost 2.4 million b/d, or 24%, through 2013. Also since 2005, U.S. consumption of crude oil and petroleum products has been trending downward, contributing to the decrease in imports. The continued shift of industry resources toward oil-rich production has prompted forecasts of continued growth. Domestic crude oil production is projected to rise through the end of the decade. The tremendous increases are primarily due to dramatic increases in production from the previously mentioned Bakken Formation in North Dakota and the Eagle Ford play in Texas, both tight oil formations. As with other energy sources or fuel production, the development of unconventional oil and gas resources can pose both environmental risks and net benefits, some direct and others indirect. Potential direct risks may include impacts to groundwater and surface water quality, public and private water supplies, and air quality. In addition, some have raised concerns about potential long-term and indirect impacts from reliance on fossil fuels and resulting greenhouse gas emissions and influence on broader energy economics. On the other hand, natural gas is seen by many as a "bridge" fuel that can provide more energy per unit of greenhouse gas produced than some alternatives (e.g., coal) and has only recently been produced in sufficient quantity and at low enough prices to provide a viable alternative fuel that is widely regarded as relatively cleaner-burning (i.e., no mercury or sulfur emissions and substantially lower emissions of nitrous oxides and carbon dioxide per Btu of energy produced compared to coal). This report focuses primarily on measures to address potential direct impacts.