With U.S. natural gas production continuing to grow faster than expected, the prospect of exporting natural gas in the form of LNG is attracting greater attention. By the end of this decade, the U.S. is likely to become a net exporter  of natural gas, reversing a multi-decade trend of being a net importer of the fuel.

But industry groups and other commentators are sharply dividend on the pros and cons of allowing additional exports of U.S. natural gas to countries that don't have a free-trade agreement with the U.S.

Some argue that increasing U.S. LNG exports could result in sharply higher prices for both consumers and energy-intensive businesses, thereby limiting the economy's growth potential. Others meanwhile claim that LNG exports will not lead to meaningful increases in domestic gas prices, and will actually boost economic growth by creating thousands of high-paying jobs.

While both camps put forth good arguments with plenty of data to support their claims, LNG export opponents may be overlooking one crucial thing -- the sheer volume of U.S. natural gas supplies. According to John Felmy, chief economist for the American Petroleum Institute, who recently spoke with FuelFix, a Houston-based provider of energy-related news and analysis, the U.S. has a far greater supply of natural gas than most commentators suggest.

Size of U.S. natural gas supply
Consider the Marcellus shale of Pennsylvania and West Virginia, for instance, where production continues to exceed expectations. As per the latest data from the U.S. Energy Information Administration, the Marcellus is producing 12 billion cubic feet of gas per day, a more than sixfold increase from 2009 production levels. Not surprisingly, Marcellus-focused producers, including Range Resources (RRC -0.90%), Cabot Oil & Gas (CTRA -0.49%), and EQT (EQT 0.49%), recently reported staggering increases in output.

In the third quarter, Range's production volumes surged 21% year-over-year to a record high of 960 Mmcfe per day, while Cabot reported an impressive 61% year-over-year improvement in total production, which came in at 107.1 billion cubic feet equivalent. Similarly, EQT saw its third-quarter sales volumes jump 42% over the same period last year, reaching 96.9 billion cubic feet equivalent.

Crucially, this continued growth in Marcellus output is occurring despite infrastructure constraints that are preventing many gas producers from bringing wells online. In the first half of this year, there were roughly 1,500 backlogged wells in the Pennsylvania Marcellus, as compared to roughly 4,000 producing wells, according to an analysis by Barclays.

As more processing and fractionating capacity is brought online over the next few years or so, many of these wells will be connected to pipelines and will start producing. This suggests that Marcellus output growth this year and next could easily exceed last year's levels.

Development versus exploration drilling
Felmy also points to the large disparity between natural gas exploration drilling activity and development drilling activity to support his claim. Since gas prices collapsed after 2010, exploratory drilling has been more or less flat, while developmental drilling activity has fallen markedly, which suggests that many producers are drilling simply to avoid leases from expiring, even if that drilling is unprofitable. If he's right, this means that energy producers can easily bring more production online to help meet growing global demand, which would keep prices in check.

The bottom line
With two sets of conflicting yet convincing views out there, it's really hard to determine what impact additional LNG exports will have on U.S. gas prices. Moreover, the magnitude of the increase in domestic gas prices is dependent on a host of factors, including the level of export volumes, government regulations on exports, the rate of economic growth, and various other factors.

With that said, however, I think the sheer volume of U.S. natural gas supplies and the fact that production is still very much constrained in key plays such as the Marcellus and the Utica should be enough to avoid a large spike in domestic gas prices. And in any case, the DOE is carefully assessing the impact of additional exports on a case-by-case basis and would likely not approve more projects if it perceived them to pose a significant risk to domestic prices.