According to a 1991 Energy Information Administration estimate, U.S. reserves of natural gas are about 165 trillion cubic feet (TCF). To meet the long-term demand for natural gas, new gas fields from these reserves will have to be developed. Gas Research Institute studies reveal that 14% (or about 19 TCF) of known reserves in the United States are subquality due to high nitrogen content. Nitrogen-contaminated natural gas has a low Btu value and must be upgraded by removing the nitrogen. In response to the problem, the Department of Energy is seeking innovative, efficient nitrogen-removal methods. Membrane processes have been considered for natural gas denitrogenation. The challenge, not yet overcome, is to develop membranes with the required nitrogen/methane separation characteristics. Our calculations show that a methane-permeable membrane with a methane/nitrogen selectivity of 4 to 6 would make denitrogenation by a membrane process viable. The objective of Phase I of this project was to show that membranes with this target selectivity can be developed, and that the economics of the process based on these membranes would be competitive. Gas permeation measurements with membranes prepared from two rubbery polymers and a superglassy polymer showed that two of these materials had the target selectivity of 4 to 6 when operated at temperatures below - 20{degrees}C. An economic analysis showed that a process based on these membranes is competitive with other technologies for small streams containing less than 10% nitrogen. Hybrid designs combining membranes with other technologies are suitable for high-flow, higher-nitrogen-content streams.