The House Committee on Energy and Commerce hearing on the impact of an Exxon Mobil Corp. – XTO Energy Inc. merger last week began as a love fest when Texas representatives gave a warm welcome to witnesses Rex Tillerson, chairman and chief executive officer of Exxon Mobil Corp., and Bob Simpson, chairman of the board and founder of XTO Energy Inc. Some representatives – seeing potential jobs and income for their cash-strapped states – seemed willing, even anxious, to yield to industry’s pressure to refrain from supporting legislation that might cost the industry money when they extract natural gas from unconventional reserves, like the Marcellus Shale that runs from West Virginia to New York State.
The gas industry says it’s only “commercially viable” to extract natural gas from these unconventional reserves using a technique called hydraulic fracturing. During hydraulic fracturing, well operators inject a mixture of water and chemicals – about two to nine million gallons of water with chemicals making up about one to five percent of the total volume – into wells at extremely high pressure to crack and prop open the shale. Environmentalists are concerned this technique may contaminate soil, groundwater and surface water. Many New Yorkers fear drilling in the NYC watershed will contaminate their unfiltered water supply. More information about these concerns can be found in an investigation by DC Bureau last month.
Later in the hearing, party pooper Rep. Diana DeGette (D-CO), who introduced the FRAC Act with Rep. Jared Polis (D-CO) in the House last summer, rained on the parade.
Exxon won’t finalize its $41 billion deal to buy XTO Energy – which owns extraction leases in these reserves – if Congress passes legislation that makes hydraulic fracturing “illegal or commercially impracticable.” Representatives at the hearing said no proposals by Congress or the Obama administration outlaw hydraulic fracturing. “I have absolutely no intention to outlaw fracking,” Rep. DeGette said. “In fact, I think fracking is important to get a lot of these reserves out of the ground.”
However, for Exxon Mobil, questions of “commercial impracticability” still linger.
Rep. DeGette’s FRAC Act would require oil and gas companies to disclose materials used in hydraulic fracturing fluids in compliance with the Safe Drinking Water Act. Tillerson and Simpson said they’re willing to disclose these components, but they don’t want to disclose this information to the Environmental Protection Agency under the Safe Drinking Water Act.
Tillerson said in his southern drawl, “It’s because the devil is always in the details.”
He said he doesn’t know how the EPA would administer DeGette’s proposed legislation. Only four states have laws specifically addressing hydraulic fracturing, so it comes as no surprise why Exxon and XTO would rather comply with relatively weak state laws than federal regulations.
DeGette asked Tillerson and Simpson how much money it would cost them to comply with her legislation: “Can you say today whether or not simply reporting the components that you agreed to be reported under the Safe Drinking Water Act would make it commercially impracticable?”
Tillerson and Simpson played dumb. Although this seems like an easy question, they said they didn’t know.
Maybe Tillerson is right: The devil is in the details. But the devil may be in the components of fracking fluids, not how the EPA might administer DeGette’s legislation.
