EARTHWORKS

Exxon's XTO merger proposal isn't killing the FRAC Act.

Alan Septoff's avatar
By Alan Septoff

December 17, 2009

Exxon, America's biggest oil company, is planning on merging with XTO, a $25 billion oil and gas drilling company heavily invested in hydraulic fracturing of shale gas deposits.

Whether or not you think that's a good thing, it's causing a bit of furor in part because Exxon has included some language pertaining to fracking's regulatory landscape.

ExxonMobil, America's biggest oil company, is planning on merging with XTO, a $25 billion oil and gas drilling company heavily invested in hydraulic fracturing of shale gas deposits.

Whether or not you think that's a good thing, it's causing a bit of furor in part because Exxon has included some language pertaining to fracking's regulatory landscape.

To wit, Exxon can back out of the merger if:

"[Congress] changes Applicable Laws related to hydraulic fracturing or similar processes that would reasonably be expected to have the effect of making illegal or commercially impracticable such hydraulic fracturing or similar processes[.]"

Some, including the Wall Street Journal are wondering if that means Exxon could call of the deal the FRAC Act passes.  And if Exxon is in fact trying to pressure Congress into killing the FRAC Act.

A few thoughts on this: 

The FRAC Act, on its face, does not make fracking "impracticable" (by which I understand Exxon to mean: unprofitable).  All it does:

  1. Require frackers to adequately disclose the toxics they use -- like almost all other industries.  This doesn't cost anything.
  2. Remove a 2005 special exemption for hydraulic fracturing from the Safe Drinking Water Act (known as the Halliburton loophole because it was inserted due in part due to the influence of ex-Halliburton CEO Dick Cheney).  Gas drillers have fracked for decades -- well before 2005.

Practically speaking, what the FRAC Act establishes is a federal minimum requirement for hydraulic fracturing companies.  Recent experience in Pennsylvania, Colorado, and elsewhere shows this is necessary.  We don't oppose fracking.  We oppose irresponsible fracking.

In the end, this is much ado about nothing.

After the FRAC Act passes -- hydraulic fracturing will continue apace.  It will just be done with consideration for communities and their drinking water.  And if Exxon looks to back out of this merger as a result -- they will have an awful hard time explaining why Exxon can't drill profitably under the FRAC Act when so many other companies are doing so.


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Tagged with: xto, fracking, frac act, exxon

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