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Exxon, XTO Chiefs: Frack-Fluid Disclosure OK as Long as EPA Is Not in Charge

The heads of ExxonMobil and XTO Energy do not object to revealing what chemicals are used in hydraulic fracturing, a technique used to access oil and gas trapped in hard-to-reach shale formations. They just don't want the Environmental Protection Agency to be the ones in charge of regulating the process.

The level of mistrust of the EPA was palatable -- even via Webcast -- during a congressional hearing held Wednesday on Exxon's acquisition of independent oil and gas producer XTO Energy. And was especially apparent during a round of questioning between Rep. Diane DeGette, D-Colo., and Rex Tillerson, the chairman and CEO of Exxon.

The hearing was billed as a discussion on the potential impact the deal will have on U.S. energy markets. But it quickly turned and stayed focused on hydraulic fracking and legislation introduced last year by Rep. DeGette that would end an exemption for fracking within the Safe Water Drinking Act. Meaning regulation would fall to the EPA.

The industry is concerned the EPA would take regulatory steps that would either ban the practice altogether or make it too expensive to drill, thereby killing the unconventional gas business. XTO is a major holder of unconventional gas plays and an escape clause in the acquisition agreement would allow Exxon to walk away from the deal if Congress made changes to a law that makes hydraulic fracking illegal or commercially impracticable.

As the hearing wrapped up, DeGette pounced on Tillerson's earlier comments about disclosure of hydraulic fracking fluids. Tillerson had said Exxon supported the disclosure of the chemicals used, a rather surprising statement given resistance from others in the industry to share such information.

DeGette's beef? If you're OK disclosing the chemicals, then why not have it fall under the Safe Water Drinking Act? Wouldn't it be better to have one federal law regulating fracking, and not 50 different state laws?

Tillerson's point: He didn't know or trust how the EPA would regulate hydraulic fracking once given the authority. In short, he'd rather take his chances and deal with different state laws.

In earlier testimony, Tillerson made similar statements. "States know their water resources and geology, Tillerson said during the hearing. He also said adding a federal layer will complicate things for state regulators and push up costs.

"Anytime you add a layer you add cost," he said. "And any time you add cost there's the potential marginal well that won't be drilled."
See additional BNET Energy coverage of fracking and the Exxon-XTO merger: