Last Updated Jan 20, 2010 5:01 PM EST
The $31 billion all-stock acquisition of XTO Energy (plus an additional $10 billion in debt) would cement Exxon's role in unconventional gas production, an industry that has exploded in the U.S. in recent years due to improvements in technology. XTO is a major holder of unconventional gas plays including the Marcellus Shale.
Tillerson told members of the subcommittee on Energy and the Environment, that Exxon intended to develop XTO into a global unconventional gas producer once the acquisition was complete.
"As we have studied the unconventional resource space globally, we have identified it has enormous potential, certainly here in the United States, which I know we're most interested in today," Tillerson said during the hearing, which was broadcast via Webcast. "But there are enormous unconventional resources globally in many countries that would be very important not just to their country, but to the global energy balance.Tillerson added ExxonMobil has taking up acreage positions in unconventional gas plays in countries around the world. He later said XTO's Fort Worth, Texas corporate office would become Exxon's global unconventional gas headquarters. He envisions transferring some of Exxon's research and development team to the global headquarters.
Exxon's research and development expertise is an important component in this acquisition. T. Boone Pickens, the billionaire energy investor who is pushing for legislation to switch heavy duty trucks to natural gas , noted the R&D component in an interview this week with Reuters.
"I love Exxon getting into the play, the reason being, XTO is not an R&D company," Pickens said in an interview with Reuters Insider. "That just isn't their persona. Exxon has plenty of R&D and Exxon will figure out how to get more gas out of the shale and they'll spend a lot of money. And with it, the rest of the industry will prosper by what they do on their R&D."See additional BNET Energy coverage of fracking and the Exxon-XTO merger:
- Exxon, XTO CEOs: Frack-Fluid Disclosure is OK as Long as EPA is Not In Charge
- Off to Washington: Exxon-XTO Merger Hearing Will Have to Deal with 'Fracking' Rule
- Exxon-XTO Deal a Bet on Natural Gas as Go-to Global Power Source
- Full Disclosure: Schlumberger, Hydraulic Fracking and the Public Access Debate