Hydrofracking Regulation Would Kill Exxon’s XTO Acquisition
Natural gas drilling rigs such as this could someday be subject to Congressional regulation. (image: cedarhilltx.com)
An out clause exists for the Exxon in its merger with XTO Energy if Congress decides to regulate hydraulic fracturing, reported Russell Gold of the Wall Street Journal’s Environmental Capital blog on Wednesday. Exxon will spend $41 billion to purchase XTO, an energy firm known for its expertise in natural gas drilling and production. XTO has invested heavily in the Marcellus Shale, a region in western New York and northern Pennsylvania which is home to large reservoirs of natural gas. However, obtaining this gas is difficult and requires the use of hydraulic fracturing, or hydrofracking, in which thousands of gallons of water are mixed with various fluids to fracture rocks holding natural gas. Critics maintain that hydrofracking causes water pollution, which could force Congress to look at the issue.
If Congress regulates hydrofracking to make it “illegal or commercially impracticable,” in the words of the merger agreement, Exxon can back out of its proposed purchase of XTO.
Josh Garrett says: says:
Thanks for your input, Chris. Could you provide a source for your statistic? We’ve been looking at this EPA report on hydrofracking, which says an “average” well requires a median of 57,000 gallons of fluid with a maximum of 150,000 gallons.
Chris says: says:
Just a slight correction. Each well can use not “thousands” but between 1 - 3 Million gallons of water.