Friday, December 18, 2009

Hydrofracking Regulation Would Kill Exxon’s XTO Acquisition

Posted by Gregg Gethard
December 17, 2009

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.



1 comment:

  1. Exxon wants to make sure they can back out if the FRAC Act passes. Or if EPA "discovers" that fracking shouldn't get a "bye" from the SDWA, CWA and the other acts that protect the environment and citizen's rights to know.



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