Wednesday, January 20, 2010

Having Rex on Your Side

ExxonMobil CEO Rex Tillerson testified in front of the House Committee on Energy and Commerce Subcommittee on Energy and the Environment today alongside XTO Energy CEO Bob Simpson. (Link to testimony and transcript.) The two executives went to Washington to defend the acquisition of XTO by Exxon and the practice of hydraulic fracturing. 

Much has been made of the environmental fears from fracking, but Bob Simpson noted that the practice has been used for sixty years.  Tillerson also said that he supports greater disclosure of the contents of the fracking fluid (makes sense because it's not his trade secret). 

The premise behind the hearing was the impact of such a large merger on the regulatory and competitive landscape of domestic natural gas...I guess.  Not that I feel sorry for Exxon, but the company has been vilified as a symbol of Big Business at a time when the general public is either scared or jealous of big companies.  Now that Exxon is getting involved in shale gas - which is being portrayed in Washington as an energy savior - many heads are turning suspiciously. 

I can't say that I blame elected officials for wanting to show their concern, but it generally is the reaction of people who don't truly understand the domestic gas business (not that I'm an expert).  While it's nice to have the political power of Exxon on your side in Washington, it's not going to do too much to sway folks in, say, Mansfield, LA.  The landscape of the gas business is going to change over the next decade as the shale finds are produced with vigor and the Big Boys get involved, but the day-to-day mechanics likely won't change much, except in scale. 

The big test is to see if Congress meddles with the fracking process and changes the economics of drilling.  I don't think they will kill a potential jobs creation engine, especially now that the momentum in Washington quickly is swinging away from the majority.  I think the voices of the strident environmentalists are going to be drowned out by the need to rehabilitate the economy through job creation and by the natural gas lobby in Washington, which has growing influence among many politicians.

2 comments:

Anonymous said...

Rex Tillerson stated there have been one million applications of hydraulic fracturing with no documented instances of drinking water contamination.

Generally the reception by the sub-committee members was positive with only the member from Washington exhibiting a negative attitude toward natural gas (as well as all other fossil fuels).

By the way, it is ExxonMobil. Remember Mobil is responsible for much of their involvement in natural gas.

Les B

Anonymous said...

ExxonMobil didn't buy XTO for their shale gas.