Budget Proposals Increase For Water Infrastructure

March 2010 Vol. 65 No. 3

Gas companies wary of EPA involvement with fracturing regulation
The Mobil/Exxon purchase of XTO Energy has sparked new congressional interest in the environmental safety of horizontal shale gas drilling, a concern also lately exhibited by the Environmental Protection Agency (EPA) which has urged New York State to expand its analysis of the impact of shale gas drilling in the Marcellus area. A House energy and environmental subcommittee held hearings on the XTO sale on Jan. 20 where the heads of both companies -- Exxon Mobil and XTO -- said they had a problem with a new piece of congressional legislation requiring natural gas producers to disclose the chemicals they use when fracturing gas deposits in shale. Both men said they had no problem making the disclosure; however, they would oppose including that disclosure requirement in the Safe Drinking Water Act, a law enforced by the EPA.

That is what the Fracturing Responsibility and Awareness of Chemicals Act (FRAC ACT) would do. It was introduced in both the House and Senate last summer. Both Rex Tillerson, chairman and CEO, ExxonMobil Corporation, and Bob R. Simpson, chairman of the board and founder, XTO Energy Inc., opposed the bill. Tillerson explained he opposed EPA's involvement because "the devil is always in the details." Pressed by Rep. Diana DeGette (D-CO), one of the key sponsors, on what he meant by that, Tillerson expanded on his original statement by saying, "It means I don't know how the EPA is going to enact or implement the regulation that you are promoting in your bill." Neither the House nor Senate has held hearings on the FRAC Act.

The back-and-forth between DeGette and Tillerson is important because Exxon-Mobil insisted that a clause be put in the contract allowing ExxonMobil to cancel the deal if Congress passes a law making hydraulic fracturing "illegal or commercially impracticable." Neither Tillerson nor Simpson said the DeGette bill would do that; but Tillerson clearly implied that EPA regulatory involvement in hydraulic fracturing could be a problem.

Any congressional legislation seen as hamstringing new shale gas development would potentially be a crimp in some pipeline expansions. For example, Texas Eastern has announced two separate projects in anticipation of bountiful Marcellus shale gas. One expansion project could handle 300 million cubic feet of gas a day; the second 500 million cubic feet. According to Spectra Energy Corp. (which owns Texas Eastern) spokesperson Wendy Olson, Marcellus gas would account for 80 percent of the first project's contracts and "a significant amount" in the second instance.

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