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76–003 2012

THE EXXONMOBIL-XTO MERGER: IMPACT ON U.S. 

ENERGY MARKETS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND ENVIRONMENT 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

JANUARY 20, 2010 

Serial No. 111–91 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 


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COMMITTEE ON ENERGY AND COMMERCE 

HENRY A. WAXMAN, California, Chairman 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

BETTY SUTTON, Ohio 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 


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SUBCOMMITTEE ON ENERGY AND ENVIRONMENT

EDWARD J. MARKEY, Massachusetts, Chairman 

MICHAEL F. DOYLE, Pennsylvania 

JAY INSLEE, Washington 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

JOHN D. DINGELL, Michigan 

RICK BOUCHER, Virginia 

FRANK PALLONE, JR., New Jersey 

ELIOT ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

JANE HARMAN, California 

CHARLES A. GONZALEZ, Texas 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

JIM MATHESON, Utah 

JOHN BARROW, Georgia 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

STEVE BUYER, Indiana 

GREG WALDEN, Oregon 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

MICHAEL C. BURGESS, Texas 


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C O N T E N T S 

Page 

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachussetts, opening statement ................................................... 1 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 3 

Hon. Jay Inslee, a Representative in Congress from the State of Washington, 

opening statement ................................................................................................ 4 

Hon. Joseph R. Pitts, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 5 

Hon. Michael F. Doyle, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 5 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 6 

Prepared statement .......................................................................................... 8 

Hon. Lois Capps, a Representative in Congress from the State of California, 

opening statement ................................................................................................ 11 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 11 

Prepared statement .......................................................................................... 13 

Hon. John Shimkus, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 16 

Hon. Gene Green, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 17 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 18 

Hon. G.K. Butterfield, a Representative in Congress from the State of North 

Carolina, opening statement ............................................................................... 18 

Hon. John Sullivan, a Representative in Congress from the State of Oklahoma, opening statement .................................................................................... 19 

Hon. Cliff Stearns, a Representative in Congress from the State of Florida, 

opening statement ................................................................................................ 20 

Hon. Doris O. Matsui, a Representative in Congress from the State of California, opening statement .................................................................................... 21 

Hon. Steve Scalise, a Representative in Congress from the State of Louisiana, 

opening statement ................................................................................................ 22 

Hon. John B. Shadegg, a Representative in Congress from the State of Arizona, opening statement ...................................................................................... 23 

Hon. Diana DeGette, a Representative in Congress from the State of Colorado, opening statement ...................................................................................... 24 

WITNESSES

Rex Tillerson, Chairman and CEO, ExxonMobil Corporation ............................. 25 

Prepared statement .......................................................................................... 27 

Answers to submitted questions ...................................................................... 71 

Bob R. Simpson, Chairman of the Board and Founder, XTO Energy, Inc ......... 31 

Prepared statement .......................................................................................... 33 

Answers to submitted questions ...................................................................... 78 

SUBMITTED MATERIAL

EPA report, June, 2004 ........................................................................................... 64 

Letter of December 15, 2009, from Members of Congress to the EPA ................ 66 


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THE EXXONMOBIL-XTO MERGER: IMPACT ON 

U.S. ENERGY MARKETS 

WEDNESDAY, JANUARY 20, 2010 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENERGY AND ENVIRONMENT, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:35 a.m., in Room 

2123, Rayburn House Office Building, Hon. Edward J. Markey 

[chairman of the subcommittee] presiding. 

Present: Representatives Markey, Doyle, Inslee, Butterfield, Matsui, McNerney, Welch, Green, Capps, Gonzalez, Matheson, Barrow, 

Upton, Hall, Stearns, Shimkus, Shadegg, Pitts, Walden, Sullivan, 

Burgess, Scalise, and Barton (ex officio). 

Also Present: Representative DeGette. 

Staff Present: Bruce Wolpe, Senior Advisor; John Jimison, Senior 

Counsel; Joel Beauvais, Counsel; Jackie Cohen, Counsel; Michael 

Goo, Counsel; Melissa Cheatham, Professional Staff Member; 

Caitlin Haberman, Special Assistant; David Kohn, Press Secretary; 

Lindsay Vidal, Special Assistant; Mitchell Smiley, Special Assistant; Matt Eisenberg, Staff Assistant; Andrew Spring, Minority Professional Staff; Aaron Cutler, Minority Counsel; Mary Neumayr, 

Minority Counsel; and Garrett Golding, Minority Legislative Analyst. 

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF MASSACHUSETTS 

Mr. MARKEY. The Chair will call to order the Subcommittee on 

Energy and the Environment. 

A little over a decade ago, this committee gathered to review the 

largest industrial merger the world had ever seen. The product of 

that merger, ExxonMobil, is now the largest company in America, 

worth $328 billion and raking in $45 billion in annual profits. 

Last month ExxonMobil announced a $41 billion merger with 

XTO Energy, one of the country’s largest natural gas producers and 

a pioneer in the production of natural gas trapped in shale rock formations and other unconventional sources. The combined entity 

will be, by far, the country’s largest natural gas producer and largest holder of natural gas reserves. 

Remember the old commercial, when E.F. Hutton talks, people 

listen? Well, it is no secret that I disagree with ExxonMobil on 

many aspects of energy policy, but when America’s biggest company makes a big move in the energy sector, policymakers need to 


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listen and understand what that means. That is why I have called 

today’s hearing. 

This merger heralds a fundamental long-term shift in U.S. energy markets and one that deserves our close attention. Over the 

last decade, a small group of companies that most Americans have 

never heard of has been developing huge deposits of natural gas in 

deep shale formations across America. Long believed uneconomic to 

produce, these reserves are now being tapped thanks to a revolution in technology. 

Using a technique called hydraulic fracturing, companies are now 

able to extract the natural gas that is locked within shales and 

other rock formations deep under the Earth’s surface. This involves 

drilling into these formations and breaking them up by injecting a 

high-pressure stream of fluid composed mostly of water and sand, 

making extraction of the gas easier. Horizontal drilling also plays 

a key role in making these reserves economical to produce. 

Companies like XTO are using these complex techniques to turn 

mile-deep shale and other rock formations into producible natural 

gas. XTO has been at the forefront of the shale gas boom over the 

past couple of years, quickly growing into one of the largest gas 

producers and the second largest holder of proven gas reserves in 

the country. 

ExxonMobil is not the only big company getting into this space. 

Today six of the seven largest publicly traded companies in the 

world are oil and gas companies. With this merger and a recent 

joint venture agreement, all six will be significantly invested in unconventional natural gas development in the United States. 

This transformation in the industry is having a major impact on 

the forecast for U.S. energy supplies. Last year the Potential Gas 

Committee, a group of academics and industry experts, increased 

its estimates of U.S. natural gas reserves by 35 percent over the 

estimate from just 2 years before. That increase was due mostly to 

shale gas, which now accounts for one-third of estimated U.S. reserves. 

The brightening outlook for domestic natural gas supplies 

changes the backdrop against which we consider energy policy here 

in America. Natural gas will play a critical role as a bridge fuel to 

the future, a lower-carbon alternative to coal and oil that helps 

America transition from high carbon of the past to a clean energy 

future. An abundant domestic supply of natural gas, together with 

robust investment in efficiency and renewables, can help make 

crossing that bridge to the future faster and less costly. 

Natural gas can only play this role if it is produced in a safe and 

sustainable way. Congress recently urged the EPA to study the potential impacts of hydraulic fracturing on drinking water sources. 

The results of that study will help to guide policy to ensure adequate protection of public health and the environment. 

Now, with that introduction, we are here to listen and to learn 

what this ExxonMobil-XTO deal means for U.S. energy markets 

and energy policy. For decades America’s energy policy has been 

between a rock and a hard place due to our dependence on imported oil from the Middle East, but now we are hearing that the 

natural gas trapped in American rock may provide us a pathway 

away from some of that dependence. I look forward to hearing from 


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our distinguished witnesses on this important subject. We thank 

you for being here. 

Let me turn now and recognize the Ranking Member of the subcommittee, the gentleman from Michigan, Mr. Upton. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Well, thank you, Mr. Chairman. I also welcome our 

two distinguished witnesses this morning. 

As you said, the topic of the hearing is the impacts of the 

ExxonMobil-XTO merger. I see this merger as an important step 

forward to protect American jobs and promote domestic energy security. 

According to the Mineral Management Service, MMS, annual 

revenues from Federal mineral leases are one of the Federal Government’s largest sources of nontax income, over $10 billion in fiscal year 2007. The figure does not include the nearly $100 billion 

in taxes paid by the industry just last year. 

The oil and natural gas industry supports more than 9 million American jobs and adds more than $1 trillion to the national economy. I hope I don’t need to remind our colleagues about the state 

of our economy, that unemployment is still in double digits nationally and 15 percent in Michigan. We have to support private industry that will continue to invest in our economy and keep Americans 

working. 

We are clearly at a crossroads. The policy decisions that this 

Congress makes will have a lasting impact on our economy and energy security. India and China’s energy consumption continues to 

grow by more than 10 percent a year. China is gobbling up energy 

resources around the globe, and consumption will continue to 

sharply escalate as one-third of the world’s population enters the 

industrial age. 

Energy prices do drive our economy. It is foolish and shortsighted 

to take an adversarial posture against American companies that 

seek to develop American energy resources. We should encourage 

domestic investment and domestic energy production, especially as 

our energy needs are expected to grow by nearly 40 to 50 percent 

over the next couple of decades. 

Oil and natural gas are just a small piece of that overall puzzle 

in meeting the energy needs of future generations. We have the capability and technology to responsibly pursue American-made energy through domestic exploration. Let us not forget that for every 

barrel of oil that we produce here at home, it is a barrel less that 

we have to import from someplace abroad. And every new natural 

gas field that is discovered and becomes technologically possible to 

explore makes the U.S. more secure from both an economic and 

natural security perspective. 

We owe it to working Americans to put partisan politics aside 

and pursue long-term solutions. It defies common sense that some 

continue to shun coal, nuclear and increased domestic exploration 

as part of the solution. Continued pursuit of such shortsighted policies will prove devastating. 

It is well known that natural gas will play a more prominent role 

in a carbon-restrained world. In fact, the success of any climate 


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change policy will need to rely heavily on natural gas. Yet some 

Members of Congress are seeking to pursue policies that would 

take a majority of our domestic natural gas off the table. 

I strongly oppose those efforts, and it sounds like Secretary Chu 

agrees with that sentiment. Last week when asked about hydraulic 

fracturing, he said, ‘‘If it can be extracted in an environmentally 

safe way, then why would you want to ban it? I think it can be 

done responsibly.’’ 

We are a Nation of the world’s best and brightest minds. The 

success and innovation of the two companies testifying today is an 

important example of that. With a greater emphasis on harnessing 

new technologies and American ingenuity, rather than government 

regulations that block America’s resources, we can address our expanding energy needs in an environmentally and economically sensitive manner. We should support actions that reduce America’s dependence on energy from unsustainable and unstable foreign governments and dictatorships. I see this merger as contributing to 

that end. 

I yield back my time. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Washington State Mr. 

Inslee. 

OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON 

Mr. INSLEE. Thank you. I am very much interested in the testimony today. I think this is a good news-bad news and a big question here. 

The good news is this would suggest that a major energy producer sees the possibilities of natural gas, which is a— cleaner 

from a carbon dioxide energy source than coal. There is good news 

that a major producer sees that potential. 

There is some potential bad news in the long term view, however, which is that while this investment, I am told, is somewhere 

in the range of $40 billion, the Chinese are investing in zero CO2

sources of energy while we are still seeking fossil fuels, and that 

is troublesome. China is investing $12 billion an hour in renewable 

energy. They plan on having 30 gigawatts of wind in the next two 

decades. They just announced the largest photovoltaic solar energy 

plant in the world in construction in western China. 

We know that in a carbon-constrained world, the good news is 

that natural gas could help us in the short term and alleviate some 

of our CO2 load. The bad news is if ExxonMobil and others are not 

making the investments necessary to go to zero and extremely low 

CO2 levels, then we are going to be left in the dust by China and 

other countries that really are making these massive investments. 

And we have to get out of the gates in that race or be left behind. 

So I will be interested in listening to Exxon’s plans in that regard. 

Lastly, I will be interested in listening to Exxon’s plans to make 

sure we are a carbon-constrained world. If ExxonMobil is making 

this investment under the assumption we will be, we would like to 

have a little help in the U.S. Senate to pass an energy bill that 

will, in fact, constrain carbon dioxide. So we hope we end up with 


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good news on all of those aspects, and I look forward to the testimony. Thank you. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Illinois Mr. Shimkus. 

Mr. SHIMKUS. Mr. Chairman, I wasn’t here when the gavel 

dropped. 

Mr. MARKEY. I am sorry. Then the Chair recognizes the gentleman from Pennsylvania Mr. Pitts. 

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF PENNSYLVANIA 

Mr. PITTS. Thank you, Mr. Chairman. Thank you for holding this 

hearing on this pending ExxonMobil and XTO merger. 

Recently the Wall Street Journal stated that the merger ‘‘has 

been widely viewed as the biggest endorsement yet for shale gas 

production, both in the U.S. and abroad, because ExxonMobil, the 

largest U.S. oil company by market value, has more wherewithal 

to develop unconventional natural gas resources such as shale.’’ 

We are excited about the resource potential of natural gas in the 

Commonwealth of Pennsylvania. The Marcellus shale formation of 

the Appalachian Basin potentially represents the largest unconventional gas resource in the United States. The American Petroleum 

Institute cites that natural gas already meets 24 percent of U.S. 

energy demand. In addition, it heats 51 percent of U.S. Households, cools many homes, and provides fuel for cooking. There are 

also over 120,000 natural gas vehicles being driven on roads all 

across the United States. Natural gas burns much cleaner than 

gasoline or diesel, making it more environmentally friendly and 

better for our atmosphere. 

The pending merger of ExxonMobil and XTO would create the 

largest natural gas producer in the United States with the largest 

base of domestic reserves in the industry. 

There is one thing that people across the ideological spectrum 

can agree on: When it comes to the issue of energy, the United 

States needs to produce far more clean energy from a source that 

does not rely on the whims of tyrants in far-off parts of the world. 

I believe that natural gas will help us achieve our energy independence and make our environment cleaner, and I look forward to 

hearing from our witnesses today on the vision for further exploration and use of natural gas in the United States. 

I yield back. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Pennsylvania Mr. 

Doyle. 

OPENING STATEMENT OF HON. MICHAEL F. DOYLE, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF PENNSYLVANIA 

Mr. DOYLE. Thank you, Mr. Chairman, for holding this important 

hearing today, and thank you to Mr. Tillerson and Mr. Simpson for 

traveling here to provide testimony on the proposed merger. 

If you talk to people in my neck of the words, in Pittsburgh, 

Pennsylvania, about energy issues, there is a lot of excitement and 


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optimism. In western Pennsylvania we realize you need the whole 

breadbasket of energy to be successful in America. Westinghouse 

makes the AP–1000 in western Pennsylvania. We have the National Energy Technology Lab that does research on carbon capture 

and sequestration so that coal has a future in our region. We have 

been known as a steel city, but pretty soon we may be known as 

the Saudi Arabia of natural gas with the Marcellus shale sitting 

underneath western Pennsylvania. 

So, we are excited about what it means for the economic future 

of our State. Last year alone Pennsylvania could attribute nearly 

50,000 jobs to environmentally safe natural gas production. I have 

long supported the development of domestic natural gas resources 

as one of the solutions to meeting the growing energy demands in 

the United States. This proposed merger between ExxonMobil and 

XTO Energy demonstrates the importance of unconventional gas 

resources for our energy portfolio. 

We have had enormous success in my State of Pennsylvania with 

horizontal drilling in natural gas shale plates, and I am hopeful 

that the merger between these two companies will produce even 

better technology and more efficient drilling techniques. Many consider the Marcellus shale to be in its infancy of development, and 

while we are all eager to exploit the clean energy resources beneath our feet, it is equally important to develop these resources 

in an environmentally sound and economically feasible way. 

My State, Pennsylvania, has done a great job in regulating the 

natural gas industry, while allowing it to grow and prosper. Both 

ExxonMobil and XTO Energy have been a part of this growth, and 

I look forward to their continued involvement in Pennsylvania. 

Mr. Chairman, thank you. I yield back the remainder of my time. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the Ranking Member of the full committee, 

the gentleman from Texas Mr. Barton. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. Well, thank you, Mr. Chairman, and thank you, 

Massachusetts. I know we are here to talk about hydraulic fracturing and energy, but I want to say, since this is the committee 

of primary jurisdiction over healthcare, people ought to listen to 

what happened in Massachusetts. 

When a State that hasn’t voted for a Republican Senator since 

1972 when I was a senior in high school, only 2 years removed 

from Joe Namath and the Jets winning the Super Bowl, which 

could happen again this year, by the way, Mr. Chairman, although 

Joe Namath won’t be the quarterback, people ought to listen. The 

healthcare bill is dead. 

If my friends on the Majority really want to work together, we 

will work to try to come up with a healthcare reform with the accent on reform that works. But who would have ever thought that 

a conservative Texas Congressman would be saying, thank you, 

Massachusetts? But it happened. 

Now, on today’s hearing I want to welcome my friends from 

ExxonMobil and XTO. We are here to talk about domestic energy, 


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and we are here to talk about our natural gas reserves and the 

issue of hydraulic fracturing. 

I am a small, small, small partner in a natural gas well in Johnson County, Texas, in the Barnett Shale, and that is probably my 

4-year-old son’s college education. So I am very supportive of the 

concept of domestic energy production. 

I am very supportive of private ownership and stewardship, and 

I think, Mr. Chairman, you have got two excellent leaders in the 

energy sector here who want to merge their companies to be even 

more efficient and more productive for producing more Americanmade energy. It is a proper role for this subcommittee to take a 

look at that merger and some of the issues that are associated with 

it, but I don’t think there needs to be any mistake that the more 

energy we make in America, the better off we are going to be. 

Again, Mr. Chairman, thank you for two things: Holding this 

hearing, and not running for the Senate in Massachusetts. I think 

had you run, I think the outcome would have been different, and 

your side would be smiling this morning, and my side would not 

be. We would be smiling for you personally, but we wouldn’t be 

smiling that the Ds won. We are glad you decided to stay in the 

House. 

I yield back. 

[The prepared statement of Mr. Barton follows:] 


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Statement of The Honorable Joe Barton 

Hearing entitled "The ExxonMobil-XTO Merger: Impacts on U.S. Energy Markets" 

Subcommittee on Energy and Environment 

Committee on Energy and Commerce 

January 20, 2010 

Thank you, Mr. Chairman, for calling this hearing. Today we will examine the merger of 

Exxon Mobil with XTO Energy and the deal's implications on natural gas and energy markets. 

Over the past several years, natural gas has become an increasingly important part of our 

domestic energy supply. Even many proponents of a cap-and-trade system for slowing global 

warming, which as many of you know I am not, have extolled the virtues of natural gas as a fuel 

with half the carbon content of coal when used to generate electric power. Anyone who wants 

energy security, cleaner air, or lower carbon emissions must want more natural gas development. 

Its continued domestic development is vital to our energy future. 

Today we have before us two leaders in the energy industry, XTO and Exxon Mobil, both 

of which have a long and historic presence in North Texas. Though Mr. Simpson and Mr. 

Tillerson are not constituents of mine, their respective companies employ many people in the 6th 

District of Texas. XTO has 3,100 employees in the Dallas-Fort Worth area, and as part of the 

terms of this merger, those employees will remain in their posts. In the past decade, the work of 

several independent producers like XTO has completely changed the economic landscape of 

North and Central Texas. The technology known as hydraulic fracturing has been a gamechanger in the U.S. natural gas industry. This process, along with other improvements, has 

allowed the country to increase its domestic production of natural gas by 65% over the past 10 

1 
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years. We are now able to produce gas in enormous quantities in places no one believed gas 

even existed. The modern use of fracking is, without question, the most significant technological 

advancement in the oil and gas industry in decades. 

This feat of engineering has been a particularly positive development for property owners 

sitting atop formations like the Barnett Shale in North Texas. Starting in the early 2000s, 

companies like XTO started buying land and leases for new gas drilling. Through years of 

research, the industry poured billions of dollars into what promised to be a revolutionary 

technology, and the results have been spectacular. With massive new discoveries in the shale 

rock, tight sands, and coal seam formations of Texas, Colorado, Pennsylvania, West Virginia, 

Louisiana, Oklahoma, and others, we have made this country more energy independent and 

therefore more secure. Jobs have sprouted up all over the country for engineers, geologists, 

landmen, roughnecks, welders, pipefitters, steelworkers ... the list goes on. 

As an engineer by trade, the intricacies of new science and technology that vastly 

improves our economy remain very interesting to me. And I'm encouraged to see what an 

industry is capable of accomplishing when allowed to function in a free market without undue 

regulatory burdens. Unfortunately, some fear that this progress and its obvious benefits are a 

threat to our environment. I believe this is an unfounded fear. And while there are some who 

would use the heavy hand of federal regulation to stop unconventional gas production, I believe 

this would have catastrophic consequences to our domestic supply of gas, to the jobs created to 

harness this resource, and to commodity prices on the international marketplace. I cannot think 

of a more irresponsible way for Congress to act. 

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I applaud the work done by Mr. Simpson and his company to bring hydraulic fracturing 

to commercial scale. XTO has proven to be a leader in the field, and their successes have 

benefitted the country as a whole. The last thing Congress should consider is a way of 

preventing such successes by others in the future. 

I am glad we are holding this hearing today, Mr. Chairman. I very much look forward to 

testimony and questions from both sides. Thank you I yield the balance of my time. 

3 
11 

Mr. MARKEY. I thank the gentleman very much. I would say that 

the politics may have changed, but the problems that we have to 

solve have not as we sit here today, whether it be energy, health 

care, Wall Street. The same problems still exist, so we will all have 

to continue to move forward to solve those problems. But I thank 

the gentleman for his personal support of my noncandidacy. I 

thank you. 

Let me now recognize the gentleman from Georgia, Mr. Barrow. 

Mr. BARROW. I waive an opening statement. 

Mr. MARKEY. Great. 

The Chair recognizes the gentlelady from California Mrs. Capps. 

OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mrs. CAPPS. Thank you, Mr. Chairman, for calling this hearing 

to review the pending merger between ExxonMobil and XTO Energy, and thank you to the CEOs of each of these companies for 

appearing to testify today. 

This merger raises a number of issues with respect to the future 

direction of the U.S. domestic oil and gas industry and the potential environmental impact of increased unconventional natural gas 

development. I am eager to learn about it. 

We know that natural gas is the cleanest of the fossil fuels. It 

produces less than half as much carbon pollution as coal and onethird of petroleum burned in cars. Gas findings in several States 

have increased the proven reserves and driven potential reserves 

even higher, it is my understanding, and recent technological advances have made the development of unconventional natural gas 

resources more affordable. This creates an opportunity to use natural gas as a bridge fuel, signaling a 21st-century energy economy 

that relies on efficiency, renewable sources and low-carbon fossil 

fuels such as natural gas. 

However, there are legitimate public health and global warming 

concerns about the impact from natural gas production. I am eager 

to learn about these as well. Adjacent communities are concerned, 

as am I, about the public health impacts from the use and release 

of toxic substances that are used in natural gas production processes. This is an issue that deeply concerns me, and it is an issue 

our committee should continue to look into. 

But, for today, I am looking forward to us taking a closer look 

at this proposed merger. I look forward to the testimony that you 

are about to present, especially regarding investments that you are 

making to serve three paramount national priorities: growing our 

economy, securing our Nation’s energy supplies, and combating 

global warming. 

Thank you, Mr. Chairman. I yield back. 

Mr. MARKEY. The gentlelady’s time has expired. 

The Chair recognizes the gentleman from Texas Mr. Burgess. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. I thank the Chairman. I, too, want to welcome two 

friends and two companies who are very important to my district 

in North Texas. I have an opening statement that I will submit for 


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the record. I don’t know if I will get through all the points that I 

need to make. 

But this merger is an important one. It highlights Exxon’s commitment to shale production in regions like north Texas, and it is 

important that that development continue to grow and provide 

jobs, and, yes, be developed in an environmentally sensitive way. 

I think we all have an interest in that, because, after all, we live 

in the area where this activity is occurring. 

I was heartened to hear from both Mr. Tillerson and Mr. Simpson that one of the critical factors in ExxonMobil-XTO’s merger 

was XTO’s employee knowledge base in shale development. 

Congress does rightly share a great deal of the blame for the way 

things are going in this country right now. We have almost singlehandedly destroyed every sector of the American economy, financial, housing, except for health care and energy, and it looked like 

this year that we were trying to destroy those as well. This is an 

opportunity for us to learn how perhaps we might be helpful. 

We have been helpful in the past. Research and development dollars provided by this committee in previous energy bills allowed for 

the development of the recovery of gas from the tight shale formations, and Congress justifiably should share some of that credit. 

But we have also been deleterious towards many of the other aspects toward developing energy, American energy from American 

companies, which we have heard over and over again. And Boone 

Pickens has said it so clearly: You can either be for natural gas, 

or you can be for foreign oil, and I will put my lot with natural gas. 

We were all heartened a year ago, 2 years ago, to hear the 

Speaker of the House say that natural gas is not a fossil fuel, so 

I think the globe warming issue was taken off the table by the 

Speaker of the House, and I, for one, was grateful for her leadership on that. 

I will submit the rest of my statement for the record. I thank the 

witnesses for being here and very much look forward to their testimony. 

Mr. MARKEY. The gentleman’s time has expired. 

[The prepared statement of Mr. Burgess follows:] 


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Congressman Michael C. Burgess, M.D. 

Opening Statement 

Subcommittee on Energy & Environment 

Hearing entitled "The ExxonMobil-XTO Merger: Impacts on U.S. 

Thank you, Mr. Chairman. 

Energy Markets" 

January 20, 2010 

I hope that today's hearing will focus on the very important and positive 

merger between ExxonMobil and XTO Energy, and not become a forum 

to attack so-called "Big Oil" or use scare tactics against the responsible 

energy production both of these companies have pursued for decades. 

I was very pleased to hear of the merger between these two companies 

and the economic impact this will have on my own district back in North 

Texas. XTO Energy has been a productive employer in the Fort Worth 

region, employing some 1,250 men and women in the area and 

contributing to the relatively low unemployment figures my district has 

seen compared to the national averages. 

Indeed, the Barnett Shale, which covers much of my district, has been an 

economic boon to the region, providing steady income and jobs to many 

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of my residents. Shale production has been effectively and safely 

utilized to provide natural gas to thousands of Americans, and produces 

a clean, abundant resource for people to heat their homes and run their 

vehicles, and create electricity. Across the country, communities are 

recognizing the positive effects that shale production has produced. 

This merger clearly highlights Exxon's commitment to shale production 

in regions like North Texas, and I'm hopefully that development will 

continue to grow and provide jobs. I was heartened to hear from both 

Mr. Tillerson and Mr. Simpson that one of the critical factors in Exxon 

pursuing XTO was XTO's employee knowledge-base in shale 

development. I understand that Exxon and XTO intend to keep XTO's 

headquarters in the Fort Worth area, and likewise intend to retain most 

of the 3,300 employees at XTO, including the 1,250 located in North 

Texas. I look forward to working with both of you to ensure XTO's 

continued presence in the Fort Worth region. I hope, as you continue to 

develop the Barnett Shale and others, it will mean increasing your 

payroll in the area. My constituents have seen first-hand the positive 

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economic impacts that this production has shown, and are eager to see 

how it can continue to help grow the region. 

Again, I hope that this hearing will focus on the positive contributions 

this merger will have on the development of clean natural gas in this 

country. I look forward to working with both witnesses in the future as 

the company expands even further in the Fort Worth area. 

With that Mr. Chairman, I yield back. 

- 3 -
16 

Mr. MARKEY. The Chair recognizes the gentleman from California Mr. McNerney. 

Mr. MCNERNEY. Thank you, Mr. Chairman, for calling this hearing. This is a very important merger, so it is good that we have 

you in front of us today. I have been very excited to see the effect 

of horizontal drilling on the natural gas prices over the last 5 

years. Supplies have become more plentiful. The prices have gone 

down. 

I am also concerned about the environmental impacts on drinking water. So I don’t know if you are going to address that today 

or not, but it is something that we are concerned about. 

I am also concerned about the impact of this big merger on our 

national economy, on jobs. So I look forward to seeing how you are 

going to address that issue. It is something we care about deeply 

in California, since our unemployment is about 18 percent. 

So I thank you for coming, and I yield back. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Illinois Mr. Shimkus. 

OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

It is times like this that I miss John Peterson, our former colleague from Pennsylvania, who was like the foremost Member who 

really talked about the benefits of natural gas for the manufacturing arena, for everyday costs. He would always hold up a map— 

in fact, this is one of his old maps of the world and the competitive 

disadvantage we have because of high natural gas prices. As you 

know, supply and demand, new opportunities can help lower costs. 

He would remind us about that natural gas is 70 to 80 percent 

of the cost of fertilizer, which is important to the agricultural economy. Farmers use it for irrigation, crop drying, food processing, 

crop protection and nitrogen fertilizer production. We know about 

home heating in the Midwest. It is all, in essence, natural gas. We 

know it in the manufacturing community. Plastics, it is a key ingredient. We just need to have more. 

Now, I am going to continue to reject putting the words ‘‘carbon’’ 

and ‘‘pollution’’ together. I think the failed Copenhagen meetings 

and Climategate and the coverup there, along with job losses, is 

also going to put to rest this whole climate issue and that carbon 

dioxide is a pollutant, and we will continue to fight against any 

move to do that. 

But we can agree on energy security, and that is where more 

supply, a diversified portfolio are so critical. Whether it is coal, natural gas, nuclear power, hydroelectric, wind, solar, we need that for 

energy security for this country. 

That is why this is so important. This technology is great. It is 

underneath the water table. There is no fear. We should not do any 

more harm and intervene anymore in the current rules and regulations. 

I appreciate this hearing, and I yield back my time. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Texas Mr. Green. 


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OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you, Mr. Chairman, and it is great that my 

colleague from Pittsburgh is going to have more of my folks from 

Houston coming up there in Pittsburgh. We are going to hear from 

him a lot more, I guess, if it is going to be the next energy capital. 

I want to thank you, Mr. Chairman, for holding this timely hearing on the ExxonMobil-XTO merger and its impacts on the U.S. 

Energy markets. Financial and energy analysts have touted the 

significance of this merger’s potential, the fifth largest U.S. energy 

company acquisition since 1995, and what it may forecast for future U.S. and world energy demands. 

There is no doubt that a combined ExxonMobil-XTO entity would 

be a major player in U.S. exploration and production activities. 

XTO, headquartered in Fort Worth, Texas, has extensive expertise 

in tight gas, shale gas, shale oil and coalbed methane development, 

which plays in the most unconventional resource basins in the U.S. 

Combined with ExxonMobil’s considerable financial capabilities, 

global resource base and advanced R&D capabilities, ExxonMobilXTO would hold almost 10 percent of all proven U.S. Natural gas 

reserves and become the largest U.S. natural gas producer. 

Some analysts have raised questions as to whether the merger 

signals further widespread consolidation in America’s energy industry or shifts in strategy for the large, integrated oil and gas companies. Traditionally onshore unconventional gas players have been 

dominated by smaller independent companies, while majors have 

focused on offshore, where resource bases are sufficiently large to 

justify significant investment required for production. 

With decreased U.S. natural gas production last year, and with 

increasing costs for gas producers to acquire new acreage and expand production capabilities, new partnerships with integrated 

companies may increase the access to untapped resources. 

Most importantly, the proposed merger validates the demand for 

clean-burning natural gas as a fuel source, which will only continue 

to grow. By 2030, natural gas will be the largest source of energy 

globally, and demand could further increase as governments consider imposing costs on carbon emissions. 

With half the carbon emissions of coal and 30 percent less emissions than oil, natural gas is our most critical transition fuel as we 

move towards cleaner energy. With recent advances in technology 

to extract more natural gas from unconventional gas resources, 

such as extended reach, horizontal drilling or hydraulic fracturing, 

we can unlock America’s 100 years’ supply of natural gas. 

This hydrofracking, U.S.-developed technology, is being exported 

to Europe and China. Due to environmental-economic benefits of 

natural gas production, Congress and the administration must be 

diligent, as we consider policies to address global climate change, 

to utilize our domestic energy resources. 

I yield back my time. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Oregon Mr. Walden. 


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OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

Mr. WALDEN. I thank you very much, Mr. Chairman. 

I want to welcome our witness here today, our witnesses. Thank 

you for being here. 

I don’t have an opening statement per se, but I do have some 

things I hope you will address in your comments and your testimony. 

It seems to me two of the biggest issues we face in the country 

today are connected, and those are jobs and energy. I grow concerned about the amount of energy potential that we have in the 

United States, and yet the amount that is kept off limits for development by the Congress and the Federal Government. 

So I would be interested to know both in terms of the sort of jobs 

that are created by your industry, by your company, what you see 

in terms of the opportunity to create new jobs going forward 

through this merger, and also the amount of natural gas and all 

that could be developed and what that could mean for America and 

American jobs. 

I, for one, am eager to get America on a new energy path, one 

that uses our own great resources, invests in our own country, 

rather than send all this money overseas or to foreign countries, 

some of which plot against us, and some of which clearly are not 

our best friends. So I hope you will talk about the technologies that 

are coming forward that your companies have been involved in. I 

hope you will talk to us about how big these resources are, and 

what we need to do to gain access to those, and what benefits could 

be derived from them, and what it means in terms of the economy 

and jobs for America going forward. 

It looks to me like if we can invest in our own resources using 

new technologies in environmentally safe ways, we can generate 

revenues to the government and create jobs in our hometowns. 

I look forward to your testimony, and with that, Mr. Chairman, 

I yield back my time. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Texas Mr. Gonzales. 

Mr. GONZALEZ. I waive opening. 

Mr. MARKEY. The gentleman waives his opening. 

The Chair recognizes the gentleman from North Carolina Mr. 

Butterfield. 

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH 

CAROLINA 

Mr. BUTTERFIELD. Thank you, Mr. Chairman. I, too, want to 

thank you for convening this hearing, and especially to the two witnesses. I anticipate very eagerly your testimony today. 

Mr. Chairman, the proposed merger that we are talking about 

today recognizes the energy industry’s recognition of natural gas as 

an important bridge fuel for the coming years. The goal of curbing 

carbon emissions while also becoming energy independent in this 

country are captured in the increased use of natural gas. So this 

is a good thing. 


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Burning natural gas produces 50 to 70 percent fewer greenhouse 

gas emissions than other fossil fuels and will be critical to achieving an 83 percent decrease in greenhouse gas emissions by 2050. 

We can do it, and we are going to do it, contrary to what many of 

my friends on the other side suggest. 

As we continue to develop technology to sequester carbon from 

coal, the demand for natural gas will continue to grow. In Wayne 

County in my North Carolina district, Progress Energy announced 

a decision last August to convert three coal-fired powered plants to 

natural gas. Duke Energy in my State has ongoing plans for several natural gas power plants. Energy companies across the U.S. 

are dealing with the future of a carbon-constrained environment by 

moving to natural gas. 

Growth in unconventional natural gas production also greatly expands America’s reserves and our ability to be energy independent. 

Expansion of exploration and production in the Barnett, Marcellus 

and other unconventional sources has increased 65 percent since 

1998. 

In 2008, 91 percent of our supply came from domestic sources. 

Continued growth in the domestic natural gas market is good for 

energy independence, so long as there is appropriate competition— 

and I stress that, appropriate competition—to ensure fair pricing 

and commitment to environmental stewardship. 

We would be wise to carefully consider the impact, economically 

and environmentally, of this merger. The incredible growth of unconventional production must be mirrored by regulatory activity 

that ensures the public trust. 

I have run out of time, Mr. Chairman, but thank you very much 

for recognizing me. I look forward to the testimony of these two 

men. 

I yield back. 

Mr. MARKEY. We thank the gentleman. 

The Chair recognizes the gentleman from Oklahoma Mr. Sullivan. 

OPENING STATEMENT OF HON. JOHN SULLIVAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OKLAHOMA 

Mr. SULLIVAN. Thank you, Mr. Chairman. Thank you for having 

this hearing. 

I want to thank our two witnesses, Mr. Tillerson and Mr. Simpson. Thank you so much for what you are doing. I wish the Congress would take your lead on this very important issue of natural 

gas in our country. 

When we look at energy policy in this country, long-term natural 

gas supplies should be a big part of it. I am from Oklahoma. It is 

the third largest gas-producing State in the United States, so I 

have a vested interest in this. 

That is why it is so important that we use natural gas for the 

other things, like transportation fuel. That is why I am the Republican author of the Natural Gas Act. I think it is very important 

that we use it for transportation fuel. There are 10 million natural 

gas vehicles around the world, and we have about 150,000 here in 

the United States. 


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Also, I want to hear more about we do have a large reserve of 

natural gas here in the United States, so it is American energy. We 

lessen our dependence on foreign oil, like others have said. But one 

of the reasons we have gotten so much of that is because of the 

drilling techniques, the horizontal drilling and the hydraulic 

fracking. 

I read a report, and you guys would know more, but I hear like 

60 to 80 percent of the wells drilled in the next 10 years are going 

to have to use hydraulic fracking, so I think it is horrible, it would 

be detrimental to this country if they outlaw that practice. 

Also I am concerned, and I want to hear what you have to say 

later on, about the EPA removing the exemption of hydraulic 

fracking from the Safe Drinking Water Act. 

Also, you know, we hear Barack Obama and others, President 

Obama, talk about all the stimulus spending and the taxing are 

creating all these jobs, yet unemployment has gone up. I just want 

to commend you, because what you are doing right here, this is 

how jobs are created right here. The government doesn’t do it; the 

private sector does it. We have about 2 million people that work 

in the energy industry in this country, and they are going to lose 

jobs if these things go into effect. We want to create jobs, and I 

want to commend you for that as well and hear more about that 

as well. 

Thank you very much. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Vermont Mr. Welch. 

Mr. WELCH. Thank you very much, Mr. Chairman. I look forward 

to hearing the testimony about this. 

I just want to say on two things: One, obviously natural gas is 

a very important component of energy. Its contribution to global 

warming is a good deal less than other sources of fuel. 

Secondly, I just say this to ExxonMobil: As a huge and very successful energy company, well run, I would urge you to get much 

more active on bringing attention and bringing solutions to the climate change problems that this country faces. ExxonMobil does 

have a history of resistance to acknowledging how severe that problem is. It has rhetorically changed its ways in some respects recently. It has devoted a substantial amount of funds to advertising. 

But I understand that it still is very resistant, or so it said, to playing a much more active role that its prominence in the industry 

would allow it to play. 

So this merger has significant questions about competition, about 

energy, about costs, but it also, I think, has significant implications 

as to what role ExxonMobil is going to play in assisting this country in addressing the problem of climate change. 

Thank you, Mr. Chairman. I will yield back. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Florida Mr. Stearns. 

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. STEARNS. Thank you, Mr. Chairman. I want to thank you for 

calling this hearing. 


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I am very supportive of this proposed merger, but I would sidetrack. I just showed you a map of Massachusetts in the red and 

blue, and it appears your congressional district still remains under 

‘‘Democrat,’’ but it looks like most of Massachusetts, including all 

out to Cape Cod, is now in the red. I spent 4 years in South Deerfield. That part of the area looked like it remained Democrat. But 

I think you made a wise decision, based upon looking at this map. 

Mr. MARKEY. If nothing else, this election made it possible for 

you to publicly announce that you were in South Deerfield for 4 

years. Now you feel a little bit more comfortable. 

Mr. STEARNS. I understand. 

I think my colleague on that side talked about fracturing and 

how they are concerned about the drinking water, but I would say 

to him that since the 1940s, hydraulic fracturing has helped to 

produce more than 7 billion barrels of oil and 600 trillion cubic feet 

of natural gas in the United States. So the oil and gas industry 

strongly believes that the continued use of hydraulic fracturing is 

essential to produce more of the oil and natural gas that the U.S. 

will consume in the next decades ahead. 

According to the American Petroleum Institute, up to 80 percent 

of natural gas wells drilled in the next decade will require, will 

simply require, hydraulic fracturing, and without it most of our 

country’s abundant natural gas resources cannot be produced. So 

I hope my colleagues on that side will not be overly concerned 

about the impact on the drinking water. 

One thing I will say, Mr. Chairman, there was an article dealing 

with this merger in the press. It said XTO has hedged more than 

half of its natural gas production for 2010, or about 1.25 billion 

cubic feet per day, with some additional hedges already in place in 

2011. By contrast, ExxonMobil says it makes little use of derivative 

instruments to hedge oil and gas production. So I guess maybe one 

question that will come out of this hearing is what will this deal 

mean for trading operations going forward at XTO? 

Mr. Chairman, with that, I thank you again for the hearing, and 

I look forward to the witnesses’ opening statements. 

Mr. MARKEY. I thank the gentleman very much. 

The Chair recognizes the gentlelady from California Ms. Matsui. 

OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. MATSUI. Thank you, Mr. Chairman, for calling today’s hearing. 

I would like to also thank the panelists for appearing before us 

today, and I look forward to hearing your views on the recently 

proposed merger at your companies and the ramifications of this 

agreement for the U.S. oil and gas markets. 

As we continue to discuss ways in which to address global climate change, it is imperative that the Federal Government support 

approaches that are effective, innovative and efficient. It is equally 

important, however, that we ensure that the merger not adversely 

impact North American oil and natural gas markets, and with regard to production, competition, prices and consumers. 


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The ExxonMobil-XTO deal may prompt its peers to move towards 

similarly and consolidate an already tight oil and gas market, creating additional concerns for the regulatory bodies that oversee the 

oil and gas supply. More importantly, studies have shown that 

fewer participants in energy can lead to both lower and higher 

prices for consumers. We cannot allow our best intentions to encourage the expansion of natural gas to impair our ability to protect the health, safety and welfare of the American people. 

While it is also critical that we embrace new technologies, we 

cannot do so at the expense of clean water, clean air or our country’s security. 

I look forward to working with my colleagues to examine these 

issues and to making certain that the proposed merger is in keeping with our efforts to save our environment and generate new 

jobs. 

Mr. Chairman, I thank you for calling today’s hearing, and I 

yield back the balance of my time. 

Mr. MARKEY. We thank the gentlelady. 

The Chair recognizes the gentleman from Louisiana Mr. Scalise. 

OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA 

Mr. SCALISE. Thank you, Mr. Chairman. 

The energy industry is critical in my home State of Louisiana, 

and the Haynesville Shale Play, along with other major natural gas 

finds around the country, have changed the landscape of our country’s energy outlook. I look forward to learning more about this 

merger and its impact on our Nation’s energy economy, and I welcome the panelists to our committee. 

As we discuss the issue today, we cannot overlook the fact that 

our country lacks a comprehensive national energy policy that will 

put the U.S. on a path to energy independence. Instead of working 

in a bipartisan manner to help break our dependence on Middle 

Eastern oil and create new jobs, this administration and the liberals running Congress are sending our country down a path of 

economic destruction while pursuing a radical environmental agenda that will lead to nothing more than millions of American jobs 

being shipped overseas to countries like China and India at a time 

when our American families can least afford it. 

The cap-and-trade energy tax, along with the threat of heavyhanded EPA regulation of carbon, represent the most drastic and 

dangerous attempts to hijack our country’s energy sector. In my 

home State of Louisiana, thousands of jobs will be lost under a capand-trade energy tax. As a matter of fact, there is a company that 

is currently basing their decision to locate in either Brazil or south 

Louisiana on what Washington does on the cap-and-trade energy 

tax. 

These dangerous proposals, taken together with their efforts to 

create a government takeover of health care, along with the reckless spending and borrowing, will destroy the fabric of our country, 

cripple our economy, and place an overwhelming burden on our 

children and grandchildren. 

It seems, Mr. Chairman, that this administration and those running Congress will stop at nothing to pursue this liberal agenda 


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that is killing our economy, resulting in thousands of dollars in 

higher taxes for American families and small businesses, and shipping millions of American jobs overseas. 

Instead of pursuing this radical agenda, it is time for this administration and the liberals running Congress to finally listen to the 

American people, and the result of last night’s election in Massachusetts should serve as a wake-up call that the American people 

have rejected this liberal agenda. They want us to focus on jobs, 

and they deserve better than the back-room deals being made on 

health care. 

Thank you, and I yield back. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Arizona Mr. Shadegg. 

OPENING STATEMENT OF HON. JOHN B. SHADEGG, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARIZONA 

Mr. SHADEGG. Thank you, Mr. Chairman. And I want to thank 

our witnesses. I look forward to hearing your testimony. 

It is widely known that the merger between ExxonMobil and 

XTO Energy is conditioned on hydraulic fracturing remaining legal 

and practicable. I think this raises for this Congress yet one more 

occasion to visit the issue of public policy, and to do it in a balanced and reasonable way. 

There is virtually no nation, indeed I think no nation in the history of mankind, that has locked up more of its natural resources 

and done more damage to its job base than this country in the 

name of protecting its natural resources and its environment. 

On the one hand, that is appropriate. We should be careful to 

protect our environment. But on the other hand, I hope we as a 

Nation have begun to learn that that has to be done with great balance and care, because irrational restrictions can cause us to do 

what we are doing now, which is to buy our energy from foreign 

sources who have no interest in our national security, and indeed 

are often our enemies, and who will not do the job of extracting 

that energy in as clean a fashion as we would. 

In 2007, 77 percent of the natural gas we consumed in the 

United States came from the United States. A vast majority of our 

domestic supply is accessible only through hydraulic fracturing, a 

technique that has been used to extract gasoline or oil for more 

than 50 years. The EPA itself found, quote, ‘‘no confirmed cases 

that are linked to fracturing fluid injection into CBM wells or subsequent underground movement of fracturing.’’ Further, although 

thousands of CBM wells are fractured annually, EPA did not find 

confirmed evidence that drinking water wells have been contaminated by hydraulic fracturing. 

It is incredibly telling that this kind of merger has to be conditioned on the government not pursuing an irrational policy which 

will lock up our own natural resources. I commend the people that 

have put this deal together. I believe it is in our Nation’s interest, 

and I think it is time that we focus on producing American energy 

in America, American jobs in America, and protecting our own environment, rather than relying on foreign resources where they do 

no better job of protecting their environment, which is indeed our 

environment as well. 


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With that, I yield back. 

Mr. MARKEY. The Chair recognizes the gentleman from Texas 

Mr. Hall. 

Mr. HALL. Mr. Chairman, thank you. I subscribe to everything 

Mr. Shadegg said, and, gosh, are we going to miss him. 

Mr. MARKEY. The gentleman’s time will be preserved for questions if he would like. 

Now, we have completed all opening statements from members 

of the subcommittee, but we have Ms. DeGette, who is here with 

us, a member of the full committee. By unanimous consent, we will 

grant her 2 minutes, if she would like, to make an opening statement. 

OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Ms. DEGETTE. Thank you so much, Mr. Chairman. I appreciate 

your and Ranking Member Upton’s comity for allowing me to participate in the hearing. 

Being from Colorado, of course, I am a very strong supporter of 

natural gas development. It is a clean domestic energy resource 

and a big source of jobs in my own State. 

In the merger agreement between ExxonMobil and XTO, there is 

language effectively allowing ExxonMobil to cancel the merger if 

laws are enacted making hydraulic fracturing ‘‘illegal or commercially impracticable.’’ Seeing as I have introduced legislation on hydraulic fracturing, this piqued my interest. 

Good news. My bill would not make hydraulic fracturing illegal, 

nor would it make it commercially impracticable. I support the use 

of hydraulic fracturing. Please let me say that again. I support the 

use of hydraulic fracturing. But I also support it being done in an 

environmentally responsible way. 

Currently there is no requirement under Federal law to disclose 

the chemicals used in hydraulic fracturing, although we know that 

many of those chemicals may be highly toxic. The oil and gas industry is the only industry exempted from one of the Nation’s landmark drinking water laws, the Safe Drinking Water Act, and, 

frankly, all of our constituents have the right to know what chemicals are being used in their community, particularly if they are 

near underground sources of drinking water. 

My bill would simply require disclosure of the constituents used 

in fracking fluids, while protecting the proprietary formula, much 

like we require Coca-Cola to list its ingredients, but not its secret 

recipe. 

What my bill would do is simply restore the EPA’s authority to 

ensure that hydraulic fracturing does not endanger drinking water 

under the Safe Drinking Water Act. That seems reasonable and 

simple to me. I think that is our job as Congress. 

I look forward to the testimony today, and also to working with 

the industry to make sure we can support hydraulic fracturing, 

while at the same time making sure it remains environmentally 

sound. 

Mr. MARKEY. The gentlelady’s time has expired. We thank her 

for joining us today. 


pwalker on DSK7TPTVN1PROD with HEARING
25 

All time for opening statements by Members has been completed, 

so we will now turn to our panel and welcome them to our hearing. 

Our first witness this morning is Mr. Rex Tillerson. He is the 

chairman and the CEO of the ExxonMobil Corporation. Mr. 

Tillerson has held a variety of management positions in domestic 

and foreign operations since joining the Exxon organization in 

1975. 

We thank you for joining us, Mr. Tillerson. Whenever you are 

ready, please begin. 

STATEMENTS OF REX TILLERSON, CHAIRMAN AND CEO, 

EXXONMOBIL CORPORATION; AND BOB R. SIMPSON, CHAIRMAN OF THE BOARD AND FOUNDER, XTO ENERGY, INC. 

STATEMENT OF REX TILLERSON 

Mr. TILLERSON. Chairman Markey, Ranking Member Upton, 

members of the subcommittee, thank you for the opportunity to appear here today. 

Americans face a critical challenge: continuing to develop affordable, reliable and secure energy supplies needed to grow our economy and create jobs, while also continuing to improve environmental aspects of energy production and use. The combination of 

ExxonMobil and XTO is an important step towards addressing this 

challenge. 

The development of our combined resources will create the opportunity for more jobs and investment in the production of cleanerburning natural gas spread across many parts of the United States. 

It will support our Nation’s economic recovery, strengthen our Nation’s energy security, and help meet our Nation’s environmental 

goals. 

At ExxonMobil we focus on the long term. The global scale of our 

industry, the volatility of the world commodity market in which we 

compete, and the decades-long timeframes of our projects require 

us to plan far into the future. 

Our agreement with XTO is consistent with this approach. It 

combines the complementary strengths of our two companies: 

XTO’s technical expertise and their substantial unconventional natural gas resource base in the United States, and ExxonMobil’s own 

global resource base, our advanced research and development, 

proven operational capabilities, our global scale, and, importantly, 

our financial capability. It will better position us to meet America’s 

long-term needs for affordable, reliable, clean-burning natural gas. 

Enabling a strong and growing U.S. economy requires meeting 

America’s total energy needs, including fuels to power their businesses, heat their homes and generate electricity. Increases in domestic natural gas supplies can meet an increasingly important 

share of these needs. This is due in large part to important technologies pioneered by ExxonMobil, XTO and others which enable us 

to unlock enormous supplies of unconventional natural gas in the 

United States. 

With recent advances and extended-reach horizontal drilling, 

combined with the time-tested technology of hydraulic fracturing, 

a process in use for more than 60 years, we can now find and 

produce unconventional natural gas supplies miles below the surVerDate Mar 15 2010 00:51 Nov 06, 2012 Jkt 076003 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 E:\HR\OC\A003.XXX A003

pwalker on DSK7TPTVN1PROD with HEARING
26 

face in a safe, efficient and environmentally responsible manner. 

Thanks to innovations such as these, unconventional natural gas is 

projected to meet most of America’s domestic natural gas demand 

by the year 2030, representing a substantial change in the overall 

energy profile of the United States. 

In the 5-year span ending in 2008, the U.S. Energy Information 

Administration estimates that the U.S. Total proven natural gas 

reserves increased by 30 percent to 245 trillion cubic feet, or the 

equivalent of about 41 billion barrels of oil. In an 18-month span 

ending in mid-2008, natural gas production in the United States increased 13 percent to 57 billion cubic feet per day. That is an 

amount equivalent to all of the natural gas production in the entire 

United Kingdom. And total U.S. natural gas resource estimates 

have increased 35 percent in the last 2 years. From this, Americans 

can now count on nearly a century of domestic natural gas supply 

at current rates of consumption. 

In addition to its domestic abundance, natural gas holds several 

other advantages for Americans. It is the cleanest burning of the 

fossil fuels, emitting up to 60 percent less carbon dioxide than the 

current leading fuel source used to meet America’s electricity 

needs. 

Natural gas production is also responsible for significant economic activity, job creation and revenues for local, State and Federal Governments in the United States. In 2008, it contributed 

$385 billion to our Nation’s economy and supported more than 2.8 

million American jobs. More than 622,000 of these jobs were 

through direct employment, representing a 20 percent increase in 

job employment since the year 2006. Significant job growth occurred in many States, including Arkansas, Colorado, North Dakota, South Dakota, Utah and Pennsylvania. 

Discovering, developing and delivering clean-burning natural gas 

is integral to the work of the U.S. oil and gas industry, which in 

2007 alone contributed more than $1 trillion to the Nation’s economy and supported more than 9 million American jobs. 

The challenge Americans face is significant. To reverse our Nation’s economic difficulties, meet our energy needs and reach our 

environmental goals, we all must do our part. Governments help by 

upholding stable tax and regulatory policies which encourage competition on a level playing field; consumers help by using energy 

efficiently; and industry helps by taking the risk to develop new energy technologies and new, cleaner-burning energy resources, such 

as unconventional natural gas. 

In my view, the combination of XTO and ExxonMobil will enable 

us to more effectively play our part in addressing the challenge our 

Nation faces and will help create the integrated solutions that provide Americans with the energy supplies, the energy security, the 

environmental protection and the economic growth they expect and 

that they deserve. 

Thank you. 

Mr. MARKEY. Thank you, Mr. Tillerson. 

[The prepared statement of Mr. Tillerson follows:] 


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pwalker on DSK7TPTVN1PROD with HEARINGInsert graphic folio 33 76003A.007

Rex W Tillerson 

Chairman and CEO, Exxon Mobil Corporation 

Us. House of Representatives 

Subcommittee on Energy and Environment Hearing 

January 20,2010 

Chairman Markey ... Ranking Member Upton ... members of the 

Subcommittee. 

Thank you for the opportunity to appear today. 

Americans face a critical challenge: continuing to develop 

affordable, reliable and secure energy supplies needed to grow our 

economy and create jobs, while also continuing to improve the 

environmental aspects of energy production and use. 

The combination of ExxonMobil and XTO is an important step 

towards addressing this challenge. 

The development of our combined resources will create the 

opportunity for more jobs and investment in the production of 

cleaner-burning natural gas spread across many parts ofthe United 

States. 

It will support our nation's economic recovery, strengthen our 

nation's energy security, and help meet our nation's environmental 

goals. 

At ExxonMobil, we focus on the long-term. The global scale of 

our industry, the volatility of the world commodity market in 

which we compete, and the decades-long timeframes of our 

projects requires us to plan far into the future. 
28 


pwalker on DSK7TPTVN1PROD with HEARINGInsert graphic folio 34 76003A.008

Our agreement with XTO is consistent with this approach. It 

combines the complementary strengths of our two companies -

XTO's technical expertise and substantial unconventional natural 

gas resource base in the United States, and ExxonMobil's own 

global resource base, advanced R&D, proven operational 

capabilities, global scale and financial capacity. 

It will better position us to meet Americans' long-term needs for 

affordable, reliable, cleaner-burning natural gas. 

Enabling a strong and growing U.S. economy requires meeting 

Americans' total energy needs - including fuels to power their 

businesses, heat their homes, and generate electricity. 

Increases in domestic natural gas supplies could meet an 

increasingly important share of these needs. This is due in large 

part to important technologies pioneered by ExxonMobil, XTO 

and others which enable us to unlock enormous supplies of 

unconventional natural gas in the United States. 

With recent advances in extended reach horizontal drilling, 

combined with the time-tested technology of hydraulic fracturing -

a process in use for more than 60 years - we can now find and 

produce unconventional natural gas supplies miles below the 

surface in a safe, efficient and environmentally responsible 

manner. 

Thanks to innovations such as these, unconventional natural gas is 

projected to meet most of America's domestic natural gas demand 

by 2030, representing a substantial change in the overall energy 

profile of the United States. 

2 
29 


pwalker on DSK7TPTVN1PROD with HEARINGInsert graphic folio 35 76003A.009

In the five-year span ending in 2008, the U.S. Energy Information 

Administration estimates that U.S. total proven natural gas reserves 

increased by about 30 percent to 245 trillion cubic feet, or the 

equivalent of about 41 billion barrels of oil. 

In an eighteen-month span ending in mid-2008, natural gas 

production in the United States increased 13 percent, to 57 billion 

cubic feet per day, an amount equivalent to all natural gas 

production in the United Kingdom. 

And total U.S. natural gas resource estimates have increased 35 

percent in the last two years. From this, Americans can now count 

on nearly a century of domestic natural gas supply at current rates 

of consumption. 

In addition to its domestic abundance, natural gas holds several 

other advantages for Americans. 

It is the cleanest-burning of the fossil fuels, emitting up to 60 

percent less carbon dioxide than the current leading fuel source 

used to meet Americans' electricity needs. 

Natural gas production is also responsible for significant economic 

activity, job creation and revenues for local, state and federal 

governments in the United States. 

In 2008, it contributed $385 billion to our nation's economy and 

supported more than 2.8 million American jobs. More than 

622,000 of these jobs were through direct employmentrepresenting a 20 percent increase since 2006. Significant job 

growth occurred in many states, including Arkansas, Colorado, 

North Dakota, South Dakota, Utah and Pennsylvania. 

Discovering, developing and delivering cleaner-burning natural 

gas is integral to the work of the U.S. oil and gas industry, which 

3 
30 


pwalker on DSK7TPTVN1PROD with HEARINGInsert graphic folio 36 76003A.010

in 2007 alone contributed more than $1 trillion to our nation's 

economy and supported more than 9 million American jobs. 

The challenge Americans face is significant. To reverse our 

nation's economic difficulties, meet our energy needs, and reach 

our environmental goals, we must all do our part. 

Governments help by upholding stable tax and regulatory policies 

which encourage competition on a level playing field. 

Consumers help by using energy efficiently. 

And industry helps by taking the risk to develop new energy 

technologies and new, cleaner-burning energy resources, such as 

unconventional natural gas. 

In my view, the combination ofXTO and ExxonMobil will enable 

us to more effectively play our part in addressing the challenge our 

nation faces, and will help create the integrated solutions that 

provide Americans with the energy supplies, the energy security, 

the environmental protection, and the economic growth they 

expect and deserve. 

Thank you. 

4 
31 

Mr. MARKEY. Our next witness is Mr. Bob Simpson, the chairman of the board of XTO Energy, Incorporated. Mr. Simpson was 

one of the founders of XTO in 1986 and has been chairman and 

chief executive officer or held similar positions with the company 

ever since. 

We welcome you, sir. Whenever you are ready, please begin. 

STATEMENT OF BOB R. SIMPSON 

Mr. SIMPSON. Thank you, Chairman Markey, Ranking Member 

Upton, and members of the subcommittee. Thank you for the opportunity to let me appear here today to discuss our merger with 

Exxon. 

Our agreement builds on XTO’s nearly quarter century of success 

in developing affordable, reliable, cleaner-burning U.S. unconventional natural gas supplies for use by Americans. 

From a humble beginning in west Texas, I learned a lot about 

hard work and long hours with our family farm and my family 

members. I also got smart enough to realize that our great American education system could open up far-reaching opportunities beyond those of sandy cotton and peanut fields in west Texas. 

The government was there to help. With the support of one of my 

heroes, the iconic President John F. Kennedy, a generation of kids 

got the financial assistance to pursue their academic dreams during the 1960s. I was one of them. My dreams took me to Baylor 

University, where I learned and also earned two degrees with honors. From this strong foundation I am proud to have built a career 

in the exciting and challenging and critical industry of energy here 

in the United States. 

Some of you may not be familiar with XTO, so let me share with 

you a little of our history. I believe it is a great American success 

story. 

We started in 1986 as a company called Cross Timbers Oil Company, with a handful of people, as I recall about seven, no oil and 

gas assets, some big aspirations and about $35 million of investor 

money. In the early lean years, the company did not make enough 

for me to justify a salary. 

In 1993, we went public with an initial market cap of about $200 

million. In 2001, we changed our name to XTO, because too many 

investors thought Cross Timbers was in the timber business. XTO 

had been our ticker symbol on the New York Stock Exchange since 

it went public in 1993. 

We focused on hiring talented people, encouraging innovation, 

and turning low-producing oil and natural gas resources into higher-producing ones. 

Later we turned our attention to the U.S. unconventional natural 

gas before many others did. As a relatively abundant, cost-effective, 

cleaner-burning U.S. energy resource, we felt unconventional natural gas had enormous potential in supporting the United States’ 

growing demand for energy. 

I believe we made the right call. Today, we are one of the leading 

producers of natural gas in America, with a total resource base 

equivalent to 45 trillion cubic feet of natural gas. Our shareholder 

equity has grown from the 35 million in 1986 to 31 billion in our 

proposed merger. For the last decade, our stock performance was 


pwalker on DSK7TPTVN1PROD with HEARING
32 

number two for all stocks on the New York Stock Exchange, with 

an average increase of 42 percent per year in appreciation. Our 

production grew by 714 percent in the fields during that same 

time, and we employ today 3,300 men and women, virtually all in 

the United States. 

Throughout our history we have focused on developing technology and operating practices that enable us to produce energy resources safely, efficiently, and in an environmentally responsible 

manner. Every employee of XTO shares in our commitment to operational excellence. This commitment has led us to success for our 

company and our country. 

There is growing evidence that, at current consumption rates, 

America now enjoys a more than 100-year supply of natural gas 

here in the States; and with changes in technology and constantly 

evolving production innovations we may have only scratched the 

surface. 

As we have grown and developed, we have always been mindful 

of the future on how we could continue to best develop the opportunities that we have been able to identify. In reviewing our future 

path, we realize that we needed to look at options to take what we 

have achieved and bring it to a new and higher level. We recognize 

that the opportunities before us could best be reached, their potential, if we could find an organization that could bring additional 

shale technology and financial capacity to the work we have been 

doing. 

I am pleased to say that we found that organization in 

ExxonMobil. Our proposed merger would enable us to continue to 

apply the technical expertise and operational excellence we are 

known for to a greater number of unconventional natural gas opportunities throughout the United States. It will continue our 

strengths, our ExxonMobil strengths, including its R&D, project 

management, operational integrity, and environmental performance and financial capacity. 

Moving forward, ExxonMobil intends to establish a new upstream organization to manage global development and production 

of unconventional resources, enabling the rapid development and 

deployment of technologies and operating practices to increase production. The new organization will be located in Forth Worth, 

Texas, at XTO’s current offices. 

Additional production of domestic and unconventional gas will result in increased supplies of energy, which will lead to expanding 

markets, all of which significantly enhance our energy security. 

I strongly believe this proposed merger is a good deal for our 

shareholders, our employees, and our consumers here in the United 

States. We will support our Nation’s economic recovery and energy 

security while also helping meet our Nation’s environmental goals. 

I am proud of our company’s success over the years and look forward to continuing that success with ExxonMobil in the years to 

come. 

Thank you. 

[The prepared statement of Mr. Simpson follows:] 


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33 


pwalker on DSK7TPTVN1PROD with HEARINGInsert graphic folio 39 76003A.011

Bob R. Simpson 

Chairman and Founder, XTO Energy Inc. 

U.S. House of Representatives 

Subcommittee on Energy and Environment Hearing 

January 20, 2010 

Chairman Markey ... Ranking Member Upton ... members of 

the Subcommittee. 

Thank you for the opportunity to appear today to discuss 

XTO's merger agreement with ExxonMobil. 

Our agreement builds on XTO's nearly quarter-century of 

success in developing affordable, reliable, cleaner-burning 

U.S. unconventional natural gas supplies for use by 

Americans. 

From an humble upbringing in west Texas, I learned a lot 

about hard work and long hours with my family on our farm. 

I also got smart enough to realize that our great American 

education system could open up far reaching opportunities 

... beyond those sandy cotton and peanut fields. The 

government was there to help. With the support of one of 

my heroes, the iconic President John F. Kennedy, a 

generation of kids got the financial assistance to pursue their 

academic dreams during the '60's. I was one of them. My 

dreams took me to Baylor University where I earned two 

degrees with honors. From that strong foundation, I am 

proud to have built a career in the exciting, challenging and 

critical industry of energy in the United States. 

Some of you may not be familiar with XTO, so let me share 

with you a little of our history. I believe it is a great American 
34 


pwalker on DSK7TPTVN1PROD with HEARINGInsert graphic folio 40 76003A.012

success story. We started in 1986 as Cross Timbers Oil 

Company, with a handful of people, no oil and gas assets, 

some big aspirations and $35 million of investor money. 

In the early lean years, the company did not make enough 

for me to justify a salary. In 1993 we went public with an 

initial market cap of about $200 million. In 2001 we changed 

our name to XTO because too many investors thought Cross 

Timbers was in the timber business. XTO had been our 

New York Stock Exchange (NYSE) ticker symbol since we 

went public. 

We focused on hiring talented people, encouraging 

innovation, and turning low-producing oil and natural gas 

resources into high-producing ones. Later, we turned our 

attention to U.S. unconventional natural gas - before many 

others did. 

As a relatively abundant, cost effective, cleaner-burning U.S. 

energy resource, we felt unconventional natural gas had 

enormous potential in supporting the United States' growing 

demand for energy. I believe we made the right call. 

Today we are one of the leading producers of natural gas in 

America with a total resource base equivalent to 45 trillion 

cubic feet of gas. Our shareholder equity has grown from 

$35 million in 1986 to $31 billion in our proposed merger. 

For the last decade our stock performance was number two 

for all stocks on the New York Stock Exchange (NYSE) 

increasing on average 42% a year. Our production grew by 

714% and our full-time workforce now numbers more than 

3300 men and women, nearly all of them working in the U.S. 

Throughout our history we have focused on developing 

technology and operating practices that enable us to 

2 
35 


pwalker on DSK7TPTVN1PROD with HEARINGInsert graphic folio 41 76003A.013

produce energy resources safely, efficiently and in an 

environmentally responsible manner. Every employee of 

XTO shares in our commitment to operational excellence. 

And this commitment has led to success for our company 

and our country. There is growing evidence that at current 

consumption rates America now enjoys a more than 100 

year supply of natural gas. And, with changes in technology 

and constantly evolving production innovations, we may 

have only scratched the surface. 

As we have grown and developed, we have always been 

mindful of the future - and how we could continue to best 

develop the opportunities that we have been able to identify. 

In reviewing our future path, we realized that we needed to 

look at options to take what we have achieved and bring it to 

a new level. We recognized that the opportunities before us 

could best reach their potential if we could find an 

organization that could bring additional scale, technology 

and financial capacity to the work we have been doing. 

I am pleased to say that we found that organization in 

ExxonMobil. Our proposed merger would enable us to 

continue to apply the technical expertise and operational 

excellence we are known for to a greater number of 

unconventional natural gas opportunities throughout the 

United States. 

It will combine our strengths with ExxonMobil strengths, 

including its R&D, project management, operational integrity, 

environmental performance and financial capacity. 

Moving forward, ExxonMobii intends to establish a new 

upstream organization to manage global development and 

3 
36 


pwalker on DSK7TPTVN1PROD with HEARINGInsert graphic folio 42 76003A.014

production of unconventional resources, enabling the rapid 

development and deployment of technologies and operating 

practices to increase production. The new organization will 

be located in Fort Worth, Texas, at XTO's current offices. 

Additional production of domestic unconventional gas will 

result in increased supplies of energy, which will lead to 

expanding markets, all of which significantly enhance our 

energy security. 

I strongly believe this proposed merger agreement is a good 

deal for our shareholders, our employees and our 

consumers here in the United States. It will support our 

nation's economic recovery and energy security while also 

helping meet our nation's environmental goals. 

I am proud of our company's success over the years, and 

look forward to continuing that success with ExxonMobil in 

the years to come. 

Thank you. 

4 
37 

Mr. MARKEY. The Chair will now recognize himself for a series 

of questions. 

Mr. Simpson, this revelation that you show that the companies 

were able to make that we have all of this additional natural gas 

is really a credit to your efforts. 

My question to you is this: There is a lot of fuel shifting that goes 

on when natural gas is plentiful, and 2008 is a good example where 

there was 10,000 new megawatts of gas-fired power that was installed in America, 8,000 new megawatts of wind but only 1,100 

new megawatts of coal. In 2009, there wasn’t one new coal-fire 

plant ordered in the United States. How do you see this going forward, especially because of the profile of where the Marcellus shale 

is and some of these other formations in terms of fuel substitution 

going forward? What is the future of coal and electrical generation 

in your opinion? 

Mr. SIMPSON. I think in my planning for the company we recognized—all the way back to 1996 we shifted our focus from balanced 

oil and gas companies and natural gas, and then our growth was 

based on natural gas. We recognized it as the clean burning fuel 

in America. To be honest about our consumption of fuel in America, 

90 percent of it is either coal, oil, or gas; and, of those three, gas 

is clearly the superior fuel for the future in bridging to a lower carbon environment. 

So I, again, speak for the natural gas industry; and my own personal belief that natural gas is the wave of the future and the exciting news is it is not academic. We have found enough leads to 

resources in America that we will be able to put fuel behind that 

belief and supply. 

Mr. MARKEY. So you see it as an ever-increasing use of gas in 

the generation of electricity? 

Mr. SIMPSON. I do. I think there will be an ever-growing need for 

natural gas, particularly in the area of electrical generation, as has 

been demonstrated over the last few years; and the good news is 

we will be able to supply that. It won’t just be a need. 

Mr. MARKEY. Thank you. 

Mr. Tillerson, could you compare the economics of onshore and 

offshore production of natural gas, given the breakthroughs that 

Mr. Simpson and others have made and now your announced merger with his company? 

Mr. TILLERSON. Well, the relative economics are not that different, and the reasons are in order for offshore resources to be 

commercial—in particular in the locations where we are discovering large resources offshore, which is in deeper water—it takes 

a very large accumulation, so you have to have a very large discovery over which you can then put very expensive production and 

extraction facilities. 

So the total economics of the resource extracted through the investment floats on the water against taking a similar size resource 

onshore and developing it with literally thousands and thousands 

of wells and the infrastructure that go with that are comparable. 

So the differences are really technical challenges. 

Mr. MARKEY. Do the comparison then, as well, with the importation of liquefied natural gas, if you would, from other countries and 

with bringing down more natural gas from Alaska in terms of the 


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38 

economics, given the fact that Marcellus and Barnett are indigenous and right there in the region. 

Mr. TILLERSON. Well, clearly the emergence of these large, now 

discovered and proven unconditional resources are going to act to 

put pressure on the economics of every other source of natural gas, 

particularly those that either have to come from long distances, 

LNG, or have to come from Arctic regions like the Alaska natural 

gas pipeline simply because the market now has greater supply 

available to it. So that is going to require that those other sources 

are going to have to continue to find ways to reduce their cost in 

order for them to compete at what the market prices will likely be 

in the U.S. It is simply a matter of now more supply available here 

locally more closely to the lower 48 markets than we previously 

would have thought even 5 years ago. 

Mr. MARKEY. So you are projecting lower prices for LNG as a result of these discoveries and your merger? 

Mr. TILLERSON. Well, the price-setting mechanisms here in the 

United States are going to be unchanged. It is still going to be 

largely supply-demand driven pricing mechanisms. There are very, 

very few long-term natural gas contracts any longer in the United 

States. We long ago through deregulation and the restructuring 

and evolving of natural gas markets have gone to much shorter 

type of sales arrangements. So the supply signals are quite immediate in terms of what the demand—— 

Mr. MARKEY. In general, will the domestic supply—— 

Mr. TILLERSON. More supply is going to put pressure on prices. 

Mr. MARKEY. So you think the longer term trend is lower prices 

for imported gas than otherwise if this supply had not been identified here domestically. 

Mr. TILLERSON. I think without question, without this supply. 

Because the unconventional supply is going to represent an evergrowing component of the total U.S. natural gas supply. Over the 

next 20 years, it is going to be supplying upwards of half of our 

total natural gas supply in the United States. So, clearly, you introduce that level of volume into the marketplace, it affects every 

other source of supply. 

Mr. MARKEY. The gentleman from Michigan, Mr. Upton. 

Mr. UPTON. Thank you, Mr. Chairman. 

I would like to start off by saying I think for many Americans 

when they think of discovery of both oil and gas and the production 

of it, they go back to that movie the Beverly Hillbillies. The 

Clampetts put in a pipe, and there it is. They don’t necessarily understand that you have to have injection to get the oil out and you 

may not have to use the process, the fracturing that is prevalent 

today. And as I look at this map—which I think you all have it; 

it was on our chairs here—I have actually been and looked at the 

Barnett operation, hear great things from my colleague, Mr. Pitts, 

about the Marcellus, Bakken, and other resources around the country. 

But, really, without that hydraulic fracturing, you wouldn’t be 

able to get, what, 20 percent, maybe out of these fields? 

Mr. TILLERSON. You would get zero, because it would be noncommercial to develop those resources. 


pwalker on DSK7TPTVN1PROD with HEARING
39 

Mr. UPTON. So it is, as I think most of our—all of the colleagues 

here on the panel, regardless of Republican or Democrat, we understand the importance of that. 

In the documents on the merger itself, I think there is some language that if, in essence—I am paraphrasing here—that Congress 

takes action to limit or restrict hydraulic fracturing, the deal is, in 

essence, off; is that right? 

Mr. TILLERSON. That is correct. 

Mr. UPTON. Would you like to elaborate on that at all? Have you 

looked at Ms. DeGette’s bill? Does that qualify as one of the problem areas? 

Mr. TILLERSON. As the language indicates, if it either prohibits 

or no longer makes it commercial. As you have heard Mr. Simpson’s comment in his remarks in response to the questions, what 

has enabled this new source of natural gas supply to the U.S. is 

a combination of integrated technologies, but a key component is 

hydraulic fracturing. And without hydraulic fracturing the gas that 

is locked in the shale rock stays locked. It just stays there. 

The existence of this resource has been known for decades, but 

we did not know or have the techniques to unlock the gas so that 

it would flow from the shale rock into the wellbore. We have drilled 

through these shales for years, and they don’t flow when we drill 

through them. So if you remove hydraulic fracturing as one of the 

key enabling technologies, this resource can no longer be recovered. 

So, obviously, our deal would make no sense. 

The provision that is in the merger agreement is one that—these 

are standard types of provisions you would find when two companies talk about mergers and they talk about the risks. And so it 

is in there to protect the ExxonMobil shareholders in the event 

something transpires before this deal would close. And I think it 

is just a recognition that we see a lot of regulation that comes out 

of the Congress and the U.S. Government that provides little benefit. But there is an enormous propensity to regulate in this country. So it is a recognition that that is a risk. 

Mr. UPTON. Mr. Simpson, do you want to add to that at all? 

Mr. SIMPSON. That provision on our side was allowed. 

Our view of it is—going back in my career I remember in the late 

1970s we viewed in America that we were running out of natural 

gas. We thought it was an 8-to-10-year supply. I built a home in 

Forth Worth, Texas, that I couldn’t get natural gas to, and I am 

in Texas. Now that house is sitting on the largest natural gas-producing field in America today. 

And so what I would say is that what has allowed us to go from 

a psychology of shortage to one of abundance in essence is the technology of hydraulic fracturing. I just don’t believe that, given that 

as a consequence, there is any real risk of legislation that would 

prohibit that practice. 

Mr. UPTON. So this really is a win-win. I mean, we have got 

these great resources and because of the increased supply it will 

further push downward pressure on the cost as it impacts consumers across the country. 

Thank you. I yield back. 

Mr. MARKEY. The Chair recognizes the gentleman from Washington State, Mr. Inslee. 


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Mr. INSLEE. Mr. Tillerson, our job and Congress’ job is job one 

is jobs now, as you know, for obvious reasons. 

I want to ask some questions of this merger as it pertains to the 

ability of the United States to really seize the economic opportunities in the new nonfossil fuel-based systems in addition to natural 

gas. 

First, I want to ask, does Exxon believe that human-caused emissions of carbon dioxide and some other gasses are changing, at 

least to some degree, the Earth’s climate? 

Mr. TILLERSON. Well, we have said for some time that there is 

no question climate is changing, that one of the contributors to climate change are greenhouse gasses that are a result of industrial 

activities—and there are many greenhouse gasses besides CO2, which I know you know that. And the real challenge I think for all 

of us is understanding to what extent and therefore what can you 

do about it. And it is a scientific challenge. We view it as a risk 

management problem. There is a risk. The consequences, if those 

risks play out, are pretty dire. 

So our view for some time has been, first and foremost, let us 

continue to support the scientific investigation of what is one of the 

most complicated areas of science that people are studying today, 

and that is the climate, the science around climate and what affects the climate. It is extremely complicated. And we have supported that work and I know the Congress has made funds to support that work and we support the scientific advancement of understanding this issue. The better we understand that, the better the 

technology solutions then will be provided and will be provided in 

the most cost-effective way to consumers the world over. 

So, yes, we acknowledge that it is a contributing factor. Where 

I think we have differences and where we perhaps talk past one 

another from time to time is that, being a science and engineering 

company, we understand the science, we understand the difficulties 

of modeling the science. And there are a number of very complicated models that have been developed by people who are studying the issue around the world to try and first replicate what has 

happened so we understand the science and then predict the future. 

And as we look at the competency of those models, there is not 

a model available today that is competent, and I think all of those 

people who run those models would acknowledge that. So we say 

keep studying it. 

In the meantime, the risks are significant, the consequences 

could be dire so we should take action. And we are taking action 

ourselves, and we are engaged actively in the discussion here in 

the Capitol on both ends of the Congress around what various policy options might be sensible. 

Mr. INSLEE. The reason I ask you that is that I still get letters 

from some constituents saying humans are not involved in changing the climate. It is egocentric to think that humans can cause a 

change in the climate. And I am going to report to them that the 

leader of the largest energy company in the United States believes 

that we are one contributing factor to climate change. I am going 

to report that to them. I hope they will listen to that, as a person 

with tremendous scientific background, as your company has, with 


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some of the most brilliant engineers in the world working for you 

believe that and now the question is what is the right response. 

Am I correct in assuming that your decision to enter into this acquisition in part is induced or motivated at least in part in a belief 

that we will be in some version of a carbon constrained world in 

the future in some sense? Is that one of your motivations? 

Mr. TILLERSON. Well, every year we undertake our own internal 

energy outlook: What are the demands for all forms of energy going 

to be? What are the supply sources going to be? And we have identified now over the last few years the growing response of natural 

gas, much of which we would attribute to consumers around the 

world understanding that there are moves under way and already 

our policies are in place in much of the world, in Europe, European 

countries and elsewhere, that do put a price on carbon and that 

does shift you towards natural gas demands. 

Here in the United States we expect natural gas demand to grow 

about 20 percent over the next 20 years. It is going to grow in its 

relative contribution, much of which is due to our view that eventually there is already an incentive I think among most consumers 

and companies to lower their carbon footprints so there is a natural 

incentive. Natural gas also provides from an energy efficiency 

standpoint a number of favorable attributes as well. 

So it was in a consideration. I wouldn’t tell you that we priced 

it in. I would tell you that in all of our investment decisions, 

though, we have, in our economic modeling, we put a carbon price 

in our economic decisions and project something for the future so 

that we at least are considering what the effects on our investments might be in the years to come. 

Mr. INSLEE. Thank you. 

Mr. MARKEY. The Chair recognizes the gentleman from Texas, 

Mr. Barton. 

Mr. BARTON. Thank you. 

Because of my good friend Mr. Inslee’s question about climate 

change, I have to have somewhat of a rebuttal to that. 

Mr. Tillerson, what is ExxonMobil’s position on the Markey-Waxman’s bill as it passed the House? Do you all support it or oppose 

it? 

Mr. TILLERSON. We oppose the Markey-Waxman bill because we 

are opposed to cap-and-trade systems as policy options. We do not 

feel that they are the most cost-effective way to put in place the 

proper incentives for people to be more efficient. 

Mr. BARTON. In your opinion as chairman or CEO of the largest 

privately owned energy company in the world and certainly in the 

United States, if Waxman-Markey were to actually be passed— 

which luckily it is not—but if it were, could the United States, in 

your opinion, in a cost-effective way or maybe in any way at all 

meet the target of reducing CO2 emissions 85 percent by the year 

2050 from the 2005 baseline? 

Mr. TILLERSON. Well, obviously, you can meet any target if you 

don’t care what it costs. So if you are willing to suffer enormous 

job loss and reduced economic activity—because one of the ways 

you achieve those targets is you shut activity down. That is the 

easiest way to reduce emissions, is just don’t emit them. 


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Mr. BARTON. So in your role again as CEO of the largest privately owned energy company in the world and certainly in the 

United States, you have to minimize risk to your stockholders and 

maximize employment opportunities for the employees under your 

direction. So your acknowledgment to Mr. Inslee is simply a prudent business decision that that is the real political world that 

ExxonMobil is in and that you need to be prepared to adopt to that 

reality. 

Mr. TILLERSON. As I indicated in our economic price index, we 

have to make some assumption about what the future might be. 

We have to do the same about what we think the price of the commodity will be, the price of business will be. So the fact that we 

include a price on carbon is an acknowledgment that there is a 

likelihood that there will be a price. There already is in some parts 

of the world. So it is in our price index. 

Mr. BARTON. I have got before me two of the best American 

CEOs of companies, not just energy companies. Mr. XTO has already said that he had the greatest rate of return on the New York 

stock market over the last X-number of years. We have all seen the 

stories about ExxonMobil’s rate of return. We will stipulate that 

you two gentlemen are pretty good at what you do and the country 

is glad that you are good at what you do. 

Mr. Tillerson, what does ExxonMobil get by merging with XTO? 

Mr. TILLERSON. 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 are most interested in today. But I know 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. 

Mr. BARTON. Do you classify the tide shale formations that XTO 

has as unconventional? 

Mr. TILLERSON. Unconventional would be the shale gas, coalbed 

methane gas, ultra-tight gas. The type of resource holdings that 

XTO has amassed here in the United States, ExxonMobil has been 

taking acreage positions around the world. 

Mr. BARTON. What does XTO get by merging with ExxonMobil, 

Mr. Simpson? 

Mr. SIMPSON. Our main advantage would be, having brought it 

to here, the opportunities we face are so large that we need capital 

to explore those and to tap those successfully. 

Now, we also enjoy joint expertise which we will put together. 

Their advanced R&D and their global scale will bring exciting opportunities to the staff. 

Mr. BARTON. You will get their expertise in capital. 

Is there any indication from either of your staffs that the Justice 

Department or the SEC is going to be negative on the merger? 

Mr. TILLERSON. We have only just begun that dialogue with 

them, including answering their questionnaire. So I wouldn’t want 

to be so presumptuous as to prejudge. 

Mr. BARTON. The press reports indicate that it doesn’t give—the 

merged company wouldn’t have a corner on the domestic energy 

market, and by all of the standard anti-trust metrics this is a 

merger which appears to fit within those parameters. 


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Mr. TILLERSON. Under all of those HSR metrics that are typically 

used to judge competitive elements, this merger does not give rise 

to a concern in any of those areas. 

Mr. BARTON. So if we can prevent the Congress or the EPA from 

mucking around in hydraulic fracturing, this merger should go 

through. Because you have got a codicil in your pending merger 

agreement that if Congress passes legislation that I guess either 

party has the right to call the merger off; is that correct? 

Mr. TILLERSON. That would be correct. 

Mr. BARTON. My final question is a personal question, Mr. Chairman. 

Mr. Simpson, where is Steve Palko these days? 

Mr. SIMPSON. Palko, one of the founders of XTO—— 

Mr. BARTON. And an original Barton backer, contributor. 

Mr. SIMPSON [continuing]. Was always very interested in education. In fact, he served on the National Education Committee 

here in Washington, and he went back 5 years ago and got his 

Ph.D. And is teaching at TCU. 

Mr. BARTON. So you would indicate when he left the company is 

when it really took off? 

Mr. SIMPSON. That is what I would tell them. 

Mr. BARTON. If you see him, tell him his old friend Joe Barton 

says hello. 

Mr. SIMPSON. OK. I will tell him. 

Mr. BARTON. Thank you, Mr. Chairman. 

Mr. MARKEY. And by the way, thank you for letting Massachusetts be allowed into the country. 

Mr. BARTON. We wouldn’t have a country if it weren’t for Massachusetts. 

Mr. MARKEY. We like to think we started that whole Tea Party 

thing up in my district. 

Mr. BARTON. Massachusetts saved the country last night. 

Mr. MARKEY. Massachusetts invented a lot of the things the 

country enjoys today. 

The Chair recognizes now the gentleman from Pennsylvania, Mr. 

Doyle. 

Mr. DOYLE. Thank you, Mr. Chairman. 

OK. Let us get one thing out of the way. Mr. Tillerson, do you 

have any knowledge of any Member of the House or the Senate or 

the Obama administration that is calling for outlawing hydraulic 

fracturing? 

Mr. TILLERSON. No. 

Mr. DOYLE. Mr. Simpson? 

Mr. SIMPSON. No. 

Mr. DOYLE. Does anyone on this committee have any knowledge 

of any Member of Congress or the House or the Obama administration that is calling for the outlawing of hydraulic fracturing? In 

Congress—House, Senate, Obama administration. 

So the answer is ‘‘no.’’ 

So now let us talk about half of this bogeyman. 

Mr. Barton, I will get to you later. 

Mr. BARTON. I have some knowledge of some Members who 

would like to outlaw it. 

Mr. DOYLE. So there is nothing proposed, but in your mind—— 


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Mr. BARTON. I have had discussions with Members who would 

like to outlaw it. 

Mr. DOYLE. Yielding back my time. 

Let us talk about now whether or not this is commercially impracticable. It is not a term we use in Pittsburgh a lot. 

Pennsylvania, we have rules in place to protect our underground 

sources of drinking water. I talked to Mr. Stearns and asked if he 

wanted to be a Pennsylvania water tester so that he could drink 

the water first before the rest of us had to do it, but he declined. 

But, in Pennsylvania, in order to obtain a permit, drillers must 

identify any anticipated impacts of water withdrawals on water resources. Wells cannot be drilled within 200 feet of structures or 

within a hundred feet of streams or wetlands. Pennsylvania law requires drillers to case in grout wells through all freshwater 

aquifers before drilling through deeper zones in order to protect 

ground water from pollutants inside wells. DEP inspectors investigate resident complaints about water quality. There is a presumption that well operators are responsible for any pollution of nearby 

ground water, and well operators are required by law to replace or 

restore adversely affected public or private drinking water supplies. 

There are also rules that require operators to disclose all chemicals to be stored and used at a drilling site, including chemicals 

and fracking fluids in order to guard against contamination and ensure safe disposal of these chemicals. That is Pennsylvania law. 

Now, Mr. Simpson, XTO currently operates natural gas wells in 

Pennsylvania, true or false? 

Mr. TILLERSON. That is true. 

Mr. DOYLE. Very good. In view of the 181 billion cubic feet of natural gas produced in Pennsylvania in 2006 alone, is it safe to say 

that Pennsylvania regulations have not made it commercially impracticable to extract Pennsylvania’s extensive natural gas reserves? 

Mr. SIMPSON. From our experience—first of all, our drilling in 

Pennsylvania is very limited to a handful of wells. So in our experience we have been able to comply in any one area we might want 

to examine to see if it impedes in terms of going beyond where we 

are. But, again, it is not our primary focus in terms of where we 

drill. 

Last year, we drilled about 1,200 wells and, as far as I remember, none in Pennsylvania. We have drilled—well, a few in Pennsylvania being 2009. So, again, it is not our—where the mass of our 

operations are. And my own personal knowledge is limited as to 

the operations in Pennsylvania. 

Mr. DOYLE. But at least when you bought LINN Energy, that included about 152,000 net acres of Marcellus shale leasehold. So you 

currently have that and you have no intentions of pulling out of 

Pennsylvania. You want to drill that Marcellus shale, do you not? 

Mr. SIMPSON. We do, and that was primarily in Pennsylvania 

and West Virginia. 

Mr. DOYLE. Very good. So I guess since you are not pulling out 

of our State and Marcellus shale is an opportunity for you—and, 

by the way, we love having you in Pennsylvania. We want to get 

that gas out of the ground. We are all for doing that. But the regulations that are already in place in Pennsylvania don’t seem to be 


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stopping you from considering Pennsylvania as part of your operation. 

Mr. SIMPSON. That is correct. 

Mr. DOYLE. So my question is, because this Marcellus shale formation goes over several States and we have some laws that have 

regulations—some States that have regulations, some States that 

have no regulations and everything in between, would a national 

regulatory framework, would that create uniformity and predictability for a company like yours? Do you think it makes more sense 

that you just have one law that creates some predictability for you, 

or do you like this patchwork of maybe, you know, 50 different laws 

if each State adopts their own laws? 

Mr. SIMPSON. Our industry and historically our company is built 

in a variety of States: Texas, Oklahoma, New Mexico, primarily, 

and Louisiana. And what I would say is that we have adapted to 

each individual State’s rules and regulations. We believe that that 

has been a successful program and that the environment and related industry issues are regulated satisfactorily, I believe, for both 

us and the consumers and the citizens through State regulations. 

Mr. DOYLE. I see my time has expired. I have lots of questions 

about leasing practices, and I see that we in Pennsylvania have a 

lot to learn from our friends in Texas and Louisiana, and I would 

like to explore that if there is a chance for a second round of questions. 

Mr. MARKEY. The Chair recognizes the gentleman from Texas, 

Mr. Burgess. 

Mr. BURGESS. I would like to explore, if possible, that horizontal 

drilling from north Texas up to Pennsylvania. 

It is impossible to overstate the economic value to our area that 

the Barnett shale has brought. The country entered a recession in 

2007. I don’t think we felt it in our area until December of 2008, 

a full year later than the rest of the country. 

Mr. Simpson, you talked about the house without the ability to 

heat with natural gas. I remember being in an all-electric home in 

the 1980s as well. We just had a very bad cold snap like we just 

had these back couple of weeks back in the 1980s, and the electric 

bill was $7- or $800 for heating the home in 1980 dollars. 

These past 2 months in Texas have been brutally cold. Our gas 

bills have in some cases been almost a hundred dollars to heat a 

similar-sized house. So it is a substantial economic benefit for jobs 

and development in our area, and it is a substantial economic development in delivering energy at a reasonable cost to people who 

live in north Texas. 

So it is with a great deal of relief that you two are sitting together at this table and looking, exploring the possibility of linking 

up the knowledge base with XTO with the capital and the ability 

to scale that ExxonMobil has. I think that is likely to be a very rewarding development. 

I think Cliff Stearns asked a very provocative question earlier in 

his opening statement. If I could just ask you to address it a little 

bit. 

Mr. Tillerson, your company does not deal much with derivatives 

and hedging and, Mr. Simpson, your company does presumably because of different missions and what have you and the size of your 


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two companies. But how will this work going forward and what 

should we look to as what is going to be the activity as far as derivatives and hedging? 

Mr. TILLERSON. Congressman, I think the use of the hedges in 

the way that XTO has traditionally used them is fairly common for 

companies of their size. They are also growing their business at the 

rate of pace that they are growing as a means of just providing for 

secure cash flow so that they can keep their ongoing activities 

under way with some type of forward planning basis. 

As you noted, because of ExxonMobil’s size and our global scale, 

our cash flow and our financial structure is quite different. So we 

have never used hedges or derivatives as part of our financing 

structure. 

The reference to the limited use that we have for those are on 

physical contracts to make physical delivery. The crude oil primarily—and it is to cover very short periods of time when crude 

is in transit, primarily 30, 60 day kind of contracts, and that is just 

to manage the risk of exposure across a short period of time. But 

they are not used as a financial instrument for ExxonMobil because 

they are not needed for our financing structure; and so, in the future, we would not be continuing those hedging programs. 

Mr. BURGESS. So as far as how that impacts the consumer, the 

ratepayer at the end of the stream, likely to be perhaps the opportunities for more stability in pricing and less of the wild swings 

that we saw in the summer of 2008. 

Mr. TILLERSON. It is hard to say. Because the hedging of activities of XTO, while certainly important to them, on the grand scale 

of the natural gas markets may not be significant. So I think that 

is very hard to say what if any impact the removal of that hedging 

activity from the market is going to have. 

Mr. BURGESS. On strictly the local scale, the number of jobs provided by both companies in the area is significant. The location of 

the corporate headquarters in Fort Worth for XTO has been important to areas around my district. What will happen with jobs in 

corporate location? 

Mr. TILLERSON. One of the important elements—and as Congressman Barton was asking for why the merger was important— 

yes, we get access to XTO’s large U.S. Domestic resource base, but 

a very important part of this merger is XTO’s organization. They 

have a 20-year track record of having invested, taken a lot of risks 

to understand how the unconditional resource base can be profitably commercialized and brought to the market and provided to 

consumers. 

We have built unconventional acreage holdings around the world. 

What we want to do is retain their organization. We want to retain 

their Fort Worth location as the headquarters of what will be the 

new global and conventional gas resource organization to use their 

know-how and their capabilities, bring some of our technology and 

R&D capabilities—because we have a significant R&D activity 

under way around the unconditionals—bring some of our project 

management capabilities and our financial stability and put the 

best of all of those together in this new organization in Fort Worth 

to create more opportunity to develop the resource here domestically. 


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But also we intend to use it as an opportunity to develop these 

resources globally. Because, to the extent we can develop more 

global energy supply, ultimately that is better for the U.S. consumer as well. So that is really the compelling part of putting the 

two together. 

As a result, we expect to retain most of the XTO organization in 

Forth Worth, and there would be very limited job impacts. 

Mr. MARKEY. The Chair recognizes the gentleman from Utah, 

Mr. Matheson. 

Mr. MATHESON. Thank you, Mr. Chairman. 

I apologize. I haven’t been here for the whole hearing. I have a 

hearing taking place in the Science Committee at the same time, 

so I have been moving back and forth between the two. 

Mr. Simpson, I know there has been some discussion of hydraulic 

fracturing today, and perhaps some of it has taken place when I 

wasn’t in the room. In your experience, have there been problems 

with this technology that Congress needs to address? 

Mr. SIMPSON. In my experience, there has not. The technology 

itself is about 60 years old. The event here is the combination of 

that traditional technology with the horizontal drilling techniques 

that have been developed particularly in the last decade; and the 

two combined have unlocked this resource that we are talking 

about today which I think, between tight gas techniques, hydraulic 

fracturing, it applies not only to shale gas but we also use it in virtually every well we drill. Our company specializes—and it always 

has—in long life reserves. Long life means generally tight reservoir 

or unconventional reservoir, low decline. 

And while the country had a declined rate of X percent, ours was 

always about half of whatever the country’s was so that we could 

more readily grow. So we have relied on that fracturing for a long 

time as a company. We virtually drill no wells that don’t employ 

some form of hydraulic fracture. 

Mr. MATHESON. Every well your company drills? 

Mr. SIMPSON. Yes. Virtually every well. 

It may not be used offshore or some more permeable reservoirs, 

but our properties are based on tight gas, and unconventional reservoirs are what is included in tight gas. 

And in my experience in the last few years we have gotten up 

to around a thousand-plus wells a year. We have had no examples 

of where we believe or there is evidence that we have contaminated 

a water zone, a freshwater zone, drinking water zone with this 

process. And undoubtedly the country has been doing it. There are 

over a million applications, and I believe the process is safe. 

Mr. MATHESON. I guess for either witness I would ask, in your 

view, if Congress were to regulate fracking under the Safe Drinking Water Act, how would that affect energy production and why 

would it be different from the State regulation of fracking? 

Mr. SIMPSON. Well, again, it would be how you would implement 

it. Is there initially a ban? What is the transition? Again, the mechanics of it, and then is it applicable. 

What I would say is that we have comfortably lived in 18 different States for a good while now subject to State regulation and 

without incident. So I don’t believe it is necessary. I think the risk 

is, if we are not careful, we go backwards; and, frankly, going from 


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a psychology of shortage that I mentioned in the 1970s, we also 

banned the use of putting on new generation fired by natural gas 

in 1978. Again, the shortage crisis mentality. That limits markets. 

It moves fertilizer plants away. It dampens demand, increases 

more dependence on other sources. And so it lessens our energy security here in America. 

So I think it is tantamount that we find a way to continue that 

practice, because it is such a valuable thing to this country. 

So I personally—we talked about earlier—will believe in the wisdom of Congress collectively, the greater wisdom, that it is—the 

practice will continue because it is safe and the consequence of not 

being able to do it for our economy is too grave. 

Mr. MATHESON. Thanks. I appreciate that. 

Mr. TILLERSON. I do think, as Congressman Doyle in great detail 

described, the State regulation of the State of Pennsylvania is not 

unusual. Most States have very detailed regulations around our 

drilling activities and our hydraulic fracturing activities that govern the protection of the drinking water aquifers in all States. 

Those I think have been tested and they have been proven to be 

quite adequate. There have been over a million wells hydraulically 

fractured in the history of the industry, and there is not one reported case of a freshwater aquifer ever having been contaminated 

from hydraulic fracturing. Not one. 

The EPA testified before the Congress last summer that they 

could not document a single case. The New York Water Resources 

Development Board investigated hydraulic fracturing. They could 

not document any threat to safe drinking water. 

So I think the real question is what is the need for Federal oversight other than it is going to add another layer to the State that 

will add cost. A uniform regulation, Congressman Doyle, would not 

be preferable, because the water aquifers and the geology are different for every State and they know their water resources and 

their requirements better than anyone up here is going to know 

and they are going to protect them better. 

So the States are regulating this well, and a uniform rule would 

actually add a layer of complexity I think for the State regulator. 

And any time you add a layer, you add a cost. And when you add 

a cost you just knocked off an increment of production. Because 

somewhere out there is the marginal cost well and it doesn’t get 

drilled. 

Mr. MATHESON. Thank you. I yield back. 

Mr. MARKEY. The Chair recognizes the gentleman from Illinois, 

Mr. Shimkus. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

I appreciate the testimony here. 

I think, in summation, the response to the last question from my 

friend Mr. Matheson was if the wheel is not broken don’t try to fix 

it. Is that an easy way to summarize those comments? 

This is just not important for natural gas, and I understand the 

implications here. I represent a large portion of the Illinois basin, 

and we have a lot of—we used to be an oil center part of the country. Through new technologies, horizontal drilling and fractionation, we are now able to recover oil and keep these fields in proVerDate Mar 15 2010 00:51 Nov 06, 2012 Jkt 076003 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 E:\HR\OC\A003.XXX A003

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duction a lot longer than we ever thought we would have imagined 

that. 

One of the newest finds a couple of years ago was underneath 

a State wildlife refuge, underneath a lake, and it has been operating now for 4 or 5 years. And, of course, if it is a State wildlife 

refuge you know the Illinois Department of Natural Resources is 

on that lake every day and watching it. 

So we are excited about this. And my focus is energy security 

and the ability of the United States to make sure that we have the 

energy we need without being dependent on imported crude oil. 

Now, the great thing about what our debates have always been 

is how do we do that or at least be independent using North American resources. We have to go in the Outer Continental Shelf. We 

have to take advantage of these new natural gas finds. And then 

we have got to use these new commodity products and allow the 

market to decide how to change that. 

The Clean Air Act, which I talked about quite a bit and was very 

successful in cleaning up toxic emittents—that is why I had this 

climate debate, because carbon dioxide is not a toxic emittent. I 

don’t care what people try to say here in this Chamber. It is not 

a toxic emittent. 

Now the stuff we cleaned up in the Clean Air Act was toxic. But 

when we did the Clean Air Act it did affect your business plan on 

how do you deploy and what do you use technology for, coal or natural gas. You know, natural gas has been historically used in home 

heating, but now we can use it in transportation fuels. Now we can 

use it not just in peaking plants but there has been talk about 

using it for base-load generation. I would think my personal opinion is that would be a mistake. It is such a great resource to be 

able to use in a variety of proposals. 

This would be the question. Based on the policies that we enact 

here, that does change the business plan for the deployment of 

those commodity products, does it not, Mr. Tillerson? 

Mr. TILLERSON. Well, clearly, the regulations or mandates from 

time to time that are put in place change the relative economic 

choices that an investor has to develop energy resources or a consumer has to buy and consume them. So, without question, what 

is done here moves that needle back and forth. That is why we 

have always been a proponent and a strong supporter of keeping 

the playing field level, not mandating solutions but set the framework in place and then let the market forces pick the most efficient 

solutions. 

Whether natural gas belongs as a transportation fuel versus electric base load, right now our economic analysis would suggest that 

electricity base load is actually a much more efficient use of the gas 

than to use it in compressed natural gas vehicles. And we would 

be happy to provide you some of the work we have done because 

we study it all the time. We are in the transportation fuel business. 

Mr. SHIMKUS. I appreciate that, because we will accept some help 

in being educated. But all I want is the market to decide that 

versus policy, which pushes commodities into an arena that may 

not be economically feasible and then you really waste a valuable 

resource. 


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So mine would always be about having the competitive advantage of the economy through competition set the best commodity for 

the best end use in that arena. 

But what you did—if I can restate it, one thing you did highlight 

if you do establish another barrier by oversight and Federal regulation, that will affect how we decide to use this commodity product, 

would it not? 

Mr. TILLERSON. I have never seen a regulation that has not seen 

a layer of cost. 

Mr. SHIMKUS. I appreciate the comment. 

I yield back. 

Mr. MARKEY. The Chair recognizes the gentleman from Texas, 

Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman, and a lot of the good 

questions have been asked. 

Mr. Simpson, first of all, I want to congratulate you for forming 

a company in 1986 with our energy situation the way we were in 

the 1980s representing my area in east Houston and north Houston. We had a depression in Texas, Louisiana, and Oklahoma because of energy prices. The rest of the country was coming out of 

the recession in the early 1980s, but we still were in it. So congratulations. 

In fact, I have a joke that I was over in Louisiana one day visiting in 1987 and they found out I was from Texas. They said, oh, 

our energy prices are tough but in Texas you all have cattle. So 

that is what is taking care of you. I said, I have a rancher in west 

Texas that said he stole the cattle, stole the feed and still lost 

money. So cattle didn’t take us out of our problems in the 1980s. 

I have a concern about if fracking and the shale discoveries are 

so important for our country that if there is a problem—and I don’t 

think there is because we have had some incidents—I know there 

was a well in Pennsylvania that had some problems with the wells 

from the residents in the area, but that was because the supplier 

of the concrete didn’t provide the correct amount. There are problems, but it is so important, our national interest, that we need to 

fix it because we need that natural gas. We need that long-term, 

the hundred-years-plus viability we had. 

In fact, my colleague and I—our good friend, Congresswoman 

DeGette, actually put some seats between us. We normally sit next 

to each other. Because I heard her statement and I support expansion. I just want to make sure we don’t throw so many regulatory 

roadblocks that we can’t have the shale protection not only in 

Texas, Louisiana, and Arkansas but also in the northeast and everywhere else. 

Mr. Tillerson, I have to admit, coming from East Harris County, 

I have represented the ExxonMobil facility for many years as the 

State Senator, now in Congress, and I appreciate how 

ExxonMobil—Exxon originally, but ExxonMobil—treat their employees. I have a lot of constituents that are very happy retirees, 

and the support for your employees is really good. 

I have noted in your statements several analyses have speculated 

whether a merger between ExxonMobil and XTO would signal further widespread consolidation of America’s energy industry or a 

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cused back on U.S. Natural gas. In the past 18 months, BP, Statoil, 

ENI, and Total have also bought into the U.S. gas industry which 

is primarily developed by small- and mid-size gas producers. 

Do you believe that the ExxonMobil-XTO merger is a signal that 

large integrated companies will continue to invest more heavily in 

the U.S. unconventional natural gas fields either through acquisitions, mergers, or joint venture? And, if so, would market conditions lead to this increase in joint ventures and mergers, and what 

impact do you think it would have on the competition within the 

domestic market? 

Mr. TILLERSON. Well, it would be hard for me to comment on 

what others will do. Clearly, this is an enormous resource opportunity, and we are all in the resource acquisition production business. So the fact, as you have already noted, that it has already 

attracted the attention of other major companies as well, both U.S. 

and foreign companies who are investing in the resource. 

With respect to what it does for competition, I think it is important to know that one of the attributes of the U.S. oil and gas industry is the enormous number of participants. The Natural Gas 

Association documents more than 6,000 gas producers in the 

United States. The EIA documents 13,700 oil and gas operators. 

This is a business that, while it contains a lot of risk, the hurdles 

to entry in this country where a person like Mr. Simpson can start 

on a very tough basis in a very tough economy, barriers to entry 

are fairly low. People who are willing and have the courage to take 

the risk can enter this business on a lease-by-lease basis and build 

a business. 

The history of the energy is littered with riches and failures and 

bankruptcies, and that is just the nature of it. But one of the real 

competitive attributes in this country is that it has that characteristic and there are thousands of players. 

The fact that this merger occurs still leaves an enormous amount 

of opportunity for others to come in and participate. So our participation—or even as it attracts the participation of other large companies—is unlikely to change the competitive balance which has 

been a characteristic of this industry for decades, and this really 

doesn’t change it. 

Mr. GREEN. Thank you, Mr. Chairman. 

Mr. MARKEY. If I could, Mr. Sullivan, I would like to recognize 

Mr. Butterfield, because he has to leave. He can’t avoid it. By 

unanimous consent I will do that and then come back and recognize Mr. Sullivan and then Mr. Scalise in order. 

The Chair recognizes the gentleman from North Carolina. 

Mr. BUTTERFIELD. Thank you very much, Mr. Chairman. 

I thank Mr. Sullivan. I was due at a meeting on Haiti over in 

the Capitol about 30 minutes ago. Thank you very much. 

Let me thank the two witnesses for your testimony today. 

I want to particularly thank Mr. Tillerson for the work that he 

does with ExxonMobil. I have two credit cards in my pocket: One 

is American Express and the other is an ExxonMobil credit card. 

They are the only two credit cards that I own. You have an employee, Mr. Lonnie Johnson, who moved to Washington some 

months ago, and I shared that with him when he first got here. It 


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is a company that I am very fond of. So thank you for what you 

do. 

I have in front of me a quote from Secretary Chu, Nobel Peace 

Prize winner, scientist, that he made several days ago. For fear of 

misquoting him, I want to read it verbatim and simply ask you 

your comments on it. 

He said the following: I think it can be done responsibly. And the 

EPA and other agencies will be looking to ensure that it is done 

safely and responsibly. If it can be extracted in an environmentally 

safe way, then why would you want to ban it? The question is, can 

you do this right so it doesn’t leak into the water table? I think you 

can, the Secretary said. But he also said that if it’s done wrong, 

that it presents substantial risk. Can you do it incorrectly and start 

to pollute the water tables? Yes, he said. 

The Secretary said companies should not use fracking in a shale 

rock that is close to a water table or an unstable fault line. You 

don’t want to be monkeying with shale that is very, very close to 

the water table, the Secretary said. There are a hundred ways to 

mess this thing up. 

Do you agree or—each of you, do you agree or disagree with the 

Secretary’s assessment? 

Mr. TILLERSON. Well, I think, you know, clearly it is a risk that 

we have to manage, and the expectation is that we manage it well. 

And I don’t know if you were in the room a moment ago or not, 

Congressman, but I commented on testimony that has been given 

to the Congress last June by the EPA, both from the results of a 

4-year study they did in 2004, where they could not find a single 

documented case of groundwater contamination from hydraulic 

fracturing. To our knowledge, there have been a million wells 

fracked and no documented cases of contamination of groundwater 

from hydraulic fracturing. 

In your places, along with some of these graphics, there is a 

graphic in there that tries to describe why that happens. It is not 

just by happenstance. It is a picture of how wells are designed. It 

looks like this. 

And to Secretary Chu’s comment that you don’t want to frack 

near a freshwater zone, that is exactly correct. And we wouldn’t 

want to fracture near freshwater zones, because if the fracture penetrates the freshwater zone, we haven’t achieved what we spent the 

millions of dollars to do, which is frack the hydrocarbon zone. 

This all starts with the well design. And when these wells were 

first drilled—and it was commented on by Congressman Doyle— 

State agencies already regulate how these wells will be drilled. And 

there are multiple layers of steel casing that protect the freshwater 

zones as the well is being drilled, just so we can simply get the well 

drilled. Those same steel casings then protect the freshwater zone 

during the hydraulic fracturing process. 

My second assignment with ExxonMobil in 1976 was to design 

hydraulic fracturing procedures for a new type gas play in East 

Texas. And the number of people that are on the location during 

a fracture procedure, there is a large number. And a lot of those 

people are there to monitor the pressures on the formation and the 

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tive structures that have been put in place. So it can be done safely; it has been done safely. 

Mr. BUTTERFIELD. Well, tell me about diesel fuel. Is diesel fuel 

used in the process? 

Mr. TILLERSON. Diesel fuel can be used in some fracturing formulations. But, again, it is—— 

Mr. BUTTERFIELD. Does that enhance the risk of danger? 

Mr. TILLERSON. No. The risk would be if you ruptured these multiple layers of casing and the fluid went where you didn’t want it 

to go. But you have hundreds to thousands of feet of rock strata 

between the freshwater and the hydrocarbon-bearing shale, and 

then you have multiple layers of steel casing as well. 

So it is a risk that we know we have to manage, and the wells 

have been designed over the last many decades to do just that. And 

that is why—— 

Mr. BUTTERFIELD. I am running out of time here. In managing 

that risk then, do you feel that the public has a right to know what 

chemicals are actually being pumped into the ground in their communities and whether it is close to a drinking source? 

Mr. TILLERSON. Well, we wouldn’t object to any disclosure on the 

contents of what is in the frack fluid. And, in fact, today, on these 

locations, in order to comply with other regulations, there are material safety data sheets on chemicals that are on the location, so 

that if there is—and that is primarily if there is either a surface 

spill or an exposure to a human that could be harmed by the exposure, that those material safety data sheets are available so people 

know exactly what is on that site. So there is already some level 

of disclosure. 

We understand the concern of some of the service providers who 

formulate the frack fluids that they are concerned about loss of 

competitive advantage. We would work with them and see if we 

couldn’t find a way to accommodate fuller disclosure or full disclosure of the contents of the frack fluid. Based on our knowledge of 

what is in those fluids, there is nothing that gives us great concern, 

in the past or today. 

Mr. BUTTERFIELD. I have run out of time. Mr. Simpson, we will 

see you next time. 

Mr. SIMPSON. Thank you. 

Mr. BUTTERFIELD. All right. I yield back. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Oklahoma, Mr. Sullivan. 

Mr. SULLIVAN. Thank you, Mr. Chairman. 

And I appreciate what you are saying, Mr. Tillerson. You have 

hit on everything I wanted to talk about, but I think it is so important that I want to discuss it again here real quick, if we could. 

In regards to hydraulic fracking, it seems almost ludicrous that 

we are trying to do this. Like you said, over the past 60 years, not 

a single documented case of drinking water contamination has ever 

been credibly tied to hydraulic fracturing due to engineering or 

technical safeguards designed to protect groundwater. None. It has 

been going on for, like, 60 years. 

Also, the energy recovered from hydraulic frack—and this just 

shows you important it is to the Nation’s energy supply—accounts 


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for 30 percent of the U.S. recoverable oil and gas reserves and has 

added more than 7 billion barrels of oil and 600 trillion cubic feet 

of natural gas to the U.S. energy supply, showing you how important this is. 

Also, like you stated too, Mr. Tillerson, a major EPA study—this 

is the EPA who wants to do this—a major study by the EPA completed in June of 2004 concluded that hydraulic fracturing does 

not—does not—pose any significant environmental risks. Yet we 

are trying to do this. 

Also, you are right; you know, the States are the best people that 

are equipped to do this, to regulate this. They are the ones that 

know the players, they know the geology, they have been there before, they have seen it. It is the best way, instead of having another 

layer of bureaucracy, again, impeding on jobs. This is about jobs. 

Also, I wanted to see if you guys could tell us what growth in 

the natural gas industry, especially in unconventional resources, 

means for jobs in the U.S.; what States and regions of the countries 

will have jobs created through ExxonMobil-XTO natural gas development and production. If you both could comment on that. 

Mr. TILLERSON. I commented earlier on the growth that we expect natural gas to take here in the United States, about 20 percent. Half of power generation, we think, over the next 20 years is 

going to be fired by natural gas. 

And if you look at the profile of gas supply that we expect to 

come from the unconventional resources, that could lead to jobs. In 

excess of 300,000 jobs would be created over the next, you know, 

couple of decades to support that activity. And they would be created—and you can look at that map, and you can see where these 

basins fall. And so if you are in a State that the basin is under, 

you could expect to see activity in your State. 

And I think it has been commented, in Pennsylvania, enormous 

job creation, 50,000 jobs in the last couple years. And we expect 

that to approach 100,000 jobs because of the activity in the 

Marcellus Shale; and a contribution to Pennsylvania’s budget of $8 

billion out of the Marcellus Shale activity. 

So it has both an enormous job-creation benefit as well as revenue benefits to local governments, State governments, and to the 

Federal Government. 

Mr. SIMPSON. Yes, you know, I look at our direct employment, 

going from a handful of employees to 3,300. Our own personal 

growth there in Fort Worth tends to track, you know, the volume 

growth of the company. So our employment has been growing at 20 

to 30 percent a year, directly of the individuals there. 

We also generally run the second most drilling rigs in America 

in exploring and developing this resource, and that is many thousands of jobs directly as a result of this activity that we cause with 

our drilling activity, and that is also going to be growing. So in 

quantifying, you know, the job growth in the industry, it has been 

enormous over the years. It is going to be more. 

If you look at natural gas production in my career, you go back 

to when I began in 1976, natural gas production then did not grow 

in this country until recently. So the last 30 years, mostly it has 

been a struggle to maintain and offset decline and not to grow this 

resource. During the last 3 or 4 years is the first time in my career 


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that I have seen you can actually grow this resource tremendously, 

leading to the benefits of both job and price and security for this 

Nation. 

So, that is the testimony from a guy who lived it. We generally 

lived off the scraps of old fields most of my career. And the exciting 

thing about this development is we now have the largest fields in 

history being found. The Hugenon and San Juan were the two largest fields in America ever discovered prior to the advent of these 

shales. To give you an order of magnitude, they were discovered in 

the 1920s. The shale discoveries of today probably represents five 

times the resource base that they ever delivered. And they were 

the two largest fields in this Nation. 

So it is not just replicating the past, it is reinventing the future. 

And so, along with that will come, you know, the job growth that 

is corollary to that. It is probably beyond the numbers we have 

talked about today, because they are far-reaching, including the 

marketplace, products and simulations that will be derived from 

the growth of this product. 

Mr. SULLIVAN. And we appreciate the 200 jobs in Oklahoma, and 

hopefully there will be more. 

And, also, I was going to ask both of you, too, what does this 

merger signify, do you think, to the American people about natural 

gas as a fuel for the future? And what do you think the takeaway 

should be on this today that you would like to see the American 

people see? Because I think it is pretty exciting. 

Mr. MARKEY. If you can both answer very briefly. 

Mr. TILLERSON. I would just say it is a signal to the American 

people that we have an enormously valuable natural resource that 

can be delivered and can be delivered to provide them a new source 

of reliable, affordable energy. 

Mr. SIMPSON. Yes, I would say that, you know, the good news for 

America is we have a more secure energy supply at a lower cost 

for the foreseeable future, and an event in my career that hasn’t 

happened before. 

Mr. MARKEY. Thank you very much. 

The gentleman from Louisiana, Mr. Scalise, is recognized. 

Mr. SCALISE. Thank you, Mr. Chairman. 

I have been out to Shreveport, where the Haynesville Shale play 

is really being run out of, and there is a lot of area out there; at 

the time, the largest natural gas find in the history of our country. 

And now we are finding more, as you have talked about, more finds 

in different parts of the country. Just last week, there was announced a tract of the Gulf Mexico, just off the coast of Louisiana, 

that they thought was completely dried up, where they found massive reserves of natural gas there as well. 

So, you know, there are more natural gas and oil finds that we 

are coming up with as the technology advances. And I want to ask 

you both about the technology advancements, because it gets lost 

in the shuffle a lot. People talk as if the technologies of 20 years 

ago were still being employed. 

You know, I like to tell my colleagues that the best place to go 

fishing in the Gulf of Mexico is next to an oil rig because, number 

one, with the environmental safeguards that are in place, it is one 

of the best habitats for fish. They love congregating and thriving 


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in that area. And the fishing captains know that because that is 

where they take people to go fishing. And you will catch some really good fish and some of the best eating you are going to find right 

there next to the oil rig. In fact, a motorboat riding around the Gulf 

of Mexico is going to leak more oil than a large offshore rig. And 

yet, you know, you listen to some of these people that want to limit 

the production of our country’s natural resources, and they act as 

if those technological advances never occurred. 

And so I want to get your take, first, on if Congress does do what 

I think would be very bad policy, not just on cap and trade but also 

on limits of fracking, what would that mean to the kinds of production that is going on right now in the United States? And if both 

of you can answer. 

Mr. TILLERSON. Well, I think as Mr. Simpson has alluded, in the 

unconventional area, if you cannot hydraulically fracture these 

wells, then you wouldn’t drill them. So you would just stop at that 

point. Because you cannot commercially recover the gas that is 

trapped there. The same would be true for the emerging oil shale 

plays, like the Bakken in North Dakota, has to be fracture-stimulated. 

And even beyond the unconventional plays, a lot of conventional 

wells utilize hydraulic fracturing to get the rates up to commercial 

level. It allows you to produce more and, therefore, improve the economics. So if you remove hydraulic fracturing as a technique, we 

don’t have an alternative technique today that will achieve the 

same result from the wells. 

We have a lot of technology tools, we bring them all together; 

that is what allows us to make these things economic. But there 

is not a replacement for hydraulic fracturing to achieve the same 

result in these types of resources. 

Mr. SCALISE. And any idea on the type of job losses our country 

would experience if we weren’t able to do that? 

Mr. TILLERSON. Well, all of the job growth we have talked about 

would pretty well come to a halt, and then you would just allow 

the wells that are producing to decline and be depleted. So you 

clearly would cease job growth. And then there would be some, obviously, immediate effect on job losses, because you wouldn’t drill 

the wells anymore if you couldn’t fracture them. So all the employment that goes with drilling activity and to support that would immediately cease. 

Now, you have a graphic in front of you that talks about the 

number of jobs the industry by and large creates, and a lot of those 

jobs would be under risk if there were some provision made that 

we could no longer utilize this technique or made it so costly that 

it didn’t give you the economic results you needed. 

Mr. SIMPSON. You know, one of the exciting things about the development of technology that you alluded to earlier and one of the 

exciting things about joining forces with Exxon for our company is 

the prospect of further advances. 

We generally only recover 30 or 40 percent of the hydrocarbons 

in place. And so these estimates of a 100-year supply are pretty 

well founded on those types of recoveries in the areas we are talking about. I believe in generations to come and years to come, that 


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recovery factor will increase, and so these reserves will be larger, 

and that will lead to further growth in the security of America. 

And, also, companies such as ExxonMobil, I think, are the most 

likely, with the R&D they do and the resources they devote to it. 

I think that is, again, a partnership that we are joining in that is 

more likely to lead to that kind of technology than not. So that is 

a force they bring to this table. 

But, again, it is not widely understood that when you talk about 

recovery of oil and gas, you are only talking about a small fraction 

of what is in place. And that is to come for the future. 

I have seen it advance in my career tremendously. We didn’t 

know what horizontal drilling was in 1986 and we had never heard 

of it. And then the shales were kind of laughed at over the years, 

like, ‘‘Yes, there may be some gas there, but it is not economic.’’ 

And so the advancement that I have seen in this 30 years is tremendous, and there is room for that type of advancement into the 

future should the resources be deployed and you can continue to 

study it with active interest and talented people. And I think our 

organization has very talented and skilled people, and I think so 

does theirs. And the teaming of the two will lead to further innovation. 

Mr. SCALISE. I know that some of this debate has been brought 

up as a safety issue and trying to be couched in terms of water 

safety. And, of course, as you have pointed out and others on the 

committee have pointed out, there are many studies that have been 

done, and not one has suggested that there is any kind of threat 

to the water safety. 

So this really has nothing to do with safety. It is about a policy 

decision we are going to make, and do we really want to utilize the 

resource that this country has and the ability that we have to 

make our country independent of especially Middle Eastern oil, 

countries that don’t necessarily want to do good things with the 

money that they are getting to our country. 

Where would exploration come from? Because our country still 

has a large appetite for energy consumption, and energy exploration is an international industry. Where would the natural gas 

come from if we weren’t able to get it from the United States? 

Mr. TILLERSON. Well, the current limited imports that the U.S. 

does have largely come from Canada by way of pipeline, and then 

through LNG imports as we have added capacity, receiving capacity, to access more of the LNG markets that are also growing globally. So it obviously would come from those two sources. 

Mr. SCALISE. And, obviously, as we talk about energy independence and those of us that want to have a comprehensive energy policy that allows us to break that dependence on Middle Eastern oil, 

these kind of radical policies would only increase our dependence 

on foreign oil. At a time when we should be doing the opposite and 

we should be creating jobs, this would run jobs off and make our 

country more dependent on foreign oil. 

I will close on that and let you comment if you want. 

Mr. SIMPSON. Yes, Congressman, I agree that there would be a 

further dependence on international markets. You know, the LNG 

is the competition for its price. It is going to be allocated, a lot of 


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it, towards the highest price in the world. To attract it here would 

be price. 

I would submit that, you know, a good example of where we are today, in the last decade I have seen natural gas spike to $10 or 

$15 several times, generally in relation to cold winters, such as we 

are having now. I look at gas today, it is a little over $5. The energy equivalent on that, you multiply it times six, so you get $30- 

something a barrel versus the price of oil. So, clearly, natural gas 

is a relative bargain. 

I think that bargain is being driven largely by supply, because 

it is a commodity. And, as to the price in the future, no one knows. 

I can just comment on my observation. I know we are having a cold 

winter, and I know I have seen it spike in the last decade several 

times when we had cold weather. 

This time, we had record supply going into this winter, almost 

four CTF. That is almost 20 percent of our demand in the ground 

ready for winter. So between that and the near-record production 

that we are experiencing from our own supply in America would 

be my submission as to why you are enjoying natural gas prices 

that are a fraction of what it would have been otherwise. 

Mr. SCALISE. Thank you, and I yield back. 

Mr. MARKEY. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Arizona, Mr. Shadegg. 

Mr. SHADEGG. Thank you, Mr. Chairman. 

And thank you, gentleman, for being with us. I apologize that I 

wasn’t able to stay for all of the answers to the questions that you 

provided. But I want to start, Mr. Simpson, by talking to you and 

asking you a question or at least making a comment. 

First of all, I applaud you as an entrepreneur. I think the Nation 

is better off for what you have been able to find and do. 

Mr. SIMPSON. Thank you. 

Mr. SHADEGG. But I must tell you that when you told the story 

about the house that you had in Texas where you couldn’t get natural gas to your home, yet it sits on one of the largest natural gas 

resources or fields we now know of, you then said, given that and 

given the realities of the natural gas we know is there and can now 

get out with today’s technology, including hydraulic fracturing, you 

can’t imagine—this is your statement—you said, ‘‘I can’t imagine 

that the Congress would pass laws restricting us from getting to 

those resources.’’ 

Trust me, I find that statement stunningly politically naive, and 

I think there is a grave risk that the Congress might do that and 

that you need to be aware of that risk. And that is why it is in this 

agreement. 

I have no problem with the government making rational decisions not to go after known resources if, in fact, they can’t be 

brought out in an environmentally safe way. But I think it is important that that be an informed decision. 

I believe you would tell me that if we ban hydraulic fracturing, 

either outright or through the unintended consequences of legislation we pass, then all of these numbers that we have been talking 

about—the 100-year supply, the reasonable price that you just 

talked about—you would tell me are gone. Is that correct? 

Mr. SIMPSON. There is a risk they are gone. 


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Mr. SHADEGG. Because I guess with all of these fields, the 

Barnett, Haynesville, Fayetteville, Marcellus, West Virginia, Ohio, 

and Woodford, with all of those we are dependent upon hydraulic 

fracturing to get to them, right? 

Mr. SIMPSON. That is correct, Congressman. 

Mr. SHADEGG. So if we suddenly could not get to them, our domestic supply would drop precipitously? 

Mr. SIMPSON. Perhaps a third. 

Mr. SHADEGG. And the price would go up accordingly? 

Mr. SIMPSON. I believe that to be the case. 

Mr. SHADEGG. Mr. Tillerson, I want to commend you for the 

thought of putting into the agreement the condition that it goes 

through only if the Congress doesn’t specifically or by unintended 

consequences make hydraulic fracturing impossible. And the reason 

I want to commend you for doing that is, again, I have no problem 

with the American people making rational policy decisions to protect the environment, but that requires an informed electorate. And 

I think one of the things we have done in this country is we have 

made natural resource decisions on oil and gas without the public 

having any idea. 

For example, I think the American public believes today that we 

are drilling offshore, that we have now opened up some of the 

areas of American offshore for drilling as a result of the spike in 

energy prices roughly 2 years ago. Guess what? That is completely 

false. And I think you know that. You know that technically they 

opened those lands up, but even where leases have been issued, 

lawsuits have been filed and there is no exploration or production 

going on. 

If the American people believe that we are going after our resources but, in fact, we are not, they can’t make a rational decision. 

And I think when they don’t know that the Government is adopting 

policies which are costing them jobs or driving the cost of their energy through the roof, then they cannot make a rational decision. 

And I would bet that there are thousands of ExxonMobil stockholders who, if they study this deal and are aware of it and look 

at it and say, wow, what is that, why did we put that in, and you 

say to them what you said to us, well, we had to put it in because 

the Congress might do something like that, the Congress seems to 

love to regulate just for the fun of regulating, often when there is 

no benefit to the regulation, if they figure that out, then maybe 

they will decide to get politically active and at least make the debate on the inside here be a rational one based on facts. 

And I guess my question of you is, do you agree that if we pursue 

policies that prohibit hydraulic fracturing, it will have a devastating impact on the price of energy and on jobs in the U.S.? 

Mr. TILLERSON. Yes. If you pursue a hydraulic fracturing policy 

or any policies that restrict access to the natural resources of the 

country, it has a detrimental effect. 

Mr. SHADEGG. And you would agree with me, for example, that 

there is no meaningful leasing or no meaningful production going 

on offshore in America today because of either current policies or 

lawsuits in place following the repeal of some of those policies? 

Mr. TILLERSON. We are approaching what is likely to be the lowest level of leasing activity in many, many years. 


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Mr. SHADEGG. And the Americans are paying a huge price for 

that? 

Mr. TILLERSON. Well, we certainly could have a lot more domestic resource development activity and production than we have 

today if that access were granted. 

Mr. SHADEGG. I will conclude with this. As a general proposition, 

do you think that we do a more environmentally sensitive job of removing natural resources from the Earth, or at least as sensitive, 

as the other countries around the world? 

Mr. TILLERSON. Well, the U.S., by and large, is the standard 

bearer because of the history of the industry here, the evolution of 

the industry, and the regulatory environment, much of which has 

been very helpful to setting standards elsewhere in the world. 

So I think your observation I would agree with, that I don’t think 

you will find a more rigorous regulatory environment around our 

industry anywhere else in the world. 

Mr. SHADEGG. Thank you. 

Mr. MARKEY. Great. The gentleman’s time has expired. 

All time for questions from subcommittee members has expired, 

which allows us to then recognize the gentlelady from Colorado, 

Ms. DeGette, who, by unanimous consent, has been granted 5 minutes to ask questions of the panel. 

Ms. DEGETTE. Thank you so much, Mr. Chairman. 

Thank you again, both of you gentlemen, for coming today. 

Mr. Tillerson, you testified in response to a couple of questions 

ago that at least ExxonMobil doesn’t object to disclosing what is in 

fracking fluid, correct? 

Mr. TILLERSON. That is correct. 

Ms. DEGETTE. Would that be also your position, Mr. Simpson? 

Mr. SIMPSON. It would be, Congresswoman. 

Ms. DEGETTE. And recognizing that in my legislation and also in 

my opinion I don’t think that the proprietary chemical formula 

should have to be disclosed unless there is some emergency, I 

would assume that would be both of you gentlemen’s positions as 

well. 

Mr. Tillerson, you wouldn’t want the proprietary information disclosed. 

Mr. TILLERSON. That is correct. 

Ms. DEGETTE. And, Mr. Simpson, would that be correct? 

Mr. SIMPSON. That is correct. 

Ms. DEGETTE. Now, that is good news to me, because that is all 

my bill does. And I see my friend from Arizona has left, but, as I 

said in my opening statement, I have absolutely no intention of 

outlawing fracking. In fact, I think fracking is important to get a 

lot of these reserves out of the ground. 

And I think, Mr. Tillerson, you testified earlier that fracking has 

been around for 60 years. But I think you would agree with me 

that it has been in about the last 10 years or so that it has been 

used a lot more than it had been because of the necessity of getting 

some difficult natural gas out of the ground. Correct? 

Mr. TILLERSON. Well, no, I don’t—I don’t know. 

Ms. DEGETTE. You don’t agree with that? 

Mr. TILLERSON. I would have to look, because there were periods 

of times in the 1970s—— 


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Ms. DEGETTE. That it was used. 

Mr. TILLERSON [continuing]. That hydraulic fracturing was used 

extensively to develop tight gas reservoirs and tight oil reservoirs. 

So there have been periodic times of higher or lower activity. 

Ms. DEGETTE. OK. But it is being used a lot more now, correct? 

Mr. TILLERSON. It is being used extensively in these unconventional plays. 

Ms. DEGETTE. OK. Now, you testified that it is your belief—and 

I think also, Mr. Simpson, you agreed—that you believe State regulations are the best way to monitor fracking activities across the 

50 States, correct? 

Mr. TILLERSON. Correct. 

Ms. DEGETTE. Are you aware that only four States have laws 

specifically directed at hydraulic fracturing? Yes or no? 

Mr. TILLERSON. Some States where these plays are emerging are 

putting in place their regulatory structure. 

Ms. DEGETTE. OK. But right now only four States have it, correct? 

Mr. TILLERSON. And they can look to other States for guidance. 

Ms. DEGETTE. Yes or no, sir? 

Mr. TILLERSON. Well, I don’t—I would have to look—— 

Ms. DEGETTE. You don’t know. OK. Is it your position—— 

Mr. TILLERSON. I acknowledge that some States have a more mature regulatory structure around this area than others. 

Ms. DEGETTE. OK. Thank you. I apologize; I only have a few 

minutes. 

But it would be your position, I would assume then, that the rest 

of the States that don’t have specific hydraulic fracturing statutes 

have other laws that might implicate this, correct? 

Mr. TILLERSON. They have other laws that would govern certain 

aspects of it, yes. 

Ms. DEGETTE. OK. So my question is, for your company, 

ExxonMobil, how much money does your company spend on complying with the regulatory processes of the 50 States every year? 

Mr. TILLERSON. I would have to get you that number. 

Ms. DEGETTE. Would you be willing to do that? 

Mr. TILLERSON. I will see if we can get you something. 

Ms. DEGETTE. Mr. Chairman, I ask unanimous consent that the 

gentleman be allowed to supplement his statement with that information. 

Mr. MARKEY. Without objection. 

Ms. DEGETTE. And, Mr. Simpson, how much does your company 

spend annually complying with these different 50 State laws on 

disclosure? 

Mr. SIMPSON. I would need to get that specific number. 

Ms. DEGETTE. And would you be willing to do that, as well, sir? 

Mr. SIMPSON. I would. 

Ms. DEGETTE. Thank you very much. I appreciate that. 

And here is my next question. Is it your view then, Mr. Tillerson, 

since you are willing to have the components of fracking fluid disclosed, but you do not want to see that happen under the Safe 

Drinking Water Act. Would that be your testimony today? 

Mr. TILLERSON. That is correct. 


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Ms. DEGETTE. And would it be your view because that would be 

an additional regulatory hurdle that you would have to jump 

through? 

Mr. TILLERSON. It is because the devil is always in the details. 

And when you turn this over to the EPA—— 

Ms. DEGETTE. OK. Because it would be an additional regulatory 

hurdle? I mean, what does that mean, the devil is in the details? 

Mr. TILLERSON. Well, it means I don’t know how the EPA is 

going to enact or implement the regulation that you are promoting 

in your bill. 

Ms. DEGETTE. All it says, sir, is that—— 

Mr. TILLERSON. I take this, being a very secure person, that ‘‘all 

it says is,’’ but I have dealt with the EPA—— 

Ms. DEGETTE. Sir, can I ask the question, please? 

If your company has to report the fracking materials to the EPA 

under the Safe Drinking Water Act, just like every other person 

who puts things into the ground, how much more would it cost 

your company every year in regulatory compliance? 

Mr. TILLERSON. I do not know, because I don’t know how the regulation is going to be written, nor do you. 

Ms. DEGETTE. OK. And, therefore, can you say today whether or 

not simply reporting the components, which you agree should be 

reported under the Safe Drinking Water Act, would make it commercially impracticable? 

Mr. TILLERSON. I do not know. 

Ms. DEGETTE. You do not know. 

And what about you, Mr. Simpson? Do you know? 

Mr. SIMPSON. I do not know either. 

Ms. DEGETTE. And has anybody told you how much more it 

would cost to report it under the Safe Drinking Water Act versus 

50 different State laws? 

Mr. SIMPSON. No one has told me. 

Ms. DEGETTE. And have they told you, Mr. Tillerson? 

Mr. TILLERSON. No. 

Ms. DEGETTE. Thank you. I have no further questions. 

Mr. MARKEY. OK. The gentlelady’s time has expired, and all time 

for this hearing has expired as well. 

You know, my favorite show when I was a kid was ‘‘Rocky and 

Bullwinkle.’’ And they used to have this segment once a week 

where Mr. Peabody, who was kind of a scientist type, would take 

this little boy, Sherman, into the WABAC Machine to study fractured history. 

And that is a little bit like what this hearing is like to me. Because, in 1978, we sat in this room, we had a big hearing, I was 

on the subcommittee. America was running out of natural gas. We 

had a natural gas crisis. This is the testimony coming from the natural gas industry to the committee. ‘‘It is too precious of a resource 

to actually be used in the generation of electricity.’’ That is where 

we were in 1978, listening to the natural gas industry. 

So it is a bit of a fractured history here, now that the O. Henry 

ending is that we probably have 2–1/2 to three times more natural 

gas than we have oil, that it has half the carbon emissions of coal 

in electrical generation, and that it is in areas of the country where 

it is going to be most needed. So it is very interesting. 


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But even as I was listening here over and over again in the hearing, it is continually heard that there might be some secret conspiracy on this side of the aisle to ban hydraulic fracturing. But I 

just want to say that that would be fracturing reality in the same 

way that Mr. Peabody and Sherman used to fracture it by taking 

Sherman back in the WABAC Machine. 

So I just want to again make that clear. There is no secret plot 

to do that. There is a goal, to make sure that it is used safely and 

with sound environmental regulations, but I haven’t heard from either of the witnesses today that they oppose those goals. How we 

achieve them might be something we continue to discuss, and Congresswoman DeGette is raising that. But I just want to once again 

say there is no secret plot here to ban hydraulic fracturing, given 

the fact that there have been 1 million wells, I heard, that have 

been drilled using that technique. 

I think what we heard here today is that ExxonMobil is putting 

down a $41 billion bet on what America’s energy future will be and 

that it is moving in a low-carbon direction. And I think that is a 

smart bet on the part of ExxonMobil. And I appreciate Mr. 

Tillerson’s testimony that humans do contribute to global warming. 

He doesn’t yet know what percentage, but yet it does play a role. 

And I appreciate that, because that helps us in terms of moving 

forward with policies to that do promote low-carbon futures, because I think that helps to push us in the correct direction. 

I think, as well, it helps us to invest in America, create jobs here 

in our country, and to create an environment where we do develop 

strategies to back out that imported oil, to back out the sources of 

energy that do pollute more within our economy. And I think that 

if Waxman-Markey is adopted, that it will telescope the time frame 

that it takes for us to move to an era where we have exploited all 

of these opportunities which natural gas are presenting to our 

country. And my hope is that we can move in that direction. 

So we thank you for your testimony. We look forward to the results of the study of the safety components of the techniques that 

are used in hydraulic fracturing that the Congress has urged the 

EPA to undertake, but that only helps us to better put together a 

comprehensive policy here in our country. 

So, with the thanks of the subcommittee, Mr. Tillerson, Mr. 

Simpson, this hearing is adjourned. Thank you. 

[Whereupon, at 1:05 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 


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Summary 

EPA has published a final report summarizing a study to evaluate the potential threat to underground 

sources of drinking water (USDWs) from the injection of hydraulic fracturing fluids into coalbed 

methane (CBM) production wells. As in its August 2002 draft report. EPA has concluded that 

additional or further study is not warranted at this time. In making tbis decision. EPA reviewed more 

than 200 peer-reviewed publications. other research, and public comments. The Agency has 

concluded that the injection of hydraulic fracturing fluids into CBM wells poses minimal threat to 

USDWs. 

In its review of incidents of drinking water well contamination believed to be associated with 

hydraulic fracturing. EPA found no confinned cases that are linked to fracturing lluid injection into 

CBM wells or subsequent underground movement of fracturing fluids. Further, although thousands of 

CBM wells are fractured annually, EPA did not lInd confirmed evidence that drinking water wells 

have been contaminated by hydraulic fracturing lluid injection into CBM wells. Where fluids arc 

injected, EPA believes that groundwater production, combined with mitigating effects of dilution and 

dispersion, adsorption, and biodegradation. minimize thc possibility that chemicals included in 

fracturing fluids would adversely affect USDWs. 

In the course of conducting the study, EPA found that diesel fuel, which may pose some environmental 

concerns, was sometimes used in fluids for hydraulic fracturing within USDWs. To address any 

environmental concerns, EPA worked with the thrce servicc companies that perform 95% of the 

hydraulic fracturing projects in the U.S. to voluntarily remove diesel fuel from CBM fracturing t1uids 

injected into USDWs. The three companies agreed and signed a Memorandum of Agreement (MOA) 

to that effect in December 2003. 

Background 

Coalbed methane is a gas contained in varying quantities within all coal. Hydraulic ii-acturing of 

production wells is technology that has been used for more than 50 years in conventional oil and gas 

production to enhance recovery by enlarging fractures through which oil and gas, including CBM. can 

be drawn to a well and pumped to the surface. Water-based t1uids have become the predominant type 

of CBM fracturing fluids; although fluids can also be based on oil, methanol. or a combination of 

water and methanol. After t1uids are injected to expand fractures within a coal seam, large quantities 

of ground water and some oftbe injecting fracturing fluids are pumped out of the well to facilitate the 

production ofCBM. Additional technical inforrnation on the practice of hydraulic fracturing can be 

found in the final report. 

In 1997, in LEAF v. EPA, the Eleventh Circuit Court ruled that, because hydraulic fracturing of 

coalbeds to produce methane gas is a form of underground injection, Alabama's EPA-approved 

underground injection control (UIC) program must effectively regulate this practice. In response to 

the Eleventh Circuit's decision, citizen complaints. and Congressional interest, EPA made the 

determination to investigate the potential for hydraulic fracturing ofCBM wells to contaminate 

USDWs. 
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In addition to reviewing more than 200 peer-reviewed publications, EPA also interviewed 50 

employees from state 0)' local government agencies and communicated with approximately 40 citizens 

who were concerned that CBM production impacted their drinking water wells. EPA made a draft of 

the report available for a 60-day public comment period in August 2002. Comments received from 

more than 100 commentors. including private citizens, environmental and citizen groups, government 

agencies, oil and gas companies, and trade associations, have been summarized in a Response to 

Comments document that is available on the EPA website. 

For More Information 

The final report and a Response to Comments document can be found on the EPA website at 

http://www.epa.govisafewaterluic!cbmstudv.btml. The Memorandum of Agreement to remove diesel 

fuel from hydraulic fracturing fluids and gencral infonnation about the UlC program are available at 

http://w\vw.epa.gov!safcwater!uic.btml. 

Environmental and Public Health Benefits 

This notice does not impose any new rcgulations, info11nation collection, or record-keeping burden on 

the public or other entities, The publication of the final report will not change the environmental or 

public health benefits ofthe me program. 

Office of Water (4606M) EPA 816·F-04·{)t7 June 2004 www.epa,gov(safewater 
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ltonardS of Itt 'lSnittb ittatts 

~t of Ibpul tntanutl 

8 851)tngton, 1M: 205 15 

100 ltonorlble Lis.a Jackson 

Administrator 

Pecember 15,2009 

U.S. Environrnemlll Protection Agency 

Arie} Ries Federal Building 

1200 Pennsylvania A\'cnuc. N.W. 

R_JOO 

Washington. DC '20460 

Dear Administrator Jackson: 

TIw Departm..:ol of the llilcrior, EuvjruTuDetll; Nld Relal~ Agencies Appropriations ACl 

for FittCal Year 2010. signed inti) law OIl October 30. 2009. COlltains funding for caJ11'ing Ollt the 

Environmental Prou:coon f\ geocy's (EPA) cri tical missioJ:! (() pmecl human health and the 

enviromneliL Pursuant to thalllljssion.1.he conference committee's report requested thatlhe EPA 

conduct a swdyof hydr.aulic fr:aclIlring. 

Specifically. the report Stales thaI the EPA is 10 "cany out a study of (be rela ion~hip 

betv.-een hydraulic fracturing Ilnd drinking water, usin.g a credible 3pPfOllCh that relies. on me best 

available st.'i.:nc.:, <IS well as independent sources of infurmation," We believe that thi\ study 

should use a systelTlOltic, scientific approach (hat ensures transparency. accuracy and va lirlity. so 

as 10 allow the EPA and Congress 10 properly cvaluall! the environmemal perfonnance of 

hydraulic fracturing. 

We rcoommcoo that the EPA follow >C"cral Icey criteria. Finl. Ihe study should rety 00 

accepted quality assurance guidelines. The EPA should develop a reasonable aBd trJJls;parcnt 

srud)' design consi~~nl with its 2004 study and have WI! results properly p«r·reviewed by 

qlllllified experts in accomaoc.:: with standard I-'r.lctices. The study should also draw on the 

knowledge and experience of experts in hydraulic fl1KllUring, including th(ll;C in the Dt:part~nI 

of EIlergy. the U,S. Geological Survey. aBd stale regulatory agencies. ~ EPA should make Ihe 

study's results available to interested mem~rs of the publJe for Tey;ew and comment prior 10 

li nali~ ng lhem. 

Second, !he EPA shOllld fulty take into account previ()lls slOdies on bydrQu]ic fracturing 

by federal or slate govemITlC11lul agende3, couudts, ~'otllmiss ons or advisory committees. For 

example, given the significanl effort associated with Ihe 2004 EPA study, the ~gc\lcy should 

cOnsider Ihm study's conclusions on hydraulic fracturing aoo utilize a phased approach .... 1Jen 

derennining whether additional review is warranted. 
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Cc~ 

The Honorable Gene Grren 

The Honornhlc Dan Boren 

lbe Honorable Ch~'1 Edwards 

TIle IlonorJ.ble Solomon Oniz 

The Honorllblc Charlie' Gonzala 

The lIonorahle Ruben Hiooj05:1 

TIle Honorable AI Green 

l11c Honor3bk Si c·~I!·c Re~ es 

The Honornble EJdiC' Bernice Jt)hn~t)n 

111c Honor3nlr Ch:lr!lc M.:lnnwn 

The HOllorable He-flry Cu{'llnf 

111r Honorable ,\like o~, 

The HOflorilhl~ Shdia hck~on Lee 

The HonoOlblc Jim ~hu~on 

The Honolllbk Ciro RotIl"iguez 

The Honorable Harry Teague 

The Hooor3hle Earl Pomeroy 

The Honorohle \Ianin Heinrich 

The Honor:J.ble Parker Griffith 

The Honorable John T:llIllcr 

The Honorablt· Jim Co~ta 

The Honornble Wah Minnick 
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5,2010 

Chairman 

House Committee 

25 Rayburn House Office 

Washirgton, DC 20515-6115 

responses to 

of the House Subco!1'mittee 

Chairman Markey for 

provide you with our views. 

U,S. 

opportunity to ";:,,-tir',",,,!,,, 
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EXXONMOBIL'S RESPONSE TO POST-HEARING QUESTIONS 

SUBCOMMITTEE ON ENERGY AND ENVIRONMENT 

COMMITTEE ON ENERGY AND COMMERCE 

U.S. HOUSE OF REPRESENTATIVES 

JANUARY i 0, 2010 HEARING 

"THE EXXONMOBIL-XTO MERGER; IMPACTS ON U.S. ENERGY 

MARKETS" 

(i) anaiyst noted 

different business models: 

Ex)(onlJiobil·XTO merger 

smalier that 

reinvest business play: and the larger 

instead Qil efficient assets. anaiyst 

difficult EXXO:1 to re~ajn XTO's talented IA!()Cktm·iC.=> :1:..12 

I"ore bureaucratic organization. 

Ho\,'\! vvould you respond to these observations. 

bUSiness fnodefs and workforces of ExxonMobll and 

merger? 

summon ccmplementary strengths of both 

before federal agencies. the Netherlands Competition Authority. and 

for approval. 

,ll,S Mr. TiHerson stated on Decenlbef 2009. the 

also sa:d that the agreement is good news 

wil! enhance 0pPoliunities 

States, Canada, Gernlany, Poland, and ,r"rgentina, Mr. 

a successful 

agreement IS part oj an ongoing. disciplined evaluation of iime:y 1m .• ';'"""""" 

opportunities 10 creaie vaiue for shareholoers. and io 

demand The is consistent w'th 
72 


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chairman 

developed technlcai 

strengths of 82Ch cornpany and 

flied a docurn'3nts vvith the U.S, Securities 

includrng severa! Forrr1s 425. 

connection with business 

'"15024 &P=lfol-sec, 

(2) 1 beiieve naturBi gas lS an 2ssentiai clean 

clmlate goals, 

carbon ernlSS!Ons. Net 

emissions coal or cil. gas is needed 

such as v\,dnd turbines or to serve as ba::;k-u:J 

energy 

poiicies do believe essentIad 

2tld net hindered. Lnder cisar; e:lergy or 
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new supplies of energy from all economic sou roes, accelerate gails 

use, and develop and neVv technologies TO curb greenhouse 

err:issions /\n expanded rOle for natural gas -- domestlcally and 

essential, 

enetgy 

\F\/hi]e no sing1e energy source available today can cornp!etely solve the dua~ chaJeng.e 

meeting growing energy needs while reduoing emiSSions, natura! gas be one of 

the most important fuels of the future because of its scalability, afrordability, 

versatility and efficiency, Natutai gas is an aoundanl, low-carbon erergy resource 

available povv'er econornic growth :oday and toniorrOVI/ currently offers the 10\'V88tcost cieaner-burning and :a[ge-::;cale alternative 

ef1-:isslons by up to 60 percent versus coal. alSO 

dioxide, nItrogen oXide. partlcu!ate and rnercury emissions. V\fith 

environmental advantages, it is expected 10 be the fastest 

globaJly over the com~ng desades l;1creasing by rnore than 50 percent 

2005 to 2030. By then, natural gas is projected to have overtaken coal as 

second-biggest sOU~Ce of erergy 

Natural gas will be "'''De(:!,'' 

generation accounts for about 

expected to account abCU1 55 percent 0: the increase ir 

2005 to 2030 reaching a total si1are of about 40 percent 

alone, energy for pO\lVef generation vvlll approxirncltely 

In contrast the potential for the use of natural gas as a 

Hrnited. The Energy Infofil1ation Administration's 2009 Annual 

chaHengss assoclated \tilth ::;roadecing the use of natura! gas as a transportation 

that Il".vvidespf2ad adoption of natu:-a! 98S vehicies in the United States 

EiA cited a range of IIsignificant hurdles" tender :t 

impractical. Fo~ exarnp:e, natura! has thre8 to four times less energy per gallo;) than 

or diesel fuels and must ke::J: under very hIgh pressure, reQUlnn9 cosUy 

fuel tanks. This explains, In part vvhy the natural gas fUel option has been 

avaiiabie for over one hundred years but has not gained popu!arity \.vith consurners, 

additional, fundamental oost challenge \Nouid be to consi~u:;! a national transpc)ftation 

and service~statlon infrastructure to accommodate hIgh-pressure 

vehicies, In snor., for :he next several decades, v..te a~'e "","Art,,,,, 

predOMlinate in n:eeting both U,S. and \/vorid 

percent of US, transportation demand in 2C30. and 94 percent c;;e)U,,"" I 

The U,S, natura~ gas resource base (inciud:ng A:8.ska gas) 

supply at current rates consumption, with 

close to 25 percent of the energy demand in the is iTe; 

of the homes in U,S, - over 60 million rely on natural gas as a 

energy Natural gas-fired generation provides more than 20 percent of 

electricity needs, whie 45 percent comes from coal. But 

largest states, such as and TX, natural gas-fired power generation 

50 peroent of the electricity consumed, importantly, between 2005 and 2030, we 

expect U,S, natural gas demand to increase over 20% to 75 billion 

cubic feet per day; natural gas consumed for power "",,,,,,,,, .. ,,,, 

nearly double. 
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For years the industry has known that the North American cont!iiem holds vast 

quantities of '\moonveniional" gas (for examp:e, shale gas and tight 

gas), Over the last decade, hOWever, advances across a w'hole 

have made the econornic production of these resources poss:ble 

isslled preliminary 2010 Ann:.;al Energy Out'ook eslirnares 

shale gas resources have increased 30 percent in the past year alone, 

trillion cubic feet ("To!") in 2009 to now. U,S, unconventional 9as 

expected increase substantially and satisfy rno:-e than 50 percent of U.S. 

by 2030, 

in po:!cy options for reducing greenl1o~jse gas (GHG) enlissiocl$, and under 

would compete alongside other potential energy sOU:'CeS, 

f"lln",',,"" p'inciples: 

any cost of GHG emiSSIons uniforrn across 

allowing market pnces to drive the selection of 

minimizing compiexiW to reduoe administrative costs: 

!T'i8Ximizlng transparency to cornpanies and consumers: 

promoting global participation: 

recognizing the priorities of the 

limiting the conseqLences of differing 

cornpetitiveness: ard 

,,' adjusting in t'le future to developments in 

impacts of climate policies 

Effective climate and energy policy should promcte innovation, 

econornlc 

sei goals and provide a stable. sensible and predictable framework for entrepreneurs 

and Innovative thinKers to achieve these goals, Establishing a pl£lyln9 

variolls constructs growing energy needs while emissions would 

fcundational for achieving broad policy goals mos, cost·efi'ectively, 

investments at the lO\rvest cost to \\le need reliable, open 

investment frameworks that consider ali ow unbiased use of ali "'~0".~",i,-

alternatives to reduce GHG ernlssions. This rneans avoiding arbitra~y mandates aTld 

preferences that prevent use of the fnost economic optlons disadvantsq8 (or 

disGrirnmale agams!) an otnervvise economic energy resource 

Both in its allocation of perrni:s under the proposed cap anci trade system 

establishment of a "renewable electrlc't)' standard," federal advancing in 

both the House and Senate last year did not safeguard the playing field" 

principle to drive cost-efficiencies in fuel selection. 

subsidies are already heavily skeWed. As by ihe 

Adrr;'nistratioll, "electricity production and support per 

(doliars per hour) vary widely by fuel Coa:-based 

that are eligible the alternative fuels tax credit solar 

by far, the higr1esl subsidies per unit of 

£30 megav;/atl hOJr of generation:' 

of Nuclear: Electric and Alternative Fuels), 

Subsidies in Energy Markets 2007." (Apri/2008), These SUbstantial subsidies 

distort markets and preclude other options - slich as natural gas -

optimally to the achievement of our overali economic, energy 
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security and environmental goals. With a leve! playing field, natural gas, because 

of its scalability and environmental advantages, can provide immediate and longterm, cost-effective environmental benefits. 

Finally. a meaningful benefit of policies that allow for a greater contribution or r;aturai gas 

to meet our energy needs is that investments to increase U.S. production will create 

jobs. by stable and sensible investment frameworks. would also provide 

a significant new source of government taxes and royalties. In this of economic 

the U.S. oil and natural gas is 

i:.",-mrHnn to an analysis by 

million jobs in the United States over 

direct jobs) and jobs in the industry have increased by 20 percent since 2006. 

job occcrrred in many states, including Arkansas. Colorado, North 

South Utal, and The economic impact of the 

notable as well with natural gas $385 billion to our nation's 

alone. ExxonMobi: is poised to participate 

the U.S, natural gas industry. 

I;n ExxonMobil·XTO merger would hold nearly 8 million total acres in 

unconventional resources. nearly 60 percent of which wouid be located 

elsewhere such as in Canada, Argentina. Germany, Poland and 

Can you briefiy compare the regulatory programs and tax policies for 

developing lhese unconventional resources in the U.S, and abroad and how do 

these regulations impact where ExxonMobil makes its investments? 

that the \vorld's total energy 

higher. as as percent higher. in 2030 than it was in 

"f1n<:I,np,nnn the current global economic downtum. To meet the enormous 

the industry' must operate at a vast scale - and over a 

long to major investments in the oil and natural gas indlJstry 

is not measured in business cycles: it is measured in generations The 

today is the product of investment decisions and technical work that were 

many years or even decades ago Sound government policies have played an important 

role. 

The lEA also now estimates that the cumulative investment in 

infrastructure needed to the year 2030 will exceed $25 trillion 

Such investments will only be made. however. If governments stable and 

sensible fiscal and regulatory frameworks based 011 free market principles, To the extent 

that the world's nations and embrace such poliCies. they more likely attract 

the investments needed to their long-term energy security economic 

aspirations. 

The energy industry - and the global economy will need 

free trade, uphold the rule of law and build the sensible tax. 

frameworks trial allow for planning and investment to lake place. 
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and governments must work to build energy policies that maximize the use of markets 

and allow market prices to drive the selection of solutions. Vv'ithir ExxonMobil. we al'o 

demonstrating our commitment ane endurance by pursuing plans to invest 525 billion to 

$30 billion over the next five years on projects These are 

investment levels us. Whether to proceed to in the development of 

entails careful analyses of many ractors. including risked resource potential. 

challenges and local costs. as well as the policy foundations. fiscal regimes. 

regulatory frameworks. and investment stability of host nations. 

regiinas 

pmvide for 

A specific aspect of your question concerns the 

on the investments we make. Stable tax and 

compe:ition on a level playing field playa 

resources. both conventional and 

in the development 

Current tax rules in the United 

States. most of which have been in and relied upon years making 

investment and developJ1'lent have to date largely met the test of 

and have not discouraged investment. However. proposals to change 

these provisions adversely would, if adopted, be counterproductive and result in 

certain development projects not being undertaken, 

Exxont1!obJ! is clearly' cOlljmitied to the developnlent of the non-conventional resource 

base in the U.S. owned by XTO. In fact, the financial strength ExxonMobii 

the opportunity for even more rapid development of these 

U.S.-based resources, creating the fo;' more jobs and Investment in the 

production of cleaner-burning gas spread across many parts of the U.S. i"gain. 

however. adverse tax or changes that materially change the current rules 

would jeopardize these 

Similar considerations to those described above apply wherever ExxonMobil has 

resource development opportunities. including in the specific countries listed in the 

question. Whiie each country listed has its own specific sel of tax rules. as a general 

matter their rules do not appear to be less favorable for natural gas exploration and 

development and in some cases. the gene;ally applicable rates of tax are significantly 

better than the current U.S rates. 

ExxonMobil is also committed to dovelopment of i:s non·convontional resources outside 

the U.S. where the economics are viable and our financial generally the 

developms;nt of all viable projects. both within and outside the We have a 

successful history of with governments and :Jartlers around the world to help 

deliver the most value from resources. tH'inging together 

technology and superior operations and management 

on our pledge of performance. 

(4) What is the allnual cost to your company of complying witil 

regulating hydraulic fracturing? 

Answer: ExxonMobils Environmental Policy clearly stales that we wiii with all 

laws and and apply responsible standards whe:e laws do not 

and precautions specific to hydraulic fracturing. 
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The S:UC1es the 
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~kRGY 

~TO 

Bob R. Simpson Chairman of the Board and Founder 

March 5, 2010 

Honorable Diana DeGette 

United States House of Representatives 

2421 Rayburn House Office Building 

Washington, D.C. 20515 

Dear Congresswoman DeGette: 

Recently, Chairman Henry Waxman of the House Committee on Energy & Commerce 

forwarded to me a question you submitted as a follow-up to my appearance before the House 

Subcomittee on Energy & Environment. My testimony was part of the hearing, "The 

ExxonMobil XTO Merger: Impacts on U.S. Energy Markets." I appreciate your interest and 

hope the following response is helpful: 

"What is the annual cost to your company of complying with state laws regulating hydraulic 

fracturing?" 

There are a number of state regulations which apply to the process of hydraulic fracturing. 

Before the process begins, regulations dictate the construction of pits designed to hold fresh 

water for fracturing. Sediment control, pit liners, dam specifications and stormwater run-off 

control measures are a few ofthe regulated details involved in pit construction. In other cases, 

where such a pit is not feasible or permitted, fracturing fluids are contained in steel tanks. 

Well construction involves a number of regulated practices which isolate underground fresh 

water zones from a wellbore which carries fracturing fluids. Steel pipe casing, cement, labor and 

equipment are part of the cost of complying with state regulations to protect fresh water from the 

hydraulic fracturing process. 

In certain scenarios, additional permit authorization from river basins, underground water 

commissions, and municipalities are necessary prior to hydraulically fracturing a well. The 

process of developing permit applications and the fees associated with them are part of the cost 

of hydraulic fracturing. 

Once a fracturing job is done, the process of disposing of the fluids - mostly water - is heavily 

regulated. Hauling the fluids to a permitted disposal site and paying the disposal facility to 

accept the fluids contribute to the regulatory cost of hydraulic fracturing. 

XTO Energy Inc .• 810 Houston Street • Fort Worth. Texas 76102-6298 • (817) 870-2800 • Fax: (817) 885-2459 
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Honorable Diana DcGcttc 

March 5, 2010 

Page 2 

As one would expect, these and other variables result in a multitude of costs depending on the 

location and nature of the well. We estimate compliance costs of regulations related to hydraulic 

fracturing have averaged $400,000 per well. Given that XTO Energy drilled and hydraulically 

fractured 1,058 wells in 2009, it is reasonable to conclude our cost to comply with statutes and 

regulations related to hydraulic fracturing exceeded $400 million. 

I appreciate the opportunity to respond to your question and ask that you let me know if! can be 

of further assistance. 

~ti~ Chairman & Founder 

cc: Chairman Henry Waxman, Committee on Energy & Commerce 

Congressman Joe Barton, Ranking Member, Committee on Energy & Commerce 

Chairman Ed Markey, Subcommittee on Energy & Enviromnent 

Congressman Fred Upton, Ranking Member, Subcommittee on Energy & 

Environment 
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Bob R. Simpson Chairman of the Board and Founder 

March 5, 2010 

Honorable Gene Green 

United States House of Representatives 

2372 Rayburn House Office Building 

Washington, D.C. 20515 

Dear Congressman Green: 

Recently, Chairman Henry Waxman of the House Committee on Energy & Commerce 

forwarded to me four questions you submitted as a follow-up to my appearance before the House 

Subcomittee on Energy & Environment. My testimony was part of the hearing, "The 

ExxonMobil- XTO Merger: Impacts on U.S. Energy Markets." I appreciate your interest and 

hope the attached responses are helpful. 

I appreciate the opportunity to respond to your questions and ask that you let me know in can be 

of further assistance. 

Sincerely, 

~~~ Chairman & Founder 

cc: Chairman Henry Waxman, Committee on Energy & Commerce 

Congressman Joe Barton, Ranking Member, Committee on Energy & Commerce 

Chairman Ed Markey, Subcommittee on Energy & Environment 

Congressman Fred Upton, Ranking Member, Subcommittee on Energy & 

Environment 

lITO Energy Inc .• 810 Houston Street • Fort Worth, Texas 76102-6298 • (817) 870-2800 • Fax: (817) 885-2459 
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Honorable Gene Green 

March 5, 2010 

Page 2 

1. "Mr. Simpson, as you know, gas producers have traditionally had to search for new gas 

supplies each year, which made long-term contracts between producers and consumers 

impractical. 

What impact will U.S. shale discoveries have on the ability for natural gas producers to enter 

into long-term contracts with consumers such as utilities, and how will these contracts impact 

natural gas prices?" 

The dramatic increase in proven U.S. natural gas reserves is a paradigm shift in the U.S. energy 

landscape. Increased confidence in abundant supply will undoubtedly serve to make natural gas 

more attractive as both a feedstock and a burner tip fuel. It is not clear whether this will result in 

an increase in the use of long term contracts to mitigate price and supply risk. As risk 

management practices have improved, the use of hedging has become a far more commonplace 

tool in natural gas markets. While increased supply may lead some to seek longer term 

contracts, we do not anticipate the use of such contracts will have a meaningful impact on natural 

gas prices. 

2. "XTO's website partially attributes its financial performance to its quote: 'significant oil 

and gas hedges through 2010 with nearly 55% of production hedged at $9.62 on an equivalent 

basis.' Recently, Congress approved legislation that sought to bring greater transparency to 

derivatives markets that included an exemption permitting energy end-users to continue to 

engage in over-the-counter transactions to legitimately hedge risk for their businesses. 

As an energy end-user, how important is this ability to hedge riskfor your business operations 

and what would happen if Congress intentionally (or unintentionally) restricted your 

company's ability to hedge risk?" 

Allowing commodity producers to protect themselves against price risk through hedging is an 

important function of the derivatives market. While we understand and support the Congress's 

effort to enact responsible market reforms, it is important to be mindful of the effect these 

changes may have on commodity producers who utilize the market to manage price risk with 

customized hedges. At XTO, our ability to plan and budget for future exploration and 

production activities has historically relied on these financial tools to manage the significant 

commodity price risk associated with oil and natural gas production. 

We applaud the effort to create an exception for those of us who are not swap dealers or major 

swap participants, but who instead, have been using swaps to effectively hedge against adverse 

price movements in the product we produce. Excluding us from cash margin collateral 

requirements and from mandatory central clearing and trading proposals recognizes our role in 

the market for what we are - and more importantly, for what we are not. 

At XTO Energy, we have effectively utilized hedging practices to stabilize our cash flow to 

facilitate a long term capital outlay and drilling program. Over the past decade, our production 

has grown 714% and our full time workforce has grown to 3,300. Our hedging strategy has been 

a key component of our growth and success. 
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Honorable Gene Green 

March 5, 2010 

Page 3 

3. "In your testimony, you discuss the new upstream organization that will be created to 

manage global development and production of unconventional resources to be based at XTO's 

current offices in Ft. Worth, Texas. 

Do you expect most ofXTO's current employees to remain employed at this new upstream 

organization, and how many additional jobs do you estimate could be created at the facility?" 

It is our expectation that most ofXTO's current employees will remain employed at the new 

upstream organization within ExxonMobil. Additional job creation is difficult to estimate, but 

given our expectation of increased operational and production opportunities resulting from the 

merger, we believe there is potential to create additional positions as we increase our focus on 

development of unconventional oil and natural gas resources, and depending on the pace of 

development in response to market demands for natural gas. 

4. "One analyst noted that the Exxon Mobil-XTO merger would bring together very different 

business models: the smaller player that must constantly drill and reinvest for the short-term 

business play; and the larger player that focuses instead on long-term, efficient assets. 

Another analyst noted that it may be difficult for Exxon to retain XTO's talented workforce 

due to Exxon's larger, more bureaucratic organization. 

How would you respond to these observations, and how will you integrate both the business 

models and workforces of Exxon Mobil and XTO for a successful merger?" 

This proposed merger will enable XTO to apply its technical expertise and operational 

excellence to a greater number of unconventional natural gas opportunities using added scale, 

technology, and financial capacity. The current companies differ in structure and focus, but the 

combined and complementary strengths of each company will create a unique entity that will be 

able to extend and increase its shale play development activities. 

o