If you want to take a break from Copenhagen, there’s another controversy involving energy and the environment in Upstate New York and rural Pennsylvania. The issue: does gas-well fracking contaminate underground drinking water?
Buried deeply in the 76 pages of legalese that is the Exxon Mobil-XTO $31 billion merger is a clause that basically says: If Congress regulates hydraulic fracturing, aka fracking, Exxon gets to back out of the deal.
The actual wording is if Congress changes a law that makes “hydraulic fracturing or similar processes … illegal or commercially impracticable.” It’s filed under “company material adverse effect” in the 8-k filing from Monday.
Bottom line is that Exxon was worried enough that Congress could take action – and potentially slow the development of unconventional gas resources – that it wanted an out before it turned over $31 billion of its stock. If Congress does act, a number of well-known companies – such as Chesapeake Energy, Petrohawk, Range Resources and Devon – could face an impact....MORE
The Chronicle had the story first, here's their update:
Would 'Frac act' kill the Exxon/XTO deal? *update*
...The deal will likely close before any new laws regarding fracturing are passed by Congress, but
Rep. Ed Markey (D-Mass.) is calling for a hearing on the merger to discuss concerns over fracturing.
A spokesman for Energy in Depth, an industry group, said the bill "isn't some sort of cosmetic exercise":
"It's not about disclosure or transparency. It's about shutting the entire process down, and initiating an unprecedented expansion of EPA authority while they're at it. To the extent this news sets the record straight and disabuses those who think these guys are just playing around, it might actually be helpful."
The folks at FBR Capital Markets aren't quite as concerned. In a research note this morning. they observe that Markey's committee can't actually draft any laws and that even though the EPA was asked to study the issue it was not appropriated the money to do so in 2010. For now, it's really more of a "headline" risk, FBR says...MUCH MORE