Hearing of the House Committee on Energy and Commerce, Subcommittee on Energy and the Environment - The ExxonMobil-XTO Merger: Impacts on U.S. Energy Markets

Statement

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 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 our distinguished witnesses on this important subject. We thank you
for being here.

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