Drilling Approach Leads to Natural Gas Boon and Backlash

Hydraulic fracturing, a drilling technique also known as fracking among other names, is the process of pumping millions of gallons of water and drilling to increase the pressure in the shale rock. This cracks the dense rock formation to reach the deposits and release gas.

Federal and state authorities are concerned about the process and its effects on the local freshwater supply. As a result, they are investigating the process and considering regulating the drilling process that could potentially hurt profits.

Exxon has a protective clause in its oilfield contract that allows the company to back out of the deal in buying XTO Energy Inc., a pioneer in fracking. Worries about the pollution that comes with fracking began before Exxon's deal with XTO Energy. Environmentalists are concerned about the chemicals mixed in with water that could contaminate drinking water. The purpose of the chemicals is to destroy bacteria, reduce mineral build up and lower friction. While the chemicals only take up less than 1% of the solution, it's enough for some to be hazardous.

Furthermore, the hazards depend on the depth of the shale and the location of the drills from freshwater aquifers. Industry representatives say there has never been an incident directly tied with fracturing while regulators have connected incidents with oil and gas drilling. Then there are the environmental groups that believe the gas and oil companies don't properly construct the wells.

As the natural gas industry improved the technology over the years, it also called for millions of gallons of liquid per well. In the past, companies only used hundreds of thousands of gallons.

If the government bans hydraulic fracturing or regulates it to the point where the process is economically infeasible, Exxon can exit the deal. Exxon Chairman and Chief Executive spoke to House Energy and Commerce Committee members on Capitol Hill in a hearing related to the merger. The hearing did not address concerns about the drilling process and instead looked at the benefits of boosting natural gas.

Congress introduced legislation to regulate fracturing at the federal level last June. In October, the house asked the Environmental Protection Agency to review the risks of fracturing. Representatives in support of federal regulations see a need for federal involvement because state rules vary greatly.