January 15, 2010 / 8:29 PM / 10 years ago

Exxon, XTO to testify to Congress on merger

WASHINGTON (Reuters) - The influential Subcommittee on Energy and Environment in the U.S. House of Representatives will hold a hearing into the ramifications for U.S. energy markets from the proposed merger OF Exxon Mobil Corp and XTO Energy Inc.

Exxon (XOM.N) Chairman and CEO Rex Tillerson and Bob Simpson, chairman of XTO XTO.N, have been called to testify.

The committee, which is chaired by Representative Edward Markey, could be considering a range of issues regarding the merger, including a controversial drilling technique used to tap oil and gas fields.

Exxon has said it can pull out of its $30 billion acquisition of XTO if U.S. lawmakers make hydraulic fracturing “illegal” or “commercially impracticable,” according to the merger agreement filed by Exxon with the U.S. Securities and Exchange Commission.

Hydraulic fracturing, or “fracking,” injects a mixture of water, sand and chemicals into rock formations to stimulate production. Some environmental groups oppose the technique as unsafe and seek more regulation over it.

Exxon plans to buy XTO Energy Inc in an all-stock deal and the combined companies will have 8 million acres of shale gas and other types of unconventional resources, the largest in the industry.

Meanwhile, U.S. Energy Secretary Steven Chu said on Friday that fracking could be done in a way to remove oil or gas that would not harm the environment and suggested Congress should not outlaw the practice.

“If it can be extracted in an environmentally safe way, then why would you want to ban it?” Chu told reporters. “I think it can be done responsibly.”

Chu said companies should not use fracking in shale rock that is close to a water table or an unstable fault line.

Chu declined to comment on whether he was concerned a combined Exxon Mobil-XTO Energy would create a bigger company that might have too much control over U.S. oil and natural gas supplies.

“There are companies that are big. The size of a company is irrelevant,” he said. “That’s like me saying that a very successful company like a Microsoft (MSFT.O) or Intel (INTC.O) is inherently bad.”

Reporting by Russell Blinch and Tom Doggett; editing by Jim Marshall

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