03/09/2012 01:48 pm ET Updated May 09, 2012

Rex Tillerson, Exxon CEO, Says More Fracking Rules Hinder Development

* Complex regulation hinders energy development, economy
* State, local regulation sufficient
* Shell, Statoil CEOs more conciliatory about regulations

By Kristen Hays
HOUSTON, March 9 (Reuters) - State and local
regulations in shale oil- and natural gas-rich plays across the
United States provide sufficient oversight, compared to the
"dysfunctional" federal layers that could hinder development as
well as the economic recovery, Exxon Mobil Corp Chief
Executive Rex Tillerson said on Friday.
Tillerson, addressing an audience of energy executives at
the annual CERAWeek conference in Houston, said layers, complex
regulatory processes in oil and gas development "has become an
obstacle to getting anything done."
"This type of dysfunctional regulation is holding back the
American economic recovery, growth, and global competitiveness,"
he said.
Tillerson said state and local governments needed
protections sufficiently to oversee oil and gas activity while
collaborating with producers.
"They provide us the road map with how to get something
done," Tillerson said. "Today the regulatory process is now so
complicated and so involved with so many different agencies,
it's a road map of how to not get anything done."
White House spokesman Clark Stevens said in an email to
Reuters that the Obama Administration is developing "sensible
standards to protect air and water quality" with input from the
industry and others to ensure continued production.
CEOs of two other European major oil and gas producers
appeared more conciliatory about regulations when they addressed
executives at the conference earlier this week, but they didn't
overtly differentiate state and local regulations from federal
Peter Voser, CEO of Royal Dutch Shell said the
industry can handle environmental and operational challenges of
tight and shale gas production, particularly when governed by
"well-targeted and robustly enforced regulations."
And Helge Lund, CEO of Norway's Statoil, said
public trust and confidence in the industry's ability to
maintain safe operations is crucial.
"There is a huge upside for working to ensure we have the
right regulations, rather than being perceived as the industry
that fights regulations," Lund said.
Tillerson cited as an "unfortunate decision" President
Barack Obama's rejection of a federal permit to allow
TransCanada to build its proposed $7 billion Keystone
XL pipeline from Canada to Texas to transport Canadian oil to
U.S. Gulf Coast refineries.
Environmental groups and some states had opposed the
pipeline on integrity concerns and whether it would increase
U.S. dependence on emissions-heavy Canadian oil production.
Tillerson called the rejection "a product of political
calculations in Washington."
He also said the industry learns from mistakes, such as the
2010 blowout of a BP Plc deepwater well in the Gulf of
Mexico that spewed more than 4 million barrels of crude into the
"It reminded all of us that the failure to manage risk
effectively carries enormous consequences, in terms of loss of
life, significant financial impact, and environmental harm,"
Tillerson said.