:00:00. > :00:12.Now, on BBC News, it's time for HardTalk.
:00:13. > :00:18.Welcome to HARDtalk. I am Stephen Sackur. The oil price crash has put
:00:19. > :00:29.four cell fuel producers under pressure. Profits are evaporating.
:00:30. > :00:33.-- fossil fuel. And to top it all off, there is a rapid
:00:34. > :00:39.decarbonisation of the world economy. Tough times for Frances
:00:40. > :00:45.Egan, leader of the company leading the charge to bring fracking to be
:00:46. > :01:05.UK. -- the. Could fracking have lost its appeal?
:01:06. > :01:21.Frances Egan, welcome to HARDtalk. Hello. This is an incredibly
:01:22. > :01:28.negative climate for a business such as yours, isn't it? Well... There
:01:29. > :01:36.are good parts and that parts like any industry. -- bad. Like you said,
:01:37. > :01:45.the oil price is at an historic low. It is certainly dropping. Of course,
:01:46. > :01:51.we are in the unfortunate position... But it doesn't impact
:01:52. > :01:55.our revenue. You are in a sense a speculative company that is about
:01:56. > :02:03.exploration and strike to find new reserves, in your case, that you can
:02:04. > :02:10.frack. -- and trying to. That is the worst place to be. We already have
:02:11. > :02:16.investors on board and drilled wells in better times. But in drilling
:02:17. > :02:22.them, we have proved there is an enormous quantity of gas in
:02:23. > :02:27.Lancashire. The geological survey confirmed that it is across the
:02:28. > :02:32.entire north of the UK. We have taken the technical risk out of it.
:02:33. > :02:37.There is one important challenge. To demonstrate the quantity of gas in
:02:38. > :02:42.the ground can be taken out of it. That is a technical challenge. But
:02:43. > :02:47.also a major business model challenge, if the price goes down,
:02:48. > :02:55.it will cross a threshold. It doesn't matter how much the race on
:02:56. > :03:00.the ground, you will not make anything by getting it out. -- there
:03:01. > :03:04.is. There has always been fluctuations. You know better than
:03:05. > :03:11.me that the department of energy has slashed its projection of gas prices
:03:12. > :03:18.going forward to 2020. This is not a one, it is a new reality. I would be
:03:19. > :03:26.cautious about new reality. Remember the supercycle model... That was the
:03:27. > :03:31.new reality. Now we have a new, new reality. That it will never go back
:03:32. > :03:36.up again. What I say should be a concern for the UK is North Sea
:03:37. > :03:39.production. Some of the highest production in the world, it is being
:03:40. > :03:48.very badly hit. It will not come back, unfortunately. You can see how
:03:49. > :03:51.resilient fracking and shale was in the US. Saudi Arabia undertook a
:03:52. > :04:00.strategy of opening taps to dry the US sharemarket. That was 30, now we
:04:01. > :04:04.are down to 20. We will undoubtedly see show production declining in the
:04:05. > :04:08.US. It is easy for it to come back on because it is a low capital
:04:09. > :04:13.investment. We will not see North Sea coming back up, though. I want
:04:14. > :04:18.to talk more about the international perspective later. But for the
:04:19. > :04:21.moment, your business model. A company committed to what I will
:04:22. > :04:29.continue to call fracking. That it binds. The exploration of gas
:04:30. > :04:34.reserves. -- fine. Rock that is far underground. That is what you do.
:04:35. > :04:38.You say that investors are already in for the long-term and you know
:04:39. > :04:48.the gases under the rock and you can bring it out to be but a comeback to
:04:49. > :04:55.the political climate. -- gas is. -- But I come back. Most evil in
:04:56. > :04:59.Britain, certainly where you want to frack, don't want you there. That
:05:00. > :05:04.would be a problem if it were true. I spent a lot of time in Lancashire
:05:05. > :05:08.and will not deny there are people opposed to it, but there are many
:05:09. > :05:12.who are for it, including business people and unemployed people in
:05:13. > :05:16.Blackpool. If you look at the actual data, you will find that there is a
:05:17. > :05:23.small group of the separately opposed people, 20%. --
:05:24. > :05:30.vociferously. An equal amount in favour. At the vast majority had yet
:05:31. > :05:37.to make up their mind. -- But. But the polls I looked at show a shift
:05:38. > :05:42.against fracking. 42% say it should not happen in the UK, shale gas
:05:43. > :05:53.fracking. 2019 said were in favour. A big shift against. -- 29. I have
:05:54. > :05:58.not seen those. The majority had yet to make up their minds. Well, let's
:05:59. > :06:03.talk reality, then. You see your focus is the Northwest of England,
:06:04. > :06:07.Lancashire, a significant gas field in the rock. By the democratically
:06:08. > :06:12.elected local council have considered everything you want to do
:06:13. > :06:18.and have refused to give you the planning commissions you need. --
:06:19. > :06:22.But. That is democracy in action. They are elected by the people and
:06:23. > :06:28.they are telling you you cannot operate. The planning process is,
:06:29. > :06:34.rightly, a democratic process of. We tick every box on all the
:06:35. > :06:45.environmental issues, but it is safe they turned it down. They turned it
:06:46. > :06:51.down for what I would call traditional issues of traffic and
:06:52. > :06:57.noise. We did not get approval. But the planning process takes note of
:06:58. > :07:02.local needs, but we are looking at international needs. It is this
:07:03. > :07:07.point about uncertainty. We talked about the prices. We will talk in a
:07:08. > :07:12.minute that environmental concerns. But in terms of all the pics and
:07:13. > :07:18.planning. I had an interview with you 1.5 years ago. You said you were
:07:19. > :07:22.sure you would be fracking in Lancashire by the end of 2015. 2016,
:07:23. > :07:26.there is still no sign of the getting the green light popular I am
:07:27. > :07:31.amazed I said I am sure. I have been in this business long enough to
:07:32. > :07:39.know... (LAUGHING). -- light. You know, the
:07:40. > :07:41.argument that there is political and economic uncertainty... That is the
:07:42. > :07:47.world we live in. Nowhere in the world can you exit for and produce
:07:48. > :07:51.gas where there is no political uncertainty. Some of the places you
:07:52. > :07:57.have to go, if you cannot develop your own indigenous resource, like
:07:58. > :08:01.Russia, the Middle East, they have a lot more uncertainty. I would say,
:08:02. > :08:06.do we want to be wholly reliant for energy sources on them? It is fine
:08:07. > :08:11.while it is cheap and plentiful at the moment. That will not with the
:08:12. > :08:21.DK. You talk about the US. -- the UK. The US have too much. They are
:08:22. > :08:25.prepared to sell a lot of it into Europe and the UK. That changes the
:08:26. > :08:30.calculation. Do we really, in a densely populated land, unlike Texas
:08:31. > :08:36.and North Dakota with vast tracts of empty land for fracking, we don't
:08:37. > :08:40.have that. Do we need it when we can get it from the US? That is the new
:08:41. > :08:46.reality. Let me say two things about that. The first, the urban myth that
:08:47. > :08:54.this is happening in the US in some kind of populated frack park when
:08:55. > :08:58.nobody lives. Look at the Environmental Protection Agency
:08:59. > :09:04.study. The statistics are that in 2013 there were 9 million people in
:09:05. > :09:13.the US nearby to a fracking plant. Seven or 8000 resources were in
:09:14. > :09:15.favour of it. The US is not just a lack I will tell you what is
:09:16. > :09:22.interesting, in one of those areas with dense population in a frack
:09:23. > :09:30.field, in the eastern part of the New York state... They have decided
:09:31. > :09:34.to ban it because they believe that the health... The public health
:09:35. > :09:38.issues are so uncertain. So many, to quote them, red flags, they have put
:09:39. > :09:44.a ban on it. That is quite correct. It gets a lot of the city. But
:09:45. > :09:47.nobody talks about the 23 states in the US where it has been going on
:09:48. > :09:54.for the last 20 years with no environmental or health
:09:55. > :10:02.repercussions. Lots of allegations. But not a single case in the US, let
:10:03. > :10:05.me finish this point, where the water supply or anything like that
:10:06. > :10:10.has been interfered by fracking. In this country, our water is... 99%
:10:11. > :10:20.comes from public water supplies to be in ten years, no impact. --
:10:21. > :10:24.supplies. I think you have brought us into the various environmental
:10:25. > :10:27.arguments about the wisdom of fracking. Let's go into some of
:10:28. > :10:35.them. You talk about water. Let me quote you the journal of
:10:36. > :10:40.epidemiology. This is based on research in New York. They raise
:10:41. > :10:46.substantial questions about the harm to help. People living in drilling
:10:47. > :10:50.sites are presenting with symptoms like skin rashes, nausea, add a
:10:51. > :10:58.model plane, respiratory problems, I could go on, there are many more. --
:10:59. > :11:03.stomach pains. These demand further investigation. That is entirely
:11:04. > :11:08.typical of claims against fracking. Not one single fact links any of
:11:09. > :11:11.that to fracking. I think if you read the paper they would be
:11:12. > :11:19.likewise. I have seen dozens of those. It is very easy, almost too
:11:20. > :11:23.easy, in fact, to make assertions of negative health outcomes. If you
:11:24. > :11:29.want to claim a positive one for a product you need enormous hoops to
:11:30. > :11:33.jump through. If you say you are going to cure cancer you have to
:11:34. > :11:37.jump through so many. But to say fracking killed my cat... There is
:11:38. > :11:44.increasing evidence... There is no data... But this is a respected
:11:45. > :11:47.journal. I am not a reader but it is highly respected in the United
:11:48. > :11:50.States. So is the Environment Protection Agency. They looked at
:11:51. > :11:55.Wyoming, not a place I know myself, but they have investigated
:11:56. > :12:01.allegations it has affected the drinking water there and they seem
:12:02. > :12:03.more investigation is needed. If you look to the conclusions, the
:12:04. > :12:10.Environmental Protection Agency studied 38,000 or so wells for a few
:12:11. > :12:17.years and discovered no evidence to systemic fracking pollution in water
:12:18. > :12:21.supplies. Not a single case of it being affected in the US. I will
:12:22. > :12:26.gladly be corrected if someone can point to one case... The New York
:12:27. > :12:30.public commissioner basically said I would not want my children to be
:12:31. > :12:35.brought up next to a fracking site. Isn't that part of the problem? You
:12:36. > :12:40.by the Chief Executive, it is so easy to tell people it is safe in
:12:41. > :12:44.the opposition. -- are. But when I tell you of serious doubt by people
:12:45. > :12:51.who live there, you dismiss their fears. I am not doing that. They are
:12:52. > :12:56.obviously genuine. I am not surprised with the degree of
:12:57. > :13:01.scaremongering around fracking. But if you look at the data as opposed
:13:02. > :13:13.to assertions, it is not supported. Here in the UK we would they inject
:13:14. > :13:18.water, sand, and stuff like that miles away from public water sources
:13:19. > :13:23.into a small hole. -- be injecting. You cannot contaminate groundwater
:13:24. > :13:29.with methane, it already has it. There is a perception in the UK that
:13:30. > :13:35.the aquifer is some sort of... You drill into it and it goes into your
:13:36. > :13:40.tap. Water comes out of ground, it goes into a treatment plants that
:13:41. > :13:43.extracts many things, and then goes into the public water supply. There
:13:44. > :13:51.is little to know risk. What we are it boring... In the end it comes
:13:52. > :13:57.down to how much independent research there is about this. --
:13:58. > :14:04.ignoring. When you were trying to back in Sussex or drill their at
:14:05. > :14:07.least they will launched a public petition saying they did not want
:14:08. > :14:13.any of this going ahead until there was rigourous investigation. --
:14:14. > :14:20.frack. -- launched. They say that never happened. Forgive me if I say
:14:21. > :14:21.that the energy of the UK should not be driven by Paul McCartney.
:14:22. > :14:37.(LAUGHING). The question is whether you're
:14:38. > :14:38.prepared to accept a thu-going, rig nous, independent investigation
:14:39. > :14:41.prepared to accept a thu-going, rig nous, independent investigation of
:14:42. > :14:45.this area of uncertainty. Let me answer that and talk a little bit
:14:46. > :14:52.because we rarely get the chance, of the benefits of fracking. There
:14:53. > :14:57.already has been. The Royal Society, the Royal Academy of Engineering
:14:58. > :15:02.have done that. Public Health England have done. The Environment
:15:03. > :15:08.Agency looked at the permits for which we applied for activity in
:15:09. > :15:10.Lancashire for 12-plus months and determined there was no risk to
:15:11. > :15:17.health and gave us the permits we needed. The council turned us down
:15:18. > :15:20.on the grounds of noise, not on any health or safety issues. They're
:15:21. > :15:27.important but not what we've been talking about. Set against that, the
:15:28. > :15:34.country is running out of gas. We're literally talking about running out
:15:35. > :15:39.of gas. We've talked to the degree to which Britain could import gas
:15:40. > :15:47.from all over the world. Where is the gas shortage? It is in the UK.
:15:48. > :15:51.But you're reliant on where it's coming from... Well, it is all over
:15:52. > :15:58.the world... It is not all over the world. To take gas, transform it
:15:59. > :16:01.into a liquid, put it on a ship, ship it across the halfway again,
:16:02. > :16:07.transform it into the gas and then put into your or my house. It is not
:16:08. > :16:10.straightforward. And, lastly, it is hugely environmentally unfriendly
:16:11. > :16:14.compared to producing it in ex-to the source of demand. The
:16:15. > :16:22.environmental requirements for LNG have been shown in terms of CO2
:16:23. > :16:27.emissions to be two to three times what domestically produced gas. I
:16:28. > :16:32.guess we should come to the other huge issue facing you is the climate
:16:33. > :16:36.change agenda and the idea is it makes sense to contemplate another
:16:37. > :16:39.attempt to tap into the reserveses of fossil fuel under the ground when
:16:40. > :16:45.political leaders across the world have committed, for the first time
:16:46. > :16:49.really, to a serious and wholesale decarbon nisation of the world
:16:50. > :16:53.economy. Can I come back a little to why you'd be wanting to do that.
:16:54. > :16:59.I've been talking about the security supply, which is not a trivial
:17:00. > :17:03.issue. I know you can in theory rely on your energy supply on imports but
:17:04. > :17:10.it is not a position that many countries feel comfortable about
:17:11. > :17:14.doing, and the US certainly didn't. Everybody your former Chairman Lord
:17:15. > :17:18.Brown said if we do or do not develop the natural fracking gases
:17:19. > :17:24.in the UK, it will no difference to the price of gas in the UK. The gas
:17:25. > :17:33.will be available at the same price whether we frack in the UK or not. I
:17:34. > :17:38.admire your faith in Lord Brown's broadcasting ability... Well, you
:17:39. > :17:41.admired him, he was your chairman. Well, I think he himself would admit
:17:42. > :17:46.that forecasting the price is a mug's game. He wasn't talking about
:17:47. > :17:51.a specific price, it was a concept. You said you can tap into the huge,
:17:52. > :17:58.we say world... We're not talking world. We're talking global gas
:17:59. > :18:05.prices? No we're talking about a market for the UKmarket. I know
:18:06. > :18:10.you're testing the three you can create an LNG plant and pop it onto
:18:11. > :18:13.a ship and flick it over to us. You can't. Gas is not as transportable
:18:14. > :18:17.as you might think it is. It requires a huge amount of capital
:18:18. > :18:23.investment to do that. You have seen it in the US. Why is the price of
:18:24. > :18:27.gas $2 in the US and $10 in Japan if it's so easy to transport gas from
:18:28. > :18:33.one country to another. It is not. In my mind, it would be
:18:34. > :18:36.irresponsible for us not to even look or explore our own resources. I
:18:37. > :18:40.understand that. It has taken us back to an issue of markets an
:18:41. > :18:44.prices, but let's get back to climate change. I'm sure you watched
:18:45. > :18:49.events in Paris... Yes. You must have got the message, it is time to
:18:50. > :18:52.accept that a lot of the fossil fuel on this planet needs to be left in
:18:53. > :18:58.the ground. Let's talk about that. You would be well aware that at the
:18:59. > :19:01.moment in the UK, about 85% of our energy comes from fossil fuels. By
:19:02. > :19:06.energy, it is not just electricity - it is transport and heating as well.
:19:07. > :19:12.That's about the same globally, if you look at the global supply and
:19:13. > :19:16.demand of energy. 85% comes from fossil fuels, the rest is from
:19:17. > :19:21.nuclear and renewables. Absolutely, there is a desire and intent - I
:19:22. > :19:31.understand why - to move from 85% to 0%. But you can't do that in a flick
:19:32. > :19:35.of a switch. All fossil fuels are all equal. We should not say the
:19:36. > :19:43.perfect situation is we have all renewables. Gas is good. Up to a
:19:44. > :19:48.point. Gas is good. There are people like Friends of the Earth,
:19:49. > :19:53.Greenpeace, the solar guy, they all say there's significant evidence
:19:54. > :20:04.that the methane leakage that comes with what you do is potentially so
:20:05. > :20:12.se -- severe that fracking could be as damaging as coal-fired plants.
:20:13. > :20:21.There is one study in the US, and that has been studied at length by a
:20:22. > :20:25.chief scientist and he has concluded that gas produced from natural
:20:26. > :20:29.fracking is as the same as natural gas... You can quote your studies,
:20:30. > :20:33.itch mine. There is -- I have mine. There is a degree of uncertainty...
:20:34. > :20:37.No, I would take issue with you there. There is one study and
:20:38. > :20:41.numerabble other studies contradicting that. I think that
:20:42. > :20:45.argument has been completely debunked. Your argument to me -
:20:46. > :20:51.well, to the world is - that you accept that we need to be moving to
:20:52. > :20:55.a decarbon nised economy, we need to be moving to a fully renewable,
:20:56. > :20:58.sustainable economy, but in the meantime give us permission to bring
:20:59. > :21:02.out the ground vast amounts of fossil fuel. Does that make sense?
:21:03. > :21:06.My argument to you and to anybody else, frankly, is we need natural
:21:07. > :21:13.gas in this country. In are people around this country watching this
:21:14. > :21:23.now who have their central heater billers turned on. 85% use it for
:21:24. > :21:28.heating, 60-odd percent use it for cooking. There will be natural gas
:21:29. > :21:33.used in the country - no question. The only question is where are we
:21:34. > :21:38.going to get it from. I repeat, I think it would be irresponsible not
:21:39. > :21:41.to even look - bear in mind we're at the exploration phase - can we
:21:42. > :21:47.produce that gas under the profound. We're talking about a handful of
:21:48. > :21:52.wells to assess that? We're not even going to look at that and we're
:21:53. > :21:56.going to import it from Russia and Nigeria? So what then do you need to
:21:57. > :22:00.happen? I come back to the ambitions you have and the way they've been
:22:01. > :22:07.thwarted. You hoped to be operating now in Lancashire. You're not
:22:08. > :22:12.because you're not allowed to. In your view is it a political failure
:22:13. > :22:15.to get this happening and what needs to happen? Like anything new in a
:22:16. > :22:19.way, particularly anything new going through planning, and fracking is
:22:20. > :22:23.not unique in this way. We've seen it with Heathrow and HS2 - you see
:22:24. > :22:26.it with any infrastructure development. Is, it's a slow process
:22:27. > :22:31.to get started. And until you get started, you're open to all these as
:22:32. > :22:37.sergss that it'll -- assertions that it'll do this or that. It is very
:22:38. > :22:40.hard to disprove an asshergs when you can't point -- assertion when
:22:41. > :22:45.you can't point to anything happen. In the end, Prime Minister Mr Calm
:22:46. > :22:49.calm says he wants to -- Mr Cameron says he wants to go for it when it
:22:50. > :22:53.comes to fracking. In the end, is the your view - it is too important
:22:54. > :22:57.to allowed to be blocked by local democracy? I think we don't have
:22:58. > :23:04.what I describe as a pick and mix democracy. You don't take the bits
:23:05. > :23:09.you like and discard the rest. We've been through the local planning
:23:10. > :23:13.policy and ticked a lot of boxes. It is an issue of national importance,
:23:14. > :23:17.which is way the Secretary of State has called it in. We're not the only
:23:18. > :23:22.ones to get called in. They call in about 100 of these through the whole
:23:23. > :23:26.spectrum of industries. But clearly it is an issue of national
:23:27. > :23:32.importance. I say it again - it would be irrational of us not to
:23:33. > :23:37.even explore our own resources. How long will you give this until you
:23:38. > :23:41.give up? I won't be giving up any time. You quoted us that I'd be sure
:23:42. > :23:49.that we'd be fracking at the end of 2015 but I intend to see this
:23:50. > :23:52.through. We need to drill to see whether this can be technically
:23:53. > :23:59.produced. We've always been upfront about that. We'll come back and
:24:00. > :24:04.discuss this more but for now, Francis Egan, thank you very much
:24:05. > :24:24.for talking to us on HARDtalk. Thank you very much.
:24:25. > :24:28.The new working week certainly dawns on a mild note,