Could Cornwall’s “Royal Oil” save Britain?

Eoin Treacy, the man who predicted the shale gas boom, has found what could be the solution to Britain’s energy crisis.

An infinite source of heat, stored beneath the earth’s surface, which can be used to generate electricity. To everybody else, it’s known as geothermal energy.

The energy source itself is not a new discovery, but what Eoin has uncovered is a breakthrough in technology which means this buried heat could finally be tapped.

Eoin’s taken to calling this energy source “Royal Oil”, because he believes that Britain’s geothermal potential could be the answer he’s been searching for.

Now, you’re probably thinking something along the lines of “Yes, what with all our British volcanoes!”

And it’s true, there is a distinct absence of lava spewing mountains in the British landscape – probably good, given clouds of ash might push our weather-obsessed psyche over the edge.

But, strange as it sounds, we do have astoundingly large geothermal resources.

Buried under Cornwall, and across the UK, could be the solution we’ve been looking for

A few years back, an in depth analysis of the UK’s geothermal potential was commissioned.

What it found was truly remarkable.

In fact, across the UK, we have enough resources to generate as much energy as nine nuclear power stations.

And enough to cover the whole of the UK’s space heating needs.

Properly harnessed, geothermal energy could play a big role in UK energy independence.

To appreciate why that’s important, we need to take a look at the British energy scene.

A snapshot of the British energy scene

The British energy scene is a mess.

There’s no nice way to say it, financially speaking, energy imports are a nightmare for the UK.

As things stand, we’re importing almost half the energy we consume, and that looks set to increase to around 80% by 2030.

A nightmare for the British government, and a nightmare for the British people.

There are all sorts of horrific statistics out there.

One of the most shocking, for me at least, is that 10% of households in the UK are forced to choose between heating and food.

One in ten!

It’s shocking, so when a potential solution presents itself, it’s important we take it seriously…

And, incredibly, geothermal energy could be an important part of that.

So why isn’t it?

Humans have been exploiting geothermal resources as far back as the Vikings, and probably further.

Iceland is famed for its hot springs. The picture below shows the outdoor bath of one Snorri Sturluson, at one time the most powerful man in Iceland. It’s known as Snorralaug, and dates back to around 1200.

The difference between the UK and Iceland’s geothermal potential, is that Icelandic geothermal resources are much closer to the surface. In the case of Sturluson’s bath, right at the surface.

In the UK, this potential is hidden, buried much deeper underground.

There are places where it naturally rises to the surface – the hots springs in Bath, for instance. But by and large, you’d have no idea it was there, unless you went looking for it.

Until now, the huge resources buried under the UK have been effectively useless, because we haven’t been able to access them…

All of that is changing…

Ten years ago, it was widely believed we had reached peak oil supply.

In response, big oil companies invested trillions of dollars in finding new reserves.

When oil prices collapsed, they cancelled just about all exploration, but they doubled down on the technology.

Now, the breakthroughs in drilling tech are making it possible to access geothermal resources which, before, were simply to deep underground.

It’s a system known as EGS, or enhanced geothermal system, which generates geothermal electricity without the need for natural hot springs, etc.

It works by pumping high-pressure cold water down an injection well, into the rock. The water captures the rock’s natural heat and is pumped back to the surface.

Then it can be used to power a steam turbine, or heat a house (or a city).

Once the well has been dug, its maintenance costs are extraordinarily low, which is why the energy is so cheap.

We’ve always known about the potential of this energy, but we’ve never been able to access it. With recent breakthroughs in technology, it could be about to make some big waves in the energy world.

Long term, it is hoped that this energy source could help the UK move away from the heavy imports she’s been depending on, and provide cheaper energy across Britain.

The British advantage

In 2015 the Department of Energy and Climate Change backed a project to investigate the possibility of repurposing old oil and gas wells.

The results were good news for the UK, who have around 1,750 unused wells. Not all of them will be appropriate, of course, but a good number of them likely will be, and the same project found that using predrilled wells can save around 80% of building costs.

That’s a huge shortcut in terms of pre-existing infrastructure, and one that should stand Britain in good stead over the years to come.

The Saudis are moving in on it, too

Interestingly, it’s not just the UK who stands to benefit from the shift towards geothermal energy.

Even countries naturally rich in fossil fuels are beginning to shift their economies over.

Back in 2016, the then-deputy crown prince of Saudi Arabia, Mohammad bin Salman (MBS), announced that Saudi Aramco would be launching on the stockmarket.

This caused quite a stir all on its own. The family was selling off its crown jewels, a company widely considered the most valuable in the word.

Two years later, and MBS remains adamant the initial public offering (IPO) is right around the corner – the family’s hit a few legal complications along the way – but here’s the really interesting part of the story:

MBS has announced that any money raised from the sale of Saudi Aramco is prohibited from being reinvested in the oil industry.

MBS has been very open about his desire to end the country’s “oil addiction”. With renewables and new technology (like electric vehicles, solar energy and battery tech) eating away at the demand for fossil fuels, Saudi Arabia can no longer depend on oil for its economy.

But the country also has some pretty impressive geothermal potential. And with oil on the out, this could be the answer to the country’s energy needs.

Exactly what the future holds for Saudi Arabia, as the world shifts away from the fuel which has been its lifeblood for so long, is hard to say. But if an empire built on oil is migrating to a new source of energy, it’s surely a sign of the direction the global energy trend is moving in.

The investment case for geothermal

Imagine there was an inexhaustible energy source buried beneath the earth, 50,000 times greater than all known oil and gas resources. Big enough to power the entire world 250,000 times over.

Now stop imagining, because that’s the scale we’re talking about with geothermal energy, worldwide.

With that amount of power, geothermal has more than the capacity needed to displace the entire global energy market, valued at around $9 trillion.

And right now, it’s still in its infancy. Which means the growth potential out there is astounding.

That’s why you have smart money heading up big funds to invest in this potential, including Bill Gates, among others.

New energy sources have a tendency to attract huge amounts of excitement and capital, almost inevitably leading to a massive bill market.

It’s a story Eoin knows all too well, having anticipated the Shale gas boom almost a decade ago, and moving in on battery and solar tech, stealing in before Tesla’s explosive 950% rise in 2013.

If you’re interested in how Eoin’s playing this global trend, you can find out more here.

Until next time,

Harry Hamburg
Editor, Exponential Investor

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Invest in the company slated to dominate the global market, for your shot at over 170% long term gains!

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