Explorers strike black gold

As the price of oil spiked two years ago, the industry began scouring remote reaches of the ocean to find new reserves. and now, oil explorers have recently made some significant discoveries. Eoin Gleeson investigates, and picks the best ways to invest in the new oil boom.

For an industry that is meant to be downing tools, oil explorers have found a hell of a lot of the stuff recently. First Iran strikes 8.8 billion barrels. Then BP uncovers a "giant" discovery in the Gulf of Mexico. And then Tullow Oil announces it has found a whole new oil basin, stretching 1,100km from the coast of Ghana to Sierra Leone. Have they been hiding this stuff from us?

Not at all. Oil experts have been factoring new discoveries like these into estimates of the world's oil reserves for some time, says Carola Hoyos in the FT. As the price of oil spiked two years ago, the industry began scouring remote reaches of the ocean to find new reserves. But firms quickly found their equipment wasn't up to the job. So they ploughed a fortune into developing drills and seismic equipment that could sound out fields deep beneath the seabed. Now those innovations are starting to pay off. Slowly, a picture has began to emerge of vast, untapped reserves miles under the oceans. Anticipating this, geologists have been adding allowances for undiscovered deepwater oil into their forecasts of future supply.

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Eoin came to MoneyWeek in 2006 having graduated with a MLitt in economics from Trinity College, Dublin. He taught economic history for two years at Trinity, while researching a thesis on how herd behaviour destroys financial markets.