As the United States becomes a net oil exporter for the first time in 75 years, the US Department of the Interior has announced the discovery of the largest continuous oil and gas field ever found. Situated in the Wolfcamp Shale and overlying Bone Spring Formation in Texas and the Permian Basin in New Mexico, the new resource is estimated to contain 46.3 billion barrels of oil, 281 trillion cu ft of natural gas, and 20 billion barrels of natural gas liquids worth trillions of dollars.

One of the problems when it comes to understanding the oil and gas industry is that the terminology can be misleading. For example, when someone asks how much oil or gas there is, the answer is almost invariably that we have enough to last 20 years. That seems straightforward enough and argues for the phasing out of increasingly scarce fossil fuels, but the curious thing is that 20 years ago we had 20 years worth of oil and gas, and the same was true 20 years before that, and will probably be true in 20 years time.

This is because what that 20-year figure deals with are reserves or, rather proven reserves. These are oil and gas fields that have been found with 90 percent certainty and can be recovered given the economic, technological, and political conditions of today. Because oil and gas prospecting is incredibly expensive, the oil companies like to find enough reserves to last a generation and call it good.