The finance ministry says  Luanda has ended talks with the IMF after borrowing $11.46bn between November 2015 and June 2016 from Chinese lenders. Picture: THINKSTOCK

DECADES ago, the world was told it was running on empty. Today we have more oil than we need. What will be the consequences of this boom?

On the evening of April 18 1977, US president Jimmy Carter invited television cameras into the Oval Office and portentously announced to the American people: “Tonight I want to have an unpleasant talk with you about a problem unprecedented in our history. With the exception of preventing war, this is the greatest challenge our country will face during our lifetimes.”

The unprecedented problem was energy. Or rather, the lack of it. “We simply must balance our demand for energy with our rapidly shrinking resources,” he said. “The oil and natural gas we rely on for 75% of our energy are running out.”

Mr Carter’s talk was poorly received. Americans did not appreciate the apocalyptic message, still less his vision for tackling the situation, with its rather schoolmasterly demand for a collective show of moral backbone. But hardly anyone questioned his facts.

And yet he was about as wrong as he could be. Far from running out, oil and natural gas reserves were, if not inexhaustible, then unfathomably vast. Nobody knew that then, but they do now.

Moreover, as well as bountiful oilfields in North America, Russia, Saudi Arabia and other producers in the Middle East, there are massive, barely tapped reserves in South America, Africa and the Arctic: not billions of barrels’ worth, but trillions. So the planet is not about to run out of oil. On the contrary, according to a Harvard University report put out last year, we are heading for a glut.

The 75-page study, by oil executive Leonardo Maugeri, was based on a field-by-field analysis of most of the major oil exploration and development projects in the world and it predicted a 20% increase in global oil production by 2020.

In particular, the report highlighted the deep-water reservoirs in Brazil’s Santos basin, which are thought to hold as much as 150-billion barrels of oil, Venezuela’s “extra-heavy” oil in the Orinoco Belt, estimated at 1.2-trillion barrels, the oil sands in Canada, the Kwanza basin in Angola, and the Bakken and Three Forks fields in North Dakota and Montana in the US, which, Maugeri said, “could become the equivalent of a Persian Gulf-producing country” all on their own.

And the reason for this boom? A technological revolution that is transforming the way oil is found and extracted.

“We, as an industry, are now able to see what we had previously not been able to see, and find what we previously had not been able to find,” says Gerald Schotman, Shell’s chief technology officer, who is based in The Hague. “But we are also able to make more out of these reserves, by being cleverer about the ways we manage them.”

One of the greatest advances, and the procedure that has dominated the headlines in recent years, for good reasons and bad, is hydraulic fracturing, or fracking.

Fracking was actually pioneered in Kansas in the 1940s but it is only recently, thanks to numerous improvements, that it has become economically viable. It means that oil previously thought unreachable is now within our grasp.

And nobody is exploiting these advances with more enthusiasm than the US. In just six years, the number of barrels being produced by the Bakken formation, a unit of shale rock stretching from Montana to North Dakota, has increased a hundred-fold — from 6,000 a day to 600,000 a day.

It has made North Dakota the second-biggest oil producer in America after Texas. The population of the main town, Williston, has tripled in 10 years as truck drivers and oilfield workers (not to mention strippers) have flocked there from all over recession-hit America.

North Dakota has new businesses and new hospital wings, but also an infras-tructure groaning under the weight of the influx.

There is a vociferous campaign against fracking by environmental groups who say the technique has the potential to contaminate underground water supplies, cause minor earthquakes and pollute the environment with vast quantities of toxic waste water.

Supporters of fracking insist these dangers can be mitigated. And they point out the huge benefits. The boom in North Dakota is rapidly transforming America from a net importer of oil to a net exporter, thus reducing its dependency on the Middle East. China, Russia and Argentina, impressed by the results in the US, are pushing ahead with their own fracking.

And Linc Energy announced just last month that it was hoping to extract 233-billion barrels of oil from shale rock in the Australian outback, with a potential worth of £13-trillion.

But fracking is just one of many remarkable breakthroughs behind the new boom. As well as helping producers release so-called “tight oil”,  technology has found a way to get at oil that is mixed with sand and clay, known as tar sand, the largest deposits of which occur in Canada.

Again, like shale oil, extraction had been dismissed as economically unviable, but new processes that involve steam-heating the sands have made it a sound proposition.

Canada is now producing up to 1.9-million barrels a day from oil sand projects, although, like fracking, the process has attracted protests.

Al Gore, the climate campaigner, has described tar sands as “the dirtiest source of liquid fuel you can imagine” and labelled plans to build a major new pipeline from the tar sands of Alberta to refineries on the Texas Gulf as “insane”.

The oil boom has also been fuelled by new, more accurate methods of drilling. The invention of horizontal drilling means even if the surface site is several miles off target companies are able to drill downwards and then turn sideways to get to the bottom of a well. A rig 300 miles out at sea can steer a drill down five miles, out five miles, and come within a couple of inches of the bull’s eye.

There is virtually no chance of drilling a dry well; oil companies had a 99% success rate in 2011.

Companies are drilling deeper than ever before, too. The Yastreb rig on Sakhalin Island, just off the east coast of Russia, has set numerous industry records. Last August, its operators announced they had drilled the world’s longest extended-reach well — nearly 15km down. That is deeper than Mount Everest is high.

Technology has an unstoppable forward momentum. What seems mind-boggling will soon seem old-fashioned.

As for the billion-dollar question — where exactly is the oil? — there is a relentless quest for answers.

So-called “seismic vessels” trail between 10 and 20 cables, each up to 15km long, probing sonically for undersea oil and gas deposits.

Each seismic vessel uses an airgun to fire acoustic pulses of compressed air into the water. Sound waves then bounce off the underwater rock and are picked up by streamers, which contain underwater microphones.

By studying this data, geologists can then map reservoirs and identify whether they are filled with oil, gas or merely water.

The level of sophistication is breathtaking. “What is going on out there is the marine equivalent of the space programme,” Robert Bryce, an American author and journalist specialising in energy issues, says. “And all of it is privately funded.”

The Daily Telegraph

* This article was first published in Sunday Times: Business Times