An Old Formula May Overstate U.S. Oil Supplies

A popular way to measure crude doesn’t work well with shale oil
Jeff Allyn of Raven Drilling climbs to the top of a derrick while drilling for oil in the Bakken shale formation outside Watford City, N.D. Photograph by Andrew Burton/Getty Images

Jan Arps is the most influential oilman you’ve never heard of. In 1945, Arps, then a 33-year-old petroleum engineer for British-American Oil Producing Co., published a formula to predict how much crude a well will produce and when it will run dry. The Arps method has become one of the most widely used measures in the industry. Companies rely on it to gauge the profitability of drilling, secure loans, and report reserves to regulators. When Representative Ed Royce (R-Calif.) said at a March 26 hearing that the U.S. should start exporting its oil to undermine Russian influence, his forecast of “increasing U.S. energy production” could be traced back to Arps.

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