Oil sector royalties

Comments

6 comments

  • Avatar
    IMPLAN Forum
    Hi Jonthan, Thank you for your post. The Royalties are captured in IMPLAN under Other Property Income which is a component of Value Added (VA). VA includes: Employment Compensation, Proprietor Income, Other Property Income and TOPI. Even though royalties are included in OPI, this isn't the only value included in OPI, thus you will not be able to isolate the royalty amount. Let us know if you have any further questions.
    0
    Comment actions Permalink
  • Avatar
    Jonathan Butcher
    Thank you for your response, most helpful. I have another question regarding data in this sector. Specifically, I'm wondering how output is allocated to a state. For example, the industry data for New Jersey shows output in oil and gas extraction of $9.5 billion. Yet there is zero oil and gas extracted in New Jersey. Is this due to producing companies having offices the state? If so, why is the output not attributed to where the activity takes place? Thank you
    0
    Comment actions Permalink
  • Avatar
    Jonathan Butcher
    Sorry to hassle, but does anyone have an answer to this? Thanks
    0
    Comment actions Permalink
  • Avatar
    IMPLAN Forum
    Hello, While the Wage and Salary Employment data used by IMPLAN are place-of-work based, the Proprietor Employment data are place-of-residence based. That is, a well-owner who lives in NJ but whose well is in another state will show up in the BEA data (and will resultant, in the IMPLAN data) as a proprietor in O&G extraction sector in the NJ data set. That proprietor is then allocated a certain proportion of the U.S. O&G extraction output, since the output data are reported at the U.S. level only. Please have a look at these forum discussions on the same topic and let us know if you still have questions or concerns: http://implan.com/index.php?option=com_kunena&view=topic&catid=80&id=9397&Itemid=1840#9399 http://implan.com/index.php?option=com_kunena&view=topic&catid=80&id=16145&Itemid=1840#16157 Thanks!
    0
    Comment actions Permalink
  • Avatar
    Jonathan Butcher
    Thank you for your response. The key issue for me then is how to deal with this when it comes to the actual analysis. Say, for example, that I have reliable data on the level of output in North Dakota in 2013, and that figure is much greater than what is currently in IMPLAN. If I model an industry change of state output in sector 20 rising $1 billion, will the resultant estimates for direct employment and indirect/induced activity etc be disproportionately large, because the base level of output for sector 20 is too low?
    0
    Comment actions Permalink
  • Avatar
    IMPLAN Forum
    Hi Jonathan, It seems counterintuitive, but a sector’s multiplier does not depend on the sector’s overall size; just on the relationships (specifically, Labor Income per $1 Output and Intermediate Expenditures per $1 of Output) of that industry. So when you run an impact analysis, it does not matter what the initial size of the industry is – so long as those industry relationships are what they should be. If you have known values for these ratios, we certainly encourage you to edit the Study Area Data or the Event accordingly. One other note, if may be good to ensure that your definitions for the sales (Output) value are the same as IMPLAN's, as this could be a part of the discrepancy that you are seeing, and can be important to account for in ensuring that you are making appropriate purchases of the correct Intermediate Expenditures. Oil and gas production has many stages and some of them fall across different Sectors in IMPLAN. We have found in the past that sometimes the definitions included in a customer's Output value include midstream pipeline and storage charges and fees, and sometimes even include retail sales values (additionally it is also important to note that drilling and refining fall into two different Sectors in IMPLAN). Thus it is important to ensure that you know the definition of you Output value and ensure that it is appropriately allocated to ensure the most accurate impact.
    0
    Comment actions Permalink

Please sign in to leave a comment.