OCS Study 

MMS 2000-065 

Coastal Alabama Offshore Natural Gas 

Economic Projection Model 

MS I il AL 

Gulf of Mexico 

FL 

in 

20r~ 

. . 

'" . 

i D alifl . " 

U.S. Department of the Interior 

Minerals management Service 

Gulf of Mexico OCS Region 
OCS Study 

MMS 2000-065 

Coastal Alabama Offshore Natural Gas 

Economic Projection Model 

Author 

Jason R . Plater 

Prepared under MMS Contract 

1435-01-96-CT-30829 

by 

Foster Associates, Inc. 

120 Montgomery Street, Suite 1776 

San Francisco, California 94104 

Published by 

U.S . Department of the Interior New Orleans Minerals Management Service 

Gulf of Mexico OCS Region May 2002 

DISCLAIMER 

This document and accompanying software was prepared under contract between the Minerals 

Management Service (MMS) and Foster Associates, Inc. This report has been technically reviewed 

by the NIMS and approved for publication. Approval does not signify that the contents necessarily 

reflect the views and policies of the MMS, nor does mention of trade names or commercial products 

constitute endorsement or recommendation for use. It is, however, exempt from review and 

compliance with MMS editorial standards . 

REPORT AVAILABILITY 

Extra copies of the report may be obtained from the Public Information Office (Mail Stop 5034) at 

the following address: 

U.S. Department of the Interior 

Minerals Management Service 

Gulf of Mexico OCS Region 

Public Information Office (MS 5034) 

1201 Elmwood Park Boulevard 

New Orleans, Louisiana 70123-2394 

Telephone Number: (504) 736-2519 or 

1-800-200-GULF 

CITATION 

Suggested citation : 

Plater, J.R. 2000. Coastal Alabama Offshore Natural Gas Economic Projection Model. OCS Study 

MMS 2000-065 . U.S . Dept. of the Interior, Minerals Management Service, Gulf of Mexico 

OCS Region, New Orleans, La. 46 pp. 

Coastal Alabama Economic Effects iii 

ABSTRACT 

This document summarizes a Microsoft Excel°-based economic projection model developed as 

part of a series of investigations analyzing the social and economic impact of the Coastal 

Alabama offshore gas industry on Gulf Coast states . The model forecasts economic effects of the 

offshore gas industry on Mobile County, the rest of Alabama, and the combined economies of 

Louisiana and Texas. Economic impact multipliers from a specially-developed IMPLAN model, 

combined with estimates of industry expenditures on offshore exploration, development, and 

production drive the model. The model estimates past economic effects and forecasts them 

through 2020. Future industry activity in the Destin Dome area of the Eastern Gulf of Mexico 

Results are also included. The model described in this document calculates the economic effects 

found in the study "Economic Effects of Coastal Alabama and Destin Dome Offshore Natural Gas 

Exploration, Development, and Production." This study is the third in a series of investigations 

analyzing the social and economic impact of the Coastal Alabama offshore gas industry on Gulf 

Coast states . 

Coastal Alabama Projection Model 

ACKNOWLEDGMENTS 

Foster Associates received substantial support for this project. Many people provided data and 

factual information. The following people and organizations were especially helpful in supplying 

information and resources, and in some cases, reviewing subsections. Without their contributions, 

this report could not have been written. Errors that remain are the authors' . 

Nancy Cone 

Dave Bolin 

Ralph Hellmich 

Dean Peeler 

Gary Jacobs 

David Duplantier 

Thornton Helm 

Clay Vaughn 

Richard Harman 

Robert Mink 

Tom Joiner 

Mike Prendergast 

Dave Marin 

Carl F. Southern 

Mike Kimmett 

Alabama Department of Conservation, Lands Division, Montgomery, AL 

Alabama Oil and Gas Board, Tuscaloosa, AL 

Alabama Oil and Gas Board, Tuscaloosa, AL 

Alabama Petroleum Council, Montgomery, AL 

Chevron USA Production Company, New Orleans, LA 

Chevron USA Production Company, New Orleans, LA 

Chevron USA Production Company, New Orleans, LA 

Exxon Company USA, New Orleans, LA 

Exxon Company USA, New Orleans, LA 

Geological Survey of Alabama, Tuscaloosa, AL 

Tom Joiner and Associates, Tuscaloosa, AL 

MMS, GOMR, New Orleans, LA 

MMS, GOMR, New Orleans, LA 

Mobil Oil Exploration and Producing Company, New Orleans, LA 

Mobil Oil Company, New Orleans, LA 

Woods W. Allen Murphy Exploration Company, New Orleans, LA 

Rick Mykitta Shell Yellowhammer Plant and Unit, Coden, Alabama 

Robert Davis Spirit Oil Company, (UNOCAL) Lafayette, LA 

Henry Caddell Thiry & Caddell, Mobile, AL 

Coastal Alabama Economic Effects vii 

TABLE OF CONTENTS 

1 . General Description of File Contents 1098 - 4 sector.xls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

2. Overview of Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

3. Offshore Operator Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 

4 . IMPLAN Multipliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

5 . Calculation of Economic Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 

6 . Charting Model Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 

Appendix A: Instructions for Estimating Exploratory and Development Drilling Costs . . . . . . . . . . . A-1 

Appendix B: Instructions for Estimating Offshore Structure Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1 

Appendix C: Technical Addendum: IMPLAN Modeling Summary/Modifications . . . . . . . . . . . . . Gl 

Coastal Alabama Economic Effects ix 

LIST OF FIGURES 

Figure 1 . General Flow of Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 

Figure 2. Overview of Expenditures Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 

Figure 3. Overview of Multipliers Worksheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

Figure 4. Overview of Economic Results Worksheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

Figure 5. Example of Typical Matrix Multiplication Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

Figure 6. Sample Results Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

Figure 7. Economic Effect Chart Worksheets General Layout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 

Coastal Alabama Economic Effects xi 

1 . General Description of File Contents 1098 - 4 sector.xls 

The economic projection model used in this coastal Alabama study is contained in the Microsoft 

Excel 97 file 1098 - 4 sector .xls . Each item is described in further detail below. The file contains 

the following: 

Estimates of Offshore Operator Spending 

The Expenditures worksheet tabulates offshore operator and related government spending to 

explore, develop, and produce offshore Coastal Alabama fields . This worksheet also tabulates 

the allocation of spending between Mobile County, the rest of Alabama, and LA/TX. 

IMPLAN Multipliers 

The Multipliers worksheet shows economic effects resulting from each $1 million of spending 

on offshore activities . 

Calculation of Economic Effects: Mobile, Alabama, and LA/TX 

The worksheets entitled Mobile IMPLAN / Alabama IMPLAN / LATX IMPLAN calculate 

the economic effects of past and future offshore gas production in their respective impact 

regions . 

Charts Depicting Economic Effects: Mobile, Alabama, and LA/TX 

For each producing region, a series of charts (on worksheets MO Charts / AL Charts / 

LATX Charts) are generated that graphically depict the economic effects shown in tabular form 

on the respective worksheets described above. Virtually all combinations of activities, producing 

regions, impact regions, and levels of aggregation are depicted on the chart worksheets. One 

worksheet is devoted to each impact region . Another sheet, Exp Charts, graphically depicts the 

spending streams tabulated on the Expenditures worksheet. 

Settings and Find Results Worksheets 

The Settings worksheet contains user parameters. The Find Results worksheet contains tools 

to assist the user in locating model results . Use of these worksheets is described below. 

2 . Overview of Calculations 

Figure 1 shows the general flow of calculations in the projection model. First, the estimated past 

and projected future spending on offshore exploration, development, and production (and 

associated government spending) is imported from supporting documents. Spending is tabulated 

by producing region (AL State, Mobile OCS, and Destin Dome OCS). The spending is then 

allocated between the three impact regions (Mobile County, the rest of Alabama, and LA/TX). 

Total spending in each impact region is then multiplied by a set of IMPLAN multipliers to obtain 

the total economic effects in each impact region . 

Coastal Alabama Projection Model 
Offshore 

Operator 

Spending: 

-E&D Drilling Impacts of Direct 

-Pipelines Allocation 

Industry 

-Platforms Expenditures : 

Between Mobile 

-Processing 

' County & LAITX -Employment _0&M 

10 -Population 

AL State -Personal Income 

Mobile OCS 

Destin Dome Mobile County 

LA/TX 

IMPLAN Impacts of State 

Alabama Multipliers: 8 Local 

Government 

Government 

Economic Impact Spending : 

Spending 

per $1 Million 

spending -Employment 

-State -Employment -Population 

-Local -Personal income -Personal Income 

-Population 

Mobile County 

Alabama 

Figure 1 . General Flow of Calculations 

3. Offshore Operator Expenditures 

Offshore operator expenditures to explore, develop, and produce Coastal Alabama offshore 

natural gas are tabulated on the Expenditures worksheet. The general layout of the worksheet is 

shown in Figure 2 . Raw data come from supporting spreadsheets or are calculated internally . 

Expenditures are tabulated for four producing regions : 

1 . Alabama State-production occurring in Alabama state waters ; 

2. Mobile OCS-production occurring in the Mobile area of federal OCS waters offshore 

Alabama; 

3. Coastal Alabama- the sum total of production occurring in state and federal waters offshore 

Alabama (i .e ., producing areas 1 and 2) ; and 

2 Coastal Alabama Projection Model 
Alabama 

Total 

Mobile OCS Coastal Destin Expenditures 

State Alabama Dome OCS Allocation 00 Price Index 1 

Current- Expenditure 

Constant $ Calculations 

Calculations 

All Regions 

Mobile 

County 

Alabama 

LA/TX 

Figure 2. Overview of Expenditures Worksheet 

4. Destin Dome OCS-production occurring in the Destin Dome area of federal OCS waters in 

the Eastern Gulf of Mexico (offshore Florida). 

For each producing region, expenditures for five offshore development activities) and, where 

applicable, related government spending are tabulated from 1982 through 2020. Expenditures for 

each activity are then allocated across three geographical impact regions. This allocation 

describes how much of each dollar spent by operators on offshore development activities is 

actually spent in the impact region . The user may change any of these allocations, which are 

found in the range Spending Allocation . Of course, expenditure allocations must sum to one for 

each activity . 

The first sets of expenditures shown on Figure 2 are for all regions (in current/constant dollars). 

Below are the expenditures for each impact region in constant dollars. The user may choose to 

use any year's dollar as a baseline constant dollar . z The baseline constant dollar can be specified 

on the Settings worksheet. 

At the head of each allocated expenditure column is a cell with a text string (e.g ., 

MOB.V.DD.PLATFORM). These strings are the named ranges used to identify the arrays in 

Exploratory & Development Drilling, Pipeline Contracting, and Platform Fabrication & Installation each have a 

supporting spreadsheet detailing how annual totals are calculated. See the appendices for a description of these 

calculations . O&M expenditures are calculated in the worksheet, based on the production forecast developed in the 

History Report. 

Z Nominal dollars are converted to constant dollars using the U.S . Dept. of Labor, Bureau of Labor Statistics 

Producer Price Index for capital equipment. If constant dollars of years later than 1998 are used, the price index 

must be undated. 

Coastal Alabama Projection Model 3 
matrix algebra calculations (on subsequent worksheets). The name is shorthand describing the 

contents of the array, for example: 

MOB.V.DD.PLATFORM 

MOB. = Mobile County Spending 

V. = Vector 

DD. = Destin Dome OCS Production 

PLATFORM = Platform Fab . & Installation Activity 

is the vector describing expenditures occurring in Mobile County for Platform Fabrication and 

Installation associated with Destin Dome OCS development. Similar nomenclature applies to 

matrices of total expenditures and IMPLAN multipliers throughout the workbook. 

4. IMPLAN Multipliers 

The worksheet Multipliers contains all of the IMPLAN multipliers developed for the study, as 

described in section 3.2 of the report. Calculation of IMPLAN multipliers is exogenous to this 

worksheet. The IMPLAN model used for this study generates multipliers per $1 million of 

spending in $1995. The multipliers are then adjusted to reflect spending of $1998 . As described 

above, the user can set the baseline year to a different year if desired. The IMPLAN multipliers 

will automatically adjust to reflect a different base year. 

Three sets of multipliers are included, reflecting the three impact areas : Mobile County, the rest 

of Alabama, and LA/TX. Multipliers are only included where applicable; e.g ., there is no LA/TX 

multiplier for government spending since all state and local government spending from Coastal 

Alabama development occurs in Alabama. Multipliers for direct effects are included on the 

worksheet, although all data presented in the report are total effects . Indirect and induced effects 

can be calculated as the difference between total and direct effects . 

Multipliers are developed for employment, total place of work (PoW) personal income, and 

population . For employment and income, multipliers are presented at 1-digit SIC code-level 

Mobile County 

Multipliers $1998 

(or $ user setting) 

Mobile County 

Multipliers $1995 

Alabama Multipliers 

$1998 

(or $ user setting) 

LA / TX 

Multipliers $1998 

(or $ user setting) 

Alabama Multipliers 

$1995 

LA / TX 

Multipliers $1995 

Figure 3 . Overview of Multipliers Worksheet 

4 Coastal Alabama Projection Model 
aggregation3 . Population multipliers are not disaggregated by industry; only the total for each 

activity is provided. IMPLAN Pro develops Type 3 multipliers, which do not include a 

population component. To estimate the population multipliers, Type I population multipliers 

from the earlier 1996 IMPLAN work were used. They were scaled to equilibrate the 

employment/population ratio from previous work with the new employment multipliers 

developed in the current study. 

5. Calculation of Economic Effects 

All calculations of economic impact occur on the three impact region-specific worksheets: Mobile 

IMPLAN, Alabama IMPLAN, and LATX IMPLAN. The general layout of the worksheets, 

shown on Figure 4, is identical except that some activities are not present in all regions, e.g ., 

LA/TX sees no economic effect from Alabama government spending. Each table contains 

historical estimates from 1982 and forecasts through 2020. Employment impacts, with a blue 

background, are in the top section of each worksheet. Personal Income impacts are below with a 

gray background. 

Economic effects are presented in four levels of aggregation: 

By Industry Sector-The most disaggregated presentation, effects are broken into industry 

sectors roughly equivalent to 1-digit SIC codes. An eleventh category, Drilling, is added to 

account for the Exploratory and Development Drilling component of the Oil & Gas sector. 

" By Industry Group-This aggregation merely combines industry sectors described above into 

six Industry Groups, primarily to aid in presentation . The user can modify the allocation of 

Industry Sectors into Industry Groups. 

" By Activity-This depicts the total economic effects of each offshore development activity 

side-by-side, rather than the combined effects of all activities . 

All Activities-The total effects of all activities over all economic sectors. 

Multiplying the vectors of operator spending from Expenditures and the IMPLAN coefficients 

from Multipliers yields the total economic effects of Coastal Alabama exploration, development, 

and production . An example of how economic effects are calculated is shown on Figure 5 . All 

matrix multiplication operations utilize named ranges that employ a shorthand for identifying the 

range's contents . Each result table has a similar range name, which is used in the results search 

algorithm . 

3 "Oil & Gas Extraction" is substituted for mining, because 100% of direct and close to 100% of total economic 

effects are attributable to the Oil & Gas Extraction subsector. 

Coastal Alabama Projection Model 5 
a 

0 

p 

b 

`. 

n 

0 

Economic Effects Worksheets - General Layout 

All Activities 

Producing Region by Industry 

Sector 

All Aiivies 

by Industy 

group 

Population: 

Ail Activities 

ExpIDev 

Drilling 

by Industry 

~ ~

Pipelines 

by r 

Sector 

Plafforms 

by Industry 

Sector 

Onshore 

Treatrnent 

by Industry 

Sector 

O&M 

by Industry 

~~r 

Govt . 

Spending 

by Industry 

Sector 

At Activities 

by Activity 

WI ActivNes 

by Industry 

Group 

AL State Prod . a o o o a o a a a a a 

Mobile OCS Prod . D D D D D O a D a o D 

Total Coastal AL Prod . o o a o o o a a a a a 

Destin Dome OCS Prod . a o o a o a a a a a a 

at FLtivmes 

Producing Region by Industry 

Sector 

All Activities 

by Industry 

group 

ExplDev 

Drilling 

by Industry 

Sector 

Pipelines 

by Industry 

Sector 

PIaGorms 

by Industry 

Sector 

Onshore 

TreatrneM 

by Industry 

Sector 

O&M 

by Industy 

Sector 

Govt . Spending 

by Industry 

Sector 

At ActivNes 

by MAY 

a1 pcyyilies 

by Industry 

Group 

AL State Prod . o o a 0 a o 0 0 0 0 

Mobile OCS Prod . D 

Total Coastal AL Prod . a o a a a a a a o 0 

Destin Dome OC5 Prod . El a a El El 1:1 1:1 o El DFigure 4. Overview of Economic Results Worksheets 
Mobile County Share of 

Destin Dome OCS Pipeline 

Contracting Expenditures 

1982 - 2020 

1982 

1983 

1984 

1985 

1986 

1987 

1988 

1989 

1990 

1991 

X 

Employment Multipliers : Jobs per $1 Million 

Spending in Mobile County on Pipeline 

Contracting (by industry sector) 

Agriculture O&G Extraction . . . Services Govt. Misc. 

[1 X 10] 

[ MOB.VTOTEMPEXP/DEV] 

2016 

2017 

2018 

2019 

[39 X 1] Mobile County Employment by Industry Sector from Pipeline 

[ MOB.V.DD.PIPELINE] Contracting Expenditures Related to Destin Dome OCS 

Development (1982 - 2020) 

Agriculture O&G Extraction . . . Services Govt. Misc. 

1982 # # # # # 

1983 # # # # # 

1984 # # # # # 

1985 # # # # # 

1986 # # # # # 

1987 # # # # # 

1988 # # # # # 

1989 # # # # # 

1990 # # # # # 

1991 # # # # # 

.2016 .# .# # # # 

2017 # # # # # 

2018 # # # # # 

2019 # # # # # 

2020 # # # # # 

[39 X 10] 

[MoEmEcPiDe] 

Figure 5. Example of Typical Matrix Multiplication Procedure 

Coastal Alabama Projection Model 7 
Note that most of the table titles and are concatenated cell functions-use caution when editing 

what appears to be a text label. The worksheet also contains hidden cells-always ensure a cell is 

actually empty before changing what looks to be an empty cell . The top left cells of each result 

table range contain formulas used to generate the title of the table. For printing purposes, these 

cells can be hidden so only the title of the table shows. The two panels in Figure 6 show a result 

table with the top left cells showing (left panel) and hidden (right panel) . To hide/unhide these 

cells, press the Hide Table Data / Show Table Data buttons on the Settings worksheet. 

All Activities 

Mobile County 

Employment 

Espenditure Cats 

Alabama Sate 

Results Table Showing 

Title Data Cells 

Table B-1 

Mobile County Employment 

by Espenditure Category 

Resulting from All Activities 

-- Alabama State Production -- 

yPjQey~ pinelinec Platiorme Dnchorn 

Of1IIldQ Midi 

1982 118.4 - - - 

1983 132.2 - - 

198. 265.1 - - 

1985 324.5 7 .9 - 

1986 171.6 48 .2 95.1 

1987 99.4 ~ 134.3 5602 

1988 99.5 ~ 131.3 45.6 

1989 24.0 35 .8 221.0 

1990 140.9 77 .4 122.1 .66.7 

1991 347.3 138.5 1572 452.7 

1992 156 .1 106 .4 227 .3 484.7 

1993 150.7 56.3 224 .8 833.4 

1994 40.3 - 32 .2 

1995 90.9 9.9 51 .7 - 

1996 41.3 10.7 28 .4 - 

1997 %3.7 18.4 - 37.7 

1998 46 .0 14 .3 - 

1999 156.7 28 .6 38.0 

2000 28 .8 14 .3 - 

Q&[v] I -a1 TOTAI 

Taxes 

52.4 

69.4 

102.4 

163.6 

551.1 

632.0 

1,081.5 

987.6 

959.7 

986.9 

1,119.7 

1,162 .9 

1,228 .6 

Figure 6. Sample Results Table 

0.9 

3.3 

2.0 

4.0 

9.0 

22 .9 

73 .5 

46 .6 

70 .0 

78 .8 

113 .8 

122.9 

131 .3 

118.4 

132.2 

265.1 

332.4 

314.9 

794.0 

329.6 

353.5 

911.6 

1,263.3 

1,534.6 

1,9202 

1.227.5 

1,186 .1 

1,110 .1 

1,285 .4 

1,287 .8 

1,509 .0 

1,403 .0 

Results Table With 

Title Data Cells Hidden 

Table B-1 

Mobile County Employment 

bg Expenditure Category 

Resulting from All Activities 

-- Alabama State Production -- 

EXpj[]m EjRfljpes Platforms np5hgg l¢[v] I -I 70TAI 

nI111109 

T 

Tadi 

raa[men[ 

I.dYlS 

1982 118.4 - - - - - 118.4 

1983 132.2 - - - - 132.2 

1984 265.1 - - - - 265.1 

1985 324.5 7 .9 - - 932.4 

1986 171.6 48 .2 - 95.1 - 314.9 

1987 99.4 134.3 5602 - 794.0 

1988 99.5 131.E 45 .6 524 329.6 

1989 24.0 35 .8 221 .0 69.4 353.5 

1990 140.9 77 .4 122.1 466.7 102.4 911.6 

1991 347.3 138.5 157.2 452.7 163.6 1,263.3 

1992 156 .1 106 .E 227.3 484.7 551 .1 1,534.6 

1993 150.7 56.3 224.8 833.4 632.0 1,920.2 

1994 40 .3 - 32.2 - 1,081.5 73. 1,227.5 

1995 90 .9 9.3 51.7 - 987.6 1,186 .1 

1996 41 .3 10.7 28 .4 - 959 .7 1,110 .1 

i 1997 163.7 18.4 37.7 986.9 1,285.4 

1998 46 .0 14 .3 1.1137 1,287 .8 

i 1999 156.7 28 .6 38.0 1,162 .9 1,509 .0 

2000 28 .8 14 .3 1 .228 . 6 1,403 .0 

Using the Navigation Tool to Find Results 

The Find Results worksheet provides a searching tool to display tabular model results. The tool 

aids users unfamiliar with the file layout in finding model results. The tool is simple : 

1 . Press the Reset List button . This will create a long list of results in 5 columns . At the head of 

each column is a small downward-pointing arrow. 

2 . Click on the avow and choose the desired criterion from the pull-down menu. For example, 

under "Impact Region" the choices are between Mobile County, Alabama, and LA/TX. As 

criteria are chosen, the list of potential matching results is filtered and becomes shorter. 

Continue across the columns (filtering can be done in any order) until the one desired result 

tabulation is shown. The filter result in the figure below would show Employment effects by 

Economic Sector on Mobile County resulting from Pipeline Contracting in the Destin Dome 

OCS. 

Impact Producing Economic 

Region Region Effect Offshore Activity Breakdown 

'Mobile County Destin Dome Employment Pipeline Contracting Economic Sector 

0.9 

3.3 

2.0 

4.0 

9.0 

22.9 

5 

46.6 

70.0 

78.8 

113.8 

122.9 

131.3 

8 Coastal Alabama Projection Model 
3. Press the Find Results button . You will be transported to the appropriate table of model 

results in the IMPLAN worksheets. 

6. Charting Model Output 

Graphical depictions of model output are found on the worksheets Exp Charts, MO Charts, 

AL Charts, and LATX Charts. Exp Charts contains charts plotting expenditures, and the 

others contain charts showing economic effects in each of the three impact regions. All results on 

the Chart worksheets are drawn from the Expenditures and IMPLAN calculation spreadsheets. 

The general layout is shown in Figure 7. 

Do not change the zoom setting on the chart worksheets from 66%. 

Due to a bug in Excel, the arrangement of chart items (titles, legend, chart area, etc.) will become 

garbled if the zoom is changed to a different value and saved 4. The Excel application may also 

"bog down" or freeze when editing charts . According to Microsoft, the only recourse in this 

situation is to close and restart Excel. Performance will then temporarily improve. 

Alabama Mobile 

Economic State OCS 

Effect 

Total Coastal Destin Dome 

Alabama OCS 

Coastal AI . Coastal 

(by Prod . Alabama and 

Region) Destin Dome 

Employment 

(Total) 

Employment by 

Activity 

Employment by 

Economic Sector 

Personal Income 

(Total) 

Employment and 

Population 

Population 

Figure 7. Economic Effect Chart Worksheets General Layout 

° For more information, see Microsoft Knowledge Base article Q142592. The article states that the problem has been 

fixed in Microsoft Excel 8 .0/97. Yet the problem persists in this document. 

Coastal Alabama Projection Model 9 
All chart titles, axis labels, and footers are linked to cells at the far left of each row of charts . 

Charts that are included in the report include the figure number in the title . Other charts use a 

generic naming scheme. 

Changing the Aggregation of Industry Groups 

Charts depicting economic effects "by Economic Sector" actually use an aggregation of six of 

the eleven IMPLAN sectors. The number was reduced to aid in presentation-eleven sectors are 

too many to display on a small chart. The user may choose to organize the eleven sectors 

differently if desired. On the Settings worksheet, name the six aggregate groups and choose 

how the eleven IMPLAN sectors are mapped into them. 

10 Coastal Alabama Projection Model 
Appendix A 

Instructions for Estimating Exploratory and Development Drilling Costs 

Overview 

1 . Use the MS Excel 97 file "ExpDev Drilling Costs.xls" to estimate exploratory and 

development drilling (E&D) costs for Alabama state and Federal OCS production from 1982 

through 2010. 

2. Copy spending estimates into forecasting model "I098 - 4 sector.xls". 

1 . Use the MS Excel 97 file "ExpDev Drilling Costs.xls" to estimate exploratory and 

development drilling (E&D) costs for Alabama state and Federal OCS production from 

1982 through 2010. 

The general file layout is shown in Figure A.1 . The spreadsheet contains numerous buttons to 

assist the user in navigating the spreadsheet contents . The user may choose to view either 

Alabama state or Federal OCS wells by pushing the appropriate button, which calls a macro to 

freeze the spreadsheet panes and display the appropriate information . The user can also filter the 

data by displaying Norphlet or Miocene wells only. The spreadsheet uses data from Alabama 

Oil & Gas Board and MMS databases to determine the target reservoir of the well (Norphlet or 

Miocene), the amount of time spent on the drilling process, and whether the well is successfully 

completed. Using the assumed per-well costs shown in the table below, the algorithm then 

spreads drilling and, if applicable, well completion expenditures over the time period of drilling 

activity. The spreadsheet contains a section for Alabama State and Federal OCS areas, with 

slight modifications to the algorithm in each due to differences in source data provided by 

Alabama and MMS. 

Exploratory & Development Drilling Cost Assumptions 

Miocene 

Drilling Expenditure per well $1,000,000 

Completion Expenditure per wells: $500,000 

Norphlet 

$20,000,000 

$5,000,000 

Cretaceous 

$10,000,000 

$2,000,000 

'Completion costs apply if the well successfully finds gas . 

The user may modify the expenditure forecasts by either changing the per-well costs or by 

adding data on new or potential wells. At the bottom of the well list for both Alabama and OCS 

1 The spreadsheet contains Visual Basic routines to automate some tasks. MS Excel's default configuration and 

some virus detection programs may prompt the user that the spreadsheet file contains macros and asks if the macros 

should be disabled . Choose "NO" to open the spreadsheet with macros ENABLED. 

Appendix A: Exploratory and Development Drilling Costs A-1 
wells, blank spaces have been provided to add new wells. The user must provide a spud date, 

total depth date, total depth, and completion status 2. Descriptive information on the well field 

location, number, and operator can also be entered; but these do not affect the expenditure 

calculations . Spending totals are automatically updated. 

2. Copy E&D spending estimates into forecasting model "I098 - 4 sector.xls". 

The Alabama state and Federal OCS E&D spending totals by year are located at the bottom right 

of the spreadsheet. To navigate to the totals, use the {FS}key or "Ctrl-G" key combination to Go 

To the following named ranges : 

Alabama State: Alabama State Spending_by_Year 

Federal OCS: Federal OCS Spending_by_Year 

Open the spreadsheet forecasting model "I098 - 4 Sector .xls". For either region, select and copy 

the total E&D spending cells from 1982 through 20103 . Activate the "Expenditures" worksheet 

in "I098 - 4 Sector .xls". E&D expenditures for Alabama state and Mobile OCS production are 

located at cells D7 and Q7, respectively . To update E&D costs, simply paste the information 

from years 1982 through 2010 from "ExpDev Drilling Costs.xls". Excel's Edit-Paste Special 

Transpose menu option must be used because the source data are arrayed horizontally and the 

destination is arrayed vertically . The Transpose function will also convert the expenditures to 

values . 

Z For Alabama state wells, entering "gas" in the status column indicates that the well was successfully completed 

and incurred a completion cost . For Federal OCS wells, the equivalent status code is "BOREHOLE COMPLETED". 

Entering any other status code, or leaving the cell blank, indicates a failed well which incurred no completion costs. 

3 E&D spending estimates begin in 1980, but IMPLAN-based forecasts begin in 1982.E&D forecasts end in 2010 

because no new wells are expected after that year. E&D spending past 2010 is assumed to be zero . 

A-2 Appendix A: Exploratory and Development Drilling Costs 
b 

A. 

k b 

O 

0 

A 

b 

b 

O 

- ~- - - =FE c. . 

----

c= i 

~=~= - _ u F Time distribution of State 

-.:"f of Alabama E&D well F; c 

~ 

F5 F: drilling 

State of Alabama E&D F ~'-- 

well drilling data 

CDM 

cn 

Annual spending on 

State of Alabama E&D I ! F well drilling j 

s= 

_..: . . . . _ .. _ ..___ ._ ..__..__ .. . ..__ ._ .____. .__ . . . . . ..-- .-- .-. r r _ _ w r ~ _ 

F 

F 

-- 

~1 ~ 

- 

- :x :. 2 1 -- 

_. . 

. F F ~ - . I ~ l.. 

Time distribution of - -- ~- - Annual spending on 

Federal OCS E&D well Federal OCS E&D well 

drilling drilling 

Federal OCS E&D well 

drilling data 

Summary of State of Alabama E&D Spending --1 

Summary of Federal OCS E&D Spending ----~ 

Alabama State Spending by Year 

Federal OCS Spending by_Year 

Figure A.1 . Overview of spreadsheet layout of "E&D Drilling Costs.xls" 

w 

Appendix B 

Instructions for Estimating Offshore Structure Costs 

Overview 

1 . Use the MS Excel 97 file "Platform Costs .xls" to estimate platform and other offshore 

structure costs for Alabama state and Federal OCS production from 1982 through 2003 . 

2. Copy spending estimates into forecasting model "I098 - 4 sector.xls". 

1 . Use the MS Excel 97 file "Platform Costs.xls" to estimate platform and other offshore 

structure costs for Alabama state and Federal OCS production from 1982 through 

2003 . 

The general file layout is shown in Figure B .1 . The spreadsheet uses data from Alabama Oil & 

Gas Board and MMS databases to determine the type of structure installed and the installation 

date. Using published and operator-provided data and the assumed structure costs in the table 

below, the algorithm then spreads construction spending over the time periods indicated in the 

table. The spreadsheet contains a section for Alabama State and Federal OCS areas, with slight 

modifications to the algorithm in each due to differences in source data provided by Alabama 

and MMS. 

Offshore Structure Expenditure Assumptions 

Const Time Cost 

(Years) ($Million) 

Norphlet Production Platform 2 20 .0 

Norphlet Well Platform 1 .5 12.0 

Norphlet Caisson 0.5 5.0 

Miocene Production Platform 0.5 5.0 

Miocene Well Platform 1 6.0 

Miocene Caisson 0.25 1 .5 

Living Quarters Platform 0.5 ' 5.0 

Bridge-Connected Well Platform 1 70% 

Production-Processing Platform 2 40.0 

The user may modify the expenditure forecasts by either changing the facility costs or by adding 

data on new or potential structures . At the bottom of the list for both Alabama and OCS 

structures, blank spaces have been provided to add new entries . The user must provide the type 

of structure, the installation date, and the type of gas processed. Descriptive information on the 

field location, number, and operator can also be entered ; but these do not affect the expenditure 

calculations . Spending totals are automatically updated. 

Coastal Alabama Economic Effects B-1 
2. Copy spending estimates into forecasting model "I098 - 4 sector .xls". 

The Alabama state and Federal OCS platform spending totals by year are located at the bottom 

right of the spreadsheet. To navigate to the totals, use the {FS}key or "Ctrl-G" key combination 

to Go To the following named ranges : 

Alabama State: AL State Spending_by_Year 

Federal OCS : Federal OCS Spending_by_Year 

Open the spreadsheet forecasting model "I098 - 4 Sector .xls". For either region, select and copy 

the total platform spending cells from 1982 through 2003' . Activate the "Expenditures" 

worksheet in "I098 - 4 Sector.xls". Platform expenditures for Alabama state and Mobile OCS 

production are located at cells F7 and S7, respectively . To update E&D costs, simply paste the 

information from years 1982 through 2010 from "Platform Costs.xls". Excel's Edit-Paste 

Special-Transpose menu option must be used because the source data are arrayed horizontally 

and the destination is arrayed vertically. The Transpose function will also convert the 

expenditures to values . 

1 Forecasts end in 2003 because no new structures are expected after that year. Platform spending past 2003 is 

assumed to be zero . 

Appendix B: Offshore Structure Costs B-2 
. . . .. .. :. . ..w. . . .._, 

. . 

.: : .. ... ... .w_ .. . . .. .. . .., .. ... . . . . . .. ... . .. ... 

Alabama state 

;; offshore structure = =~~ ~ =~ `~ 

:: data ~ -° 

Federal OCS 

offshore structure .w .. : . : ~ .::: 

.. . data ., ,.~ . . . . 

. . 

Total Alabama state spending by Year 

Total federal OCS spending by Year 

Figure B.1 . Overview of Spreadsheet Layout "Platform Costs.xls" 

Appendix B: Offshore Structure Costs B-3 

Appendix C 

Technical Addendum: IMPLAN Modeling Summary/Modifications 

Introduction 

This document provides a detailed description of the IMPLAN model developed in support of 

the study "Economic Effects of Coastal Alabama and Destin Dome Offshore Natural Gas 

Exploration, Development, and Production." For the interested analyst, this document provides a 

more thorough overview than is presented in the final study. 

Antecedents 

The Minnesota IMPLAN Group's (MIG's) IMPLANProfessional economic input-output 

modeling system was used to develop multipliers for estimating the local and regional economic 

impacts of development and production of Mobile Bay state and federal offshore natural gas 

resources.' An earlier DOS version of IMPLAN (M191 -F) was used by Foster Associates for 

portions of previous studies of Mobile Bay OCS gas development (Foster Associates 1994, 

1996). Subsequently MIG developed a Windows/NT version, which incorporates a number of 

changes and improvements in the methodology. Of particular importance to the current analysis 

was application of the IMPLAN system to estimate all local and regional impacts in the 1996 

update of the 1994 Mobile Bay OCS gas study (see Foster Associates 1996). In that study, the 

DOS version of IMPLAN was used for the Mobile County, statewide Alabama and LouisianaTexas study areas. The 1994 and 1996 studies provide the basis for allocating OCS operators' 

expenditures amongst the IMPLAN model's industry sectors for each phase of OCS gas 

development and production as well as for local and state government spending of gas industry 

bonuses, royalties, tax payments and trust fund interest earnings deriving from OCS 

development. Z 

The sectoral allocation sets are the basic foundation of the impact analysis . They describe the 

composition of goods and services, by phase, consumed for a given level of output of OCS gas 

development and production (and related local and state government spending of derived taxes 

and interest income) . Provision of these goods and services to OCS operators and state and local 

governments by workers and businesses generates income and employment, which over time has 

a cumulative, multiple effect on the economy. To project the cumulative changes in the local and 

regional economies it is necessary first to estimate the spending that OCS operators and 

' Hereafter referred to as IMPLAN. The Minnesota IMPLAN Group, Inc. sells and supports proprietary modeling 

software and regional economic data sets for estimating economic impacts in every county in the United States . This 

study used IMPLAN Pro Version 1 .1 .6008 for Windows/NT and the 1995 (latest available) county data set for 

Mobile County and the statewide sets for Alabama, Louisiana and Texas. 

z In the original 1994 work, IMPLAN was used only for the combined Louisiana-Texas study area, while the REMI 

(Regional Economic Models, Inc .) system of econometric modeling with conjoined input-output inter-industry 

transactions database was used to estimate impacts in Mobile County and statewide Alabama. Appendix B of the 

1994 study, Model Selection Criteria and Output, contains a detailed explanation of the modeling methodology and 

underlying data collection and model calibration exercise to reflect the special conditions that characterize the 

Mobile Bay OCS gas exploration and development environment. An explanation of the adaptation and application 

of IMPLAN to the Mobile County and statewide Alabama study areas is provided in Foster Associates (1996) . 

Appendix C: Technical Addendum: IMPLANModeling C-1 
governments will generate and then estimate the portion that will be expended in the study areas 

of interest-Mobile County, Alabama statewide and combined Louisiana-Texas (which was 

done in Section 3), and then apply those forecasts to economic multipliers (whose development 

is the subject of this sub-section) . 

Modifications to the IMPLAN Pro Model 

To make the IMPLAN Pro model reflect more accurately current economic conditions in the 

study areas and portray more realistically the effects of changes in OCS spending, it was 

necessary to modify some of the default values in the Mobile County and Alabama data sets . 3 

Three changes were made. First, changes were made in the Mobile County 1995 data set to 

correct for the absence of three industry subsectors that should be included (the source data from 

the Bureaus of Economic Analysis and Labor Statistics evidently combined these subsectors' 

activities with others, and it was necessary to create them in the Mobile County data base so that 

the impacts of OCS activities would be more accurately reflected) . An underlying problem with 

the IMPLAN database set for Mobile County is the lag in adjusting values to reflect the 

development of new industries in response to the emergence of the OCS market. The three 

industry subsectors will be identified below. 

The second modification involved changing the values for output and earnings per worker in 

several OCS-related sectors because the default values in the Mobile County data set were much 

lower than the OCS industry typically pays its specially-qualified type of worker. The changes 

were necessary to avoid overestimating the numbers of workers that would be directly hired to 

work on the OCS facilities . No changes were necessary for the statewide Alabama, Louisiana or 

Texas database sets' output and earnings per OCS worker values . In the case of statewide 

Alabama, the impact modeling focused on state General Fund spending based on OCS-derived 

taxes, bonuses and royalties, and from the Forever Alabama Wild Trust's interest earnings . This 

required separate adjustments, which are described below. For statewide Louisiana and Texas, 

which were combined into a single regional impact area to account for non-Mobile Bay area 

sources of OCS-related goods and services, it was not necessary to modify the output and 

earnings per OCS worker parameter values . These states' data sets already reflect the long 

establishment of these industries . 

The third modification involved construction of a custom set of impact sectors for state and local 

government (SLG) spending. IMPLAN's default set for SLG spending includes just two subsets: 

educational and non-educational activities . All of the value of output from these sectors is in the 

form of employee compensation. As a result, the default set of industry sectors generates no 

intermediate inputs of goods and services (the indirect effects, reflecting the stimulus of 

government spending on supplier industries) . Only induced effects from the government 

workers' consumption spending are modeled in the basic IMPLAN. IMPLAN allows users to 

create new or customized sectors, however. MIG created a special set of government spending 

activity vectors for the various segments of the public sector (e.g ., police, welfare, recreation, 

3 This discussion is fairly technical, and assumes that the reader is somewhat familiar with input-output modeling in 

general and with the structure and operating procedures of IMPLAN Pro in particular . A full description of the 

model is beyond the scope of this study, but MIG has a comprehensive Internet website at http :\\www.implan.com 

that fully describes its products and services . MIG also provides a fully operational demonstration version of the 

model on CD-ROM, except that it runs only a single county-Larimer, Colorado . 

G2 Appendix C: Technical Addendum: IMPLANModeling 
health and natural resources) to account for their consumption of non-labor goods and services. 

We thus were able to create sets of SLG spending vectors in the form of impact scenarios that 

combined the payroll and non-payroll expenditures of Mobile County and the Alabama state 

governments (per their Fiscal Year 1997 budgets) that capture the full range of direct (employee 

compensation), indirect (suppliers' business) and induced (workers' consumption spending) 

impacts of their expenditures of OCS-related revenues. 

OCS Expenditure Patterns 

As noted earlier, the allocation of OCS operators' expenditures among supporting industries is 

the foundation of the IMPLAN analysis. The composition of industry inputs by phase of Mobile 

Bay OCS activity was determined in Foster's 1994 work for Chevron USA (Foster Associates 

1994) on the basis of surveys of the industry. In Foster's 1996 work, the allocation was refined 

and applied to the IMPLAN modeling. Table A-1 presents these data, showing the percentage 

composition of OCS-related outlays, by phase of activity (exploration and development, platform 

fabrication and installation, pipeline construction, onshore treatment plant construction, and gas 

production operations and maintenance activities) . 

These values were used to create impact scenarios for the Mobile County and Louisiana-Texas 

(or "La-Tx") models. The process involved creating a set of grouped activities (collections of 

IMPLAN industry sectors for each OCS phase) whose individual elements (or "events" in 

IMPLAN nomenclature) added up to unity (1 .0000). Exploration/Development Drilling would be 

one group, for example, in which the activities of "new well drilling," "oil and gas exploration" 

and "other O&G field services," entailing expenditures of 0.138983, 0.172770 and 0.057139, 

respectively, per unit of total outlay, would be combined as a single "event" into IMPLAN sector 

57 with a value of 0 .3689 (because that sector covers all subparts of SIC code 138). Similarly, an 

outlay of 0.05678 would be made per unit of total outlay for "chemicals, n.e .c .", etc., etc ., per the 

table . The group would then be run through the impact modeling with a group value of $1 

million. The following image is a print screen of the IMPLAN impact analysis program, 

illustrating how the data are organized for processing. 

Appendix C: Technical Addendum: IMPLANModeling C-3 
EvenislGroups I Projects 

Events 

Chemicals 209- 0 0568 

---- 

- 

_- 

r .... . . 

~ ~ ' P etrol . fuels ; 210 0 0392 

Hyd cement 1 232 0 0413 

,~' . Steel pipe 303 02061 

OaGSeldmg-h 3lJ -- 00015 

Impel Event Options 

AnaFyze Add New 

Re,ufts 

ConsWCVOn---- ~g r, 

Febdcafion 8 Installation ~" M1 .000.000 00 y 

Process Fedfties !~ . . Lme ISecror I value ( Level l . 

Fanlrues ct~ 00392 : 1 .0 

H .. : t : 0 0413 

(mpaaAnaysis 

Impacts List . . . . u~ . . .au 

P4 ubde -unty ,~n ~av^ C " pend 

Onshore Treatment Plant Constru 

Pipeline Construction T" ° 

Platform Fabrication end Inslelle6okI Duets 

ImPactName E ploretion/ Development Dnlhng 

Bun Impact Close 

G4 Appendix C: Technical Addendum: IMPLANModeling 
Table A-1 

Composition of OCS Expenditures 

IMPLAN Percentage of Total Outla s b base 

SIC Pipeline Onshore Produc- No. Activity Sector Exp/Dev Platform Code Construct- Treatment tion No. Drilling Fab/Inst. tion Plant O&M 

1 Oil & gas operations 131 38* 36.3% 

2 New gas utility facilities 1629 50* 65 .7% 

3 Pipeline construction 1629 50* 46.6% 

4 New well drilling 1381 57* 13 .9% 

5 Oil & gas exploration 1382 57* 173% 

6 Misc. natural resource facility 1629 53* 19.5% 

const. 

7 Other O&G field services 1389 57* 5 .7% 2.1% 0.2% 0.2% 18.4% 

8 Chemicals, nec 2899 209 5 .7% 0.0% 0.0% 0.9% 

9 Petroleum fuels 291 210 3 .9% 4.4% 

10 Hydraulic cement 324 232 4.1% 0.7% 

11 Steel pipe 3317 303 20.6% 37.1% 0.1% 0.1% 

12 Iron & steel forgings 3462 290** 1 .4% 1 .4% 

13 Fabricated plate work 3443 284 0.7% 0.7% 

14 Turbines 3511 307 0.8% 0.8% 

15 Construction machinery & equip. 3531 311 1 .2% 1 .2% 

16 O&G field machinery 3533 313 0.2% 0.1% 14.3% 14.3% 0.0% 

17 Special industrial machinery, nec 3559 331** 7.1% 4.6% 5.4% 5.4% 5.1 

18 Pumps & compressors 3561,63 332 2.9% 0.2% 0 .2% 

19 Switchgear 3613 356 0.2% 0 .2% 

20 Shipbuilding 3731 392 46.2% 

21 Instrumentation 3823 403** 3.3% 3 .3% 

22 Water transport 44 436 4.2% 1 .6% 1 .1% 1 .1% 4 .0% 

23 Air transport 45 437 1 .5% 0 .1% 0.2% 0 .2% 3.8% 

24 Misc. equip. rent/lease 7359 473 6.8% 0.0% 0 .0% 1 .4% 

25 Test/research facilities 8731,2,4 509 5.7% 4.5% 

26 Envir/engineering services 871 506 2.6% 4.6% 4.8% 4 .8% 14 .7% 

27 Acctg/misc. business services 872,79 507 0.5% 0 .0% 0.3% 0 .3% 4.2% 

28 Eating/drinkin g laces 58 454 0.2% 0 .1% 0.2% 0 .2% 1 .7% 

Total I I 1 100 % 1 100 % 1 100 % 1 100 % 1 100 

* Sector with modified output and earnings per worker (see text). 

** Sector added to Mobile County database (see text). 

Source: Tables 3.2-1 through 3.2-6. 

Note: 

SIC code 1629 covers "Heavy Construction, NEC" (industrial nonbuilding structures construction), which maps into 

IMPLAN sectors 50 and 53. IMPLAN did not have separate sectors for oil & gas-related pipeline construction, offshore 

platform construction or for gas treatment plant construction (on- or offshore). All IMPLAN has are its sectors 50 (New 

Utility Structures) and 53 (New Mineral Extraction Facilities). Both of the IMPLAN sectors comprise an amalgam of 

SIC sectors 15, 16, and 17 (general building contractors, heavy construction contractors, and special trade contractors, 

respectively) . It was decided that construction of pipelines and gas treatment plants was covered by new utility structures 

while platforms were covered by new mineral extraction facilities . Thus the application of one SIC code (1629) to two 

different IMPLAN sectors. 

Appendix C: Technical Addendum: IMPLANModeling C-S 
The IMPLAN program then generates reports showing the direct, indirect and induced effects for 

each sector in the economy for a variety of impact parameters, including total industry output, 

personal income and employment. The impact reports can be aggregated to consolidate the 

number of industry sectors presented (there are over 500 in the local and regional economies), 

with the most usual format being values at the 1-digit SIC level . The final product of the exercise 

was a set of coefficients for the impacts of expending one million dollars in each OCS activity 

phase. These coefficients were then used to calculate the year-to-year total values of changes in 

income and employment in Mobile and LA/TX, as a function of the projected OCS annual 

expenditures during the study period . 

Revisions to Industry Sector Data 

In the column labeled IMPLAN Sector No. in Table A-1, several of the items have asterisks 

attached . Sectors 38, 50, 53 and 57 (with a single asterisk) are directly related to OCS gas facility 

construction and operation activities, and the default values in the Mobile County database for 

output and earnings per worker are significantly lower than what the industry actually pays for 

the specially skilled workers used in offshore work. This reflects the (inevitable) lag in model 

providers being able to obtain timely data from the national sources (BEA and BLS) on changes 

in the structures of local economies: in the case of Mobile County, the database does not yet 

account adequately for the development of the Mobile Bay OCS gas industry . The default values 

in the IMPLAN database for annual earnings per worker in these sectors are on the order of 

$20,000 to $25,000, whereas in reality the gross earnings per OCS worker (including benefits 

and employer contributions) run around $60,000 per year. Surveys of OCS operators provided 

the basis for modifying the model. The problem with using the default values for these sectors is 

that they would greatly overestimate the number of workers that would be hired per million 

dollars of construction/operation outlay. This bias would lead to the incorrect conclusion that 

many more people would have to be recruited to work on the OCS projects than actually were 

necessary, which has negative implications for pressure on local housing and public service 

resources. 

The IMPLAN model allows users to substitute data when they have better information than the 

default database, and this was done with the Mobile County model. The process involves editing 

values in the Region Data section of the model-specifically, altering the number of workers in 

the sector database-so as to yield correct levels of output and earnings per worker. After these 

changes are made the model has to be recompiled. 

The following pictures are screen prints of the model's Region Data section showing the revised 

values for the OCS sectors used in the Mobile County model . The values in the Value Added and 

Output boxes are default values . Only the value in the Employment box was changed (from the 

default value of 274 to 88 in the case of Sector 38) which yielded the desired Per Worker 

Earnings value of approximately $60,000. 

C-6 Appendix C: Technical Addendum : IMPLANModeling 
38: Natural Gas Crude Petroleum 

MOM 

Edit(ndustry I EditQommodity I View Industry Table I View Commodity Table I 

50: New Utility Structures 

51 : New Highways and Streets 

52: New Form Structures 

Per Worker (dollars) 53: New Mineral Extraction Facilities 

54 New Government Facilities 

OutlDur_ ' 55: Maintenance end Repair, Reside 

$1 63,202 ' 56. Maintenance and Repair Other F 

57' Maintenance end Repair Oil and 

Earning-~ ; ' S8 Meet Packing Plants 

$60,033 ' 59: Sausages and Other Prepared b 

A Poultry Processing 

61 :GeameryButter 

62: Cheese, Natural and Processed 

63: Condensed and Evaporated Mil! 

Appendix C: Technical Addendum: IMPLAN Modeling C- 7 

i 

mployrnent 

escriplion JEmplqynent 

r-~~lo~,rnert (,fill occupation ~ i l 22 

lutput (in millions) 
Edit industry I EditCommodrty 

53 : New Mineral Extraction Facilities 

Value Added (in millions) 

57 : Maintenance and Repair Oil and Gas Wells 

View CommodibyTable 

Referring back to Table A-1, three sectors-290 (Iron & steel forgings : SIC 3462), 331 (Special 

industrial machinery, n.e .c : SIC 3559) and 403 (Instrumentation: SIC 3823)-had to be added to 

the Mobile County database to reflect development of those industries locally in support of the 

OCS activities . To accomplish this the model's Region Data section was edited via insertion of 

appropriate values in the Value Added, Employment and Output boxes for these industries . The 

default Mobile County model's database shows zeros in the boxes for these sectors. To create 

values we took the counterpart values from the statewide Alabama model, and scaled them down 

C-8 Appendix C: Technical Addendum: IMPLANModeling 

Edit_Industry I EditCommodity I View Industry Table I V~zvrCommodity Table 
to a nominal total industry output value of $10 million for Mobile County. Thus a sector was 

created which would generate indirect and induced effects in response to direct spending for 

outputs of that sector . Without the new sector, the model would have had to import 100 percent 

of the inputs from outside the county in order to meet the change in demand for its products. 

With the new sector, the model generates income and employment for Mobile County-based 

factors of production . An additional step in modifying the model was to import the production 

functions for the new sectors from the IMPLAN library of production functions. These 

production functions contain all the coefficients for inputs of intermediate products and services 

than go into production of the sector's final product, and are based on nationwide averages. Once 

the changes in the Region Data are made, the model has to be reconstructed, during which time 

(utilizing the Advanced Construction mode) the production functions for the affected industry 

sectors are imported. 

Following are screen pictures of the modified Region Data sets for Sectors 290, 403 and 331 : 

Edit industry I EditSommodity View Industry Table I View Commodity Table 

1 

Value Added (in millions) 

Description ValueAdded 

Eniployaa_ Carripen~arion £153 

Indirect Business Taxes $0 07D= 

Proprietny.lncome (0 .160 

1 

=M 

Other Property Income 51 .146 

employment 

Description Employment I 

Employment (all occiipation~) 91 

Output (n millions) 

Description JOtrtput 

ndu,try Output $10 NH ; 

Per Worker (dollars) 

~ 

'91 : Nonferrous Forgings 

~ 92 : Automotive Stampings 

93 : Gowns end Closures 

-- '94 : Metal Stam in s N E C 

Output 

p g , . . . 

295: Plating and Polishing 

$106,383 296: Metal Coating end Allied Servicf 

297: Smell Arms Ammunition Earnings : ~gB:Ammunition,Except ForSmall A 

$35,245 2 99 : Small Arms 

300: Other Ordnance and Accessons' 

301 : Industrial end Fluid Valves 

>- 302: Steel Springs, Except Wire 

303: Pipe, Valves, end Pipe Fittings 

4 The actual size of the sector is not particularly important to the analysis, just so it can accommodate the demands 

from the OCS activities . Ten million dollars in total output was deemed adequate for the introduced sectors. 

Appendix C: Technical Addendum: IMPLANModeling G9 
Edit Industry I Edit Commodity I View Industry Table I View Commodity Table 

403 : Mechanical Measuring Devices 

Value Adder! (in millions) Sectors 

e Ad 

Indirect Business Taxes $0 .138 

Proprietary Income $0 .120 

Other Property Inco me $ 0.092 1, 

Employment 

_.: .~~. 

Description I Employmen 

Employrnerit (dll occupations) 73' 

., k0_utput (in millions 

402: Automatic Tem erature Contr 

404: Instruments To Measure Elec 

405: Analytical Instruments 

PerWorker (cioilars) 406: Optical Instruments 8 Lenses 

407: Surgical and Medical Instrumi 

output : " 408: Surgical Appliances and Sup 

$136,986 409- Dental Equipment and Suppli 

410: X-Ray Apparatus Earnings : 411 : Electromedical Apparatus 

$48.205 412 : Ophthalmic Goods 

_ 413: Photographic Equipment and 

414: Watches, Clocks, and Parts 

415: Jewelry, Precious Metal 

416: Silverware and Plated Ware 

$10.000 

Editl_ndusty I EditCommndiry I View Industry Table I View Commodity Table I 

331 : Special Industry Machine!)! N.E.C. 

Value Added (in millions) 

Description IValue Added 

Employee Compensation $1 .619 

Indirect Business Taxes 80 .059 

Proprietary Income 

¢ 

$0 .094 

Other Prnpa_rtyIncome X1 .009- Per Worker (d[ 

Output 

employment ! $222,222 

46 De~scriptian ~Emplo yment ~ Earnings 

~ Employment (all occupations) 

11g: 1111 

45 ' $38,067 

Output tin millions) 

$10.000 

333: Ball and Roller Bearings 

334: Blowers and Fans 

335: Packaging Machinery 

336: Power Transmission Equipmei 

337: Industrial Furnaces and Opens 

338: General Industrial Machinery, t 

339: Electronic Computers 

340: Computer Storage Devices 

341 : Computer Terminals 

342: Computer Peripheral Equipme 

343: Calculating and Accounting Me 

G10 Appendix C: Technical Addendum: IMPLANModeling 
Regional Purchase Coefficients 

Foster surveyed offshore operators and contractors regarding the origin of the their labor and 

materials as part of the research effort to make the IMPLAN sectors more closely match the 

unique requirements of Norphlet gas exploration and production. This research yielded more 

accurate estimates of local spending and leakage than IMPLAN's default regional purchase 

coefficients (RPC). The local share of investment by offshore operators is discounted for 

leakage, so IMPLAN is only modeling the share of operator spending that occurs in the County. 

Accordingly, for the Mobile County model, the RPCs were uniformly used at 100% local supply 

(i .e ., LPC switch set to No). 

Modifications to State and Local Government Spending Sectors 

As noted earlier, an issue with modeling of state and local government (SLG) expenditures is the 

recognition of non-labor goods and services procured as part of the general business of 

government. Agencies and departments purchase supplies and services from the private sector, 

and increases in government spending have an expansionary effect on the economy. The problem 

with the IMPLAN basic model is that the government sectors are 1) highly aggregated (i .e., SLG 

educational and non-educational expenditures are the only two general government sectors in the 

standard database) (government-owned enterprises like water and power utilities are treated 

separately), and 2) all the value of the SLG expenditures is treated as employee compensation . 

Accordingly, the model does not generate indirect effects from SLG spending because the 

sectors' output consists only of worker compensation, without any intermediate inputs. 

MIG recognized this problem and created a special set of production functions for the 

intermediate input requirements of a range of government activities, such as police, fire, welfare, 

health, redevelopment and the like . MIG made these available to users via the MIG Internet 

website in the form of a downloadable file named "Expanded Gov FD .iad" (expanded 

government final demand) . This data file is actually an IMPLAN model with consumption and 

investment sectors for various government functions at the federal, state and local levels . Users 

can import and compose impact scenarios from it to run on any geographically based modele.g ., Mobile County or statewide Alabama. The underlying production functions for the various 

government functions are generic, being based on national averages taken from the Census of 

Governments. It is important to note that the government final demand model excludes employee 

compensation; i .e ., it includes only intermediate inputs (called "non-administrative" expenses by 

MIG). Workers' wages and salaries have to be added to complete the analysis . 

The functional, or departmental composition of Mobile County's and Alabama State's general 

government spending was used as the input to the SLG spending model. This was based on their 

FY 1997 budgets, which identified the functional allocation of spending among departments like 

police, fire, etc., and the portion of the total budget absorbed in government workers' wages and 

salaries . The next step combined the functional (non-labor) expenditures with the employee 

compensation values for each jurisdiction and derived their percentage shares of their respective 

totals . The percentages were then converted to dollars whose total amounted to $1 million. These 

values were then fed into the Mobile County and statewide Alabama models to obtain the direct, 

indirect and induced effects coefficients for impacts on total output, personal income and 

employment. 

Appendix C: Technical Addendum: IMPLANModeling C-11 
Tables A-2 and A-3 present the worksheets for determining the composition of SLG 

expenditures for, respectively, Mobile County and statewide Alabama. The tables identify the 

SLG spending sectors that were imported from the "Expanded Gov FD .iad" model. Note that for 

Mobile County, the final demand vectors for functional expenditures add up to $421,000, with 

employee compensation adding another $579,000 to complete the one million dollar base case. 

For statewide Alabama, the ratio was 38% functional expenditures and 62% employee 

compensation. 

These values were then run through the two jurisdictions' models to obtain coefficients of 

impacts of general government spending per million dollars of expenditures of OCS-related taxes 

and other revenues. 

Table A-2 

Mobile County Government Expenditures, FY 1997 (Excluding Debt Service): 

Basis for Allocation of Spending Among Activities 

Distribution' (%) I 

Function 1997 Exp 100% Norm. to 

$421k IMPLAN FD Activity 

General Government 28,865,341 33 .9% 142,616 cons exp other general government 

Public Safety 29,039,287 11 .4% 

11 .4% 

11 .4% 

47,825 

47,825 

47,825 

cons exp police 

cons exp fire fighting organizations 

cons exp correctional institutions 

Highway and Roads 13,292,649 15.6% 65,675 cons exp public highways 

Sanitation 1,089,145 13% 5,381 cons exp sanitation 

Health 2,389,677 2.8% 11,807 cons exp hospitals & categorical 

Welfare 2,892,269 3.4% 14,290 cons exp public welfare 

Culture and Recreation 2,264,929 2.7% 11,190 cons exp natural resources & agricultural 

Education 2,104,625 0.8% 

0.8% 

0.8% 

3,466 

3,466 

3,466 

cons exp public education 

cons exp elem & secondary ed 

cons other education & libraries 

Capital Outlay 2,150,756 2.5% 10,626 invest other general government 

Infrastructure Outlay 1,121,448 1 .3% 5,541 invest waterports and airports 

Total Functional 

Expenditures 

85,210,124 100.0% 421,000 

Mobile County Employee Compensation 579,000 SLG 523 Empl Comp 

Total $1,000,000 

I Budget allocated 42.1% to procurements of intermediate inputs and 57 .9% to employee compensation (per county budget). 

Source: Mobile County Commission, 1998; Foster Associates, 1998. 

C-12 Appendix C: Technical Addendum: IMPLANModeling 
Table A-3 

Alabama General Government Expenditures, FY 1997 (excluding Debt Service) : 

Basis for Allocation of Spending Among Activities 

Distribution' (%) 

Function 1997 Exp 100% Norm. to IMPLAN FD Activity 

$000 $380k 

Economic Development 18,702 2 .1% 7,935 invest waterports and airports 

Educational and Cultural 10,858 113% 47,539 cons exp elem & secondary ed 

113% 47,539 cons other education & libraries 

113% 47,539 cons exp public education 

Natural Resources & 7, 781 0.0% 38 cons exp natural resources & agricultural Recreation 

Alabama Forever Wild TrustZ 15,000 0.0% 74 cons exp natural resources & agricultural 

Health - Physical & Mental 299,695 0.4% 1,481 cons exp hospitals & categorical 

Social Services 55,322 0.1% 273 cons exp public welfare 

Protection of Persons & 

281,867 1 .1% 4,763 cons exp correctional institutions 

Property 

1 .1% 4,763 cons exp fire fighting organizations 

1 .1% 4,763 cons exp police 

Transportation 350 0.0% 1 .7 cons exp public highways 

General Government 203,896 0.2% 1,007 cons exp other general government 

Capital Projects 36 0.0% 0.2 invest waterports and airports 

Transfers to Proprietary Funds 2,070 0.0% 10 invest other general government 

Subtotal Natural Resources 22,781 0.0% 113 cons exp natural resources & agricultural 

Subtotal Capital Projects 18,738 2.1% 7,936 invest waterports and airports 

Total Functional 

895,577 40.0% $380,000 Expenditures 

Alabama State Gov. $620,000 SLG 523 Empl Comp Employee Compensation 

Total $1, 000,000 

I Budget allocated 38% to procurements of intermediate inputs and 62% to employee compensation (per state budget). 

Z $15 million/year for Alabama Forever Wild Trust based on long-term cap on total size of trust fund principal . 

Source: Alabama Dept. of Finance, 1998. 

Appendix C: Technical Addendum: IMPLANModeling C-13 
References 

Alabama Department of Finance, 1998b. Office of the State Comptroller. "State of Alabama 

Comprehensive Annual Financial Report." Montgomery, Alabama. 

Foster Associates, Inc. 1994 . Social and Economic Impacts of Mobile Bay and Destin Dome 

Natural Gas Exploration and Development. For Chevron U.S .A. Gulf of Mexico Business 

Unit. San Francisco, June 1994 (Draft Final Report). 

Foster Associates, Inc. 1996. Economic, Fiscal and Infrastructure Impacts of Coastal Alabama 

Baseline and Destin Dome Natural Gas Exploration and Development: Data Update and 

Model Re-estimation. For Chevron U.S.A. Gulf of Mexico Business Unit. San Francisco, 

November 1996 . 

Foster Associates, Inc. 1998 . Unpublished data and calculations used in the development of the 

current study. 

Mobile County Commission, 1998. State of Alabama Dept. of Examiners of Public Accounts. 

"Report on the Mobile County Commission." Montgomery, Alabama. 

G14 Appendix C: Technical Addendum: IMPLANModeling 
QPQ~MENT Of~y~y The Department of the Interior Mission 

o`' p As the Nation's principal conservation agency, the Department of the Interior has responsibility 

for most of our nationally owned public lands and natural resources. This includes fostering 

sound use of our land and water resources; protecting our fish, wildlife, and biological diversity; 

preserving the environmental and cultural values of our national parks and historical places; 

and providing for the enjoyment of life through outdoor recreation . The Department assesses 

our energy and mineral resources and works to ensure that their development is in the best 

interests of all our people by encouraging stewardship and citizen participation in their care. 

The Department also has a major responsibility for American Indian reservation communities 

and for people who live in island territories under U.S . administration . 

ova~4"+6"T °" The Minerals Management Service Mission 

~, As a bureau of the Department of the Interior, the Minerals Management Service's (MMS) 

primary responsibilities are to manage the mineral resources located on the Nation's Outer 

1A'° °' 

Continental Shelf (OCS), collect revenue from the Federal OCS and onshore Federal and Indian 

~~ ~.m ~ 

~'~H EN6t~ 

lands, and distribute those revenues. 

AG 

Moreover, in working to meet its responsibilities, the Offshore Minerals Management Program 

administers the OCS competitive leasing program and oversees the safe and environmentally 

sound exploration and production of our Nation's offshore natural gas, oil and other mineral 

resources. The MMS Minerals Revenue Management meets its responsibilities by ensuring the 

efficient, timely and accurate collection and disbursement of revenue from mineral leasing and 

production due to Indian tribes and allottees, States and the U.S . Treasury . 

The MMS strives to fulfill its responsibilities through the general guiding principles of: (1) being 

responsive to the public's concerns and interests by maintaining a dialogue with all potentially 

affected parties and (2) carrying out its programs with an emphasis on working to enhance the 

quality of life for all Americans by lending MMS assistance and expertise to economic 

development and environmental protection .