ACCESS NUMBER: 0000056.1 

STUDY TITLE: Updating MAG-PLAN Gulf of Mexico and Assessing Applicability to New 

Five-Year Program Areas 

REPORT TITLE: MAG-PLAN GOM 2016: Economic Impact Model for the Gulf of Mexico 

CONTRACT NUMBER: M14PD00056 

SPONSORING OCS REGION: Gulf of Mexico 

APPLICABLE PLANNING AREA(S): Gulf-wide 

FISCAL YEAR(S) OF PROJECT FUNDING: FY2015; FY2016 

COMPLETION DATE OF REPORT: July 2016 

COSTS: FY2015: $293,392; FY2016: $16,364, Total Cost: $309,756 

PROJECT MANAGER(S): Maureen F. Kaplan 

AFFILIATION: Eastern Research Group, Inc. 

ADDRESS: 110 Hartwell Avenue, Lexington, MA 02421 

PRINCIPAL INVESTIGATOR(S): Maureen F. Kaplan 

KEY WORDS: Socioeconomics, modeling, oil and gas activities, statistics, Gulf of Mexico 

Socioeconomic Impact Analyses, MAG-PLAN, Gulf of Mexico, Western Gulf of Mexico, 

Central Gulf of Mexico, Eastern Gulf of Mexico, industry expenditures 

BACKGROUND: BOEM maintains an OCS Economic Impact Model (EIM) called MAGPLAN to provide a consistent bureau-wide approach to estimating employment, personal 

income, and similar economic impacts from OCS activities. MAG-PLAN is a Microsoft® 

Access®-based, two-stage model that uses OCS-specific “cost functions” to estimate the 

industry expenditures required (by industry sector and onshore area that the spending is likely to 

occur) to complete a given activity, such as drilling an exploration well or operating a production 

facility. The second stage uses general economic multipliers from the commercial economic 

modeling system IMPLAN to forecast employment, personal income, and other variables 

resulting from the initial industry expenditures. 

OBJECTIVES: The objective of the MAG-PLAN update study is to strengthen and refine the 

Bureau’s procedures for estimating the onshore economic effects from OCS-related activities, by 

improving the current MAG-PLAN model. 

DESCRIPTION: The offshore oil and gas industry is small relative to the onshore oil and gas 

activity in the United States. Many sources of data, such as Census Bureau products, do not 

distinguish between onshore and offshore operations. ERG developed detailed industry sector 

profiles that incorporated water-borne activities that are characteristic of offshore operations for: 

geophysical and geological prospecting; subsea installations; floating, production, storage, and 
ACCESS NUMBER: 0000056.1 

offloading (FPSO) vessels; decommissioning activities (with and without explosives); and 

operations and maintenance activities for production systems. This step divides the cost 

(expenditure) associated with an activity (e.g., building and installing a subsea production 

system) into a set of IMPLAN’s 440-industry scheme. 

MAG-PLAN then distributes the non-labor spending by industry to onshore regions. ERG 

developed “bottom up” distributions for oil and gas field manufacturing equipment; oil country 

tubular goods; umbilicals and subsea equipment; and hulls/topsides for FPSOs as well as refined 

the “top down” approach for all other industries. ERG identified a root cause for the condition 

where the onshore distribution sends expenditures to a region where IMPLAN has zero 

multipliers for that industry/region combination and developed methods to reduce this source of 

leakage in MAG-PLAN. ERG developed three sets of onshore distributions depending upon the 

type of lease sale, e.g., Gulf-wide, Western, or Central regions. ERG developed IMPLAN 

models for newly-defined economic impact areas, generated the multipliers for the stage 2 

calculations, and incorporated them in MAG-PLAN. 

ERG developed three sets of onshore distributions for labor expenditures associated with 

offshore oil and gas activities to address the distinguishing characteristic that drilling and 

production crew members can live at great distances from the work place. That is, household 

expenditures are likely to occur in regions other than those in which the labor is performed. The 

International Association of Drilling Contractors (IADC) provided the results of their 2010 

survey on the residence of nearly 11,800 workers in the offshore drilling industry; this is the 

basis of the onshore distributions for labor expenditures associated with drilling operations. The 

Labor Needs Survey (MMS 2008-050) is the basis for the onshore distribution of household 

expenditures from production operations and maintenance crews. The third set assumes that 

people work within commuting distance of where they reside. 

SIGNIFICANT CONCLUSIONS: MAG-PLAN GOM 2016 contains updated economic 

impact area descriptions, IMPLAN 2012 multipliers for the each area, and 2010 data for the 

drilling crew residences. Industry sector profiles provide a more “offshore-centric” aspect of the 

industry and onshore distributions for key industries (e.g., steel and umbilical manufacturing) 

have been built up from plant locations. This will help broader BOEM understand the local and 

regional consequences of the program as industry activities expand or contract, and will support 

planning, decision making, and environmental assessments related to the management of mineral 

resources on the OCS. 

STUDY RESULTS: The revised model is populated with activities and expenditures reflecting 

technological changes that have occurred since the previous version of MAG-PLAN was 

developed. 

STUDY PRODUCT(S): Eastern Research Group, Inc. 2016. MAG-PLAN GOM 2016: 

Economic Impact Model for the Gulf of Mexico. U.S. Dept. of the Interior, Bureau of Ocean 

Energy Management, Gulf of Mexico OCS Region, New Orleans, LA. OCS Study BOEM 2016-

072. 129 pp. 
ACCESS NUMBER: 0000056.1 

REFERENCE: ICF Consulting. 2008. Labor needs survey. Volume I: Technical report. New 

Orleans (LA): US Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS 

Region. (OCS Study MMS 2008-050).