August 2008

Wyoming Oil and Gas Economic Contribution Study 

Prepared for the 

Wyoming Heritage Foundation 

Casper, Wyoming 82601 
Table of Contents 

Executive Summary ....................................................................................................................................... i 

1. Introduction.......................................................................................................................................... 1

2. Objective and Design of the Project.................................................................................................... 2

3. Brief Overview of Oil and Gas Industry and Activities in Wyoming..................................................... 2

4. Regional Economic Modeling.............................................................................................................. 8

4.1 Types of Economic Impacts or Economic Contribution...............................................................8

4.2 Customizing the IMPLAN Model..................................................................................................9

5. Primary Data Collection and Storage Approach ............................................................................... 13

5.1 Operator Data Collection ...........................................................................................................14

5.2 Service Company Data Collection.............................................................................................15

5.3 Data Storage and Querying Approach ......................................................................................18

6. Secondary Data Collection................................................................................................................ 19

7. Extrapolation Methods and Estimating the Direct Oil and Gas Impacts ........................................... 20

7.1 Drilling, Completion, and Recompletion Activities .....................................................................20

7.2 Extraction Operations ................................................................................................................23

7.3 Private Mineral Royalties and Payments...................................................................................24

7.4 Extraction Taxes ........................................................................................................................25

8. Economic Contribution ...................................................................................................................... 26

8.1 Analyzing Direct Impacts through IMPLAN Model Sectors .......................................................27

8.2 Drilling, Completion, Recompletion Activities ............................................................................27

8.3 Extraction Operations ................................................................................................................30

8.4 Private Mineral Royalties and Payments...................................................................................31

8.5 Extraction Taxes ........................................................................................................................32

8.6 Total Economic Contribution of All Oil and Gas Activities .........................................................33

9. Relative Importance of Wyoming’s Oil and Gas Activities ................................................................ 38

9.1 Relative Importance of Oil and Gas Industries in the State of Wyoming ..................................38

9.2 Oil and Gas Industry Compared to the Travel Industry in Wyoming .........................................40

9.3 Wyoming and Colorado Oil and Gas Activities..........................................................................42

10. Fiscal Analysis: Estimate of Sales Taxes.......................................................................................... 46

11. Conclusion......................................................................................................................................... 53

Appendix A: Acronyms................................................................................................................................ 54

Appendix B: Glossary.................................................................................................................................. 55

Appendix C: IMPLAN Sector 19, 27, and 28 Study Area Data................................................................... 57
Appendix D: Wyoming Oil and Gas Operators Data Collection Documents .............................................. 67

Appendix E: Vendor and Service Company Allocations ............................................................................. 73

Appendix F: References............................................................................................................................. 76
Table of Exhibits 

Exhibit ES-1. Total Economic Contribution for Oil and Gas Activities in Wyoming (2007$)* .......................iii

Exhibit ES-2. 2007 Oil and Gas Activity as a Fraction of the State’s Economy (2007$) ............................. v

Exhibit ES-3. Drilling, Completion, and Facility Expenditures for Wyoming, by Basin (2007$).................. vi

Exhibit ES-4. Private Mineral Royalties and Lease Payments in Wyoming (2007$)...................................vii

Exhibit 3.1. Distribution of Producing Wells in Wyoming, 2007 ...................................................................4

Exhibit 3.2. Wells Drilled in Wyoming in 2007...............................................................................................5

Exhibit 3.3. Wyoming Drilling and Production Statistics, by Basin, 2007 .....................................................6

Exhibit 3.4. Production by Basin in Wyoming, 2007 .....................................................................................7

Exhibit 5.1. Example Well Drilling & Completion Cost Categories..............................................................15

Exhibit 5.2. Example Drilling Company Location Allocation .......................................................................16

Exhibit 6.1. Secondary Source Data Used to Modify Model Parameters ...................................................19

Exhibit 7.1. IMPLAN Sectors for Direct Capital Investments for Drilling, Completion, and Recompletion 

Activities ......................................................................................................................................................20

Exhibit 7.2. 2007 Well Recompletions, Workovers, and Reactivations by Basin ......................................22

Exhibit 7.3. Extraction Volumes, Prices, and Revenues............................................................................23

Exhibit 7.4. Direct Impact -- Extraction Operations....................................................................................24

Exhibit 7.5. Extraction Taxes Paid by Wyoming Oil and Gas Industry (2007$)..........................................26

Exhibit 8.1. Drilling, Completion, Facility, and Recompletion Investments for Wyoming (2007$) ..............28

Exhibit 8.2. Drilling, Completion, and Facility Investments for Wyoming (2007$) .....................................29

Exhibit 8.3. Drilling, Completion, Facility and Recompletion Economic Contribution for Wyoming (2007$)

....................................................................................................................................................................30

Exhibit 8.4. 2007 Extraction Economic Contribution for Wyoming (2007$)................................................30

Exhibit 8.5. Wyoming Private Mineral Royalties and Lease Payments (2007$)........................................31

Exhibit 8.6. Economic Contribution of Private Mineral Royalties and Lease Payments for Wyoming 

(2007$)........................................................................................................................................................32

Exhibit 8.7. Economic Contribution of Extraction Taxes in Wyoming (2007$)............................................32

Exhibit 8.8. State and Local Tax Receipts with a Unit Price Change (2007$)............................................32

Exhibit 8.9. State and Local Tax Receipts with a Unit Price Change (2007$)............................................33

Exhibit 8.10. Total Economic Contribution for Oil and Gas Activities in Wyoming (2007$)........................34

Exhibit 8.11. 2007 Employment Impacts by Industry Associated with All Oil and Gas Activities ...............35

Exhibit 8.12. 2007 Oil and Gas Industry Employment in Wyoming ............................................................36

Exhibit 8.13. Labor Earnings Impacts by Industry Associated with All Oil and Gas Activities (2007$) ......37

Exhibit 9.1. Oil and Gas Industry Activity as a Fraction of the State’s Economy (2007$) .........................39
Exhibit 9.2. Economic Comparison of Oil and Gas and Travel Activities in Wyoming (2007$)..................41

Exhibit 9.3. Total Economic Contribution for Oil and Gas Activities in Colorado in 2005 (2007$) .............42

Exhibit 9.4. Comparison of Wyoming and Colorado Economic Indicators (2007$)....................................43

Exhibit 9.5. Oil and Gas Employment by Activity in Colorado and Wyoming .............................................44

Exhibit 9.6. Colorado and Wyoming Employment and Labor Earnings Multipliers.....................................45

Exhibit 9.7. Comparison of Colorado and Wyoming’s Fiscal Contributions (2007$) ..................................45

Exhibit 10.1. 2007 Total Annual Sales and Use Taxes...............................................................................47

Exhibit 10.2. 2007 Sales and Use Tax Estimates for Sectors 2111 and 2131 ..........................................48

Exhibit 10.3. Percentage of Sales and Use Taxes by Basin......................................................................49

Exhibit 10.4. Estimated Average Sales and Use Tax Rates for Basins within Wyoming ...........................50

Exhibit 10.5. Sales Tax Estimates by Basin for Wyoming Oil and Gas Activities......................................51

Exhibit E.1. Drilling Contract Expenditure Location Allocations..................................................................73

Exhibit E.2. Earthwork and Construction Expenditure Location Allocation................................................73

Exhibit E.3. Stimulation and Cementing Expenditure Location Allocation..................................................74

Exhibit E.4. General Labor-Based Service Expenditure Location Allocation.............................................74

Exhibit E.5. Casing and Tubing Expenditure Location Allocation...............................................................74

Exhibit E.6. General Materials and Equipment Expenditure Location Allocation .......................................75
Acknowledgments 

Primary contributors to this report include the following: 

Holly Wise Bender, PhD 

Sheri Donnelley 

Jessica Dick 

Booz Allen Hamilton 

5299 DTC Blvd 

Greenwood Village, CO 80111-3362 

(303) 221-3726 

Lisa McDonald, PhD 

The Louis Berger Group 

12596 West Bayaud Ave 

Lakewood, CO 80229 

(303) 985-6613 

David ‘Tex’ Taylor, PhD 

University of Wyoming 

Department of Agricultural and Applied Economics 

2254 1000 East University Ave 

Laramie, WY 82071-3354 

(307) 766-5682 

The authors of this report would like to gratefully acknowledge the Wyoming oil and gas industry. The 

industry provided considerable information needed for the accuracy of the modeling effort, without which 

there would be no credible model or study. 

We would also like to acknowledge the Review Team, brought together by Wyoming Heritage 

Foundation, to provide comments on the Draft Report. 

 Lori Becker, Wyoming Chamber of Commerce Executives 

 Dave Bell, Tegeler and Associates 

 Randy Bolles, Devon Energy 

 Mike Ceballos, Qwest Wyoming 

 Joe Coyne, Wyoming Economic Development Association 

 Mark Doelger, Barlow and Hahn 

 Brent Hathaway, University of Wyoming 

 Bruce Hinchey, Petroleum Association of Wyoming 
 Rob Hurless, Governor’s Office 

 Dallen Juelfs, First Interstate Bank 

 Mike Matthews, Wells Fargo Bank 

 Buck McVeigh, Wyoming Economic Analysis Division 

 Jim Nielson, Nielson and Associates 

 Mark Northam, University of Wyoming 

 Dave Raynolds, Table Mountain Ranch 

 Bill Schilling, Wyoming Business Alliance and Wyoming Heritage Foundation 

 Randy Teeuwen, EnCana Oil and Gas 

We would also like to acknowledge Don Likwartz, Wyoming Oil and Gas Conservation Commission 

Supervisor, and Brian Jeffries, Executive Director of the Wyoming Pipeline Authority, for their review of 

the Draft Report. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

ii

Executive Summary 

This project, commissioned by the Wyoming Heritage Foundation, was designed to evaluate the 

economic contribution of the oil and gas industry to the state of Wyoming in terms of employment, 

income, gross revenues, and taxes. Booz Allen used a regional economic modeling approach to evaluate 

the economic contribution of the industry. The approach included an extensive effort to gather site 

specific information needed to complete the analysis, such as capital investments, expenditures to drill 

and complete a well, production costs, private royalty and lease payments, and service company costs. 

Secondary source data were also obtained, including number of wells drilled and completed for each 

basin, oil and gas prices, oil and gas production, sector employment, and much more. The primary and 

secondary data were then used in combination with a common regional economic model, IMPLAN, to 

estimate economic contributions. Additionally, a fiscal model was developed to estimate sales and use 

taxes associated with oil and gas activities in Wyoming. Appendices A and B provide a list of acronyms 

and glossary for definitions of technical terms, respectively. 

The oil and gas industry is generally comprised of two primary activities, development and extraction. 

Development activities consist of drilling, completing, and recompleting wells, which are typically 

completed in a few of months. Recompletion activities involve restimulating or reactiviting the wells after 

they have been producing for a period of time. Extraction or production is the act of removing the oil or 

gas from the mineral formations, and it occurs continually over a longer period of time. Taxes and 

royalties are paid to the state on the value of the production. Royalties are also paid to the owners of the 

minerals from which the production occurs: state government, Federal government, or private households 

and businesses. All of these taxes and royalties are reported through various state sources except the 

ones paid to private households and businesses. 

Therefore, this report is focused on four oil and gas activities to estimate the economic contribution of oil 

and gas industry in Wyoming.1

 These are: 

1. Drilling, completing and recompleting wells 

2. Extraction operations 

3. Mineral royalty payments to households and business for access to private minerals 

4. Extraction taxes paid to the state and counties of Wyoming. 

Other capital investments, pipeline investments, and refinery impacts are not captured in this analysis. 

The analysis indicates that there was an estimated $15.5 billion in total economic output2

 (i.e., both direct 

and downstream economic impacts) as a result of drilling, completion, recompletion, and extraction 

activities in 2007, 77 percent of which is attributable to extraction activities (See Exhibit E-1). Including 

private mineral royalty and lease payments and extraction tax payments, total economic output for all oil 

and gas-related activities within Wyoming is approximately $18.6 billion. Oil and gas activities within the 

state employ over 73,000 people in direct and downstream jobs. These are model-derived estimates of 

the total direct (industry), indirect (industry support), and induced (employee-household support) 

 

1

 When these activities are aggregated, taxes and royalty payments were removed from the extraction 

value to avoid double counting these impacts as described in 7.2. 

2

 Economic output is also known as economic activity, gross revenues, or gross sales. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

iii

employment generated as a result of direct employment associated with oil and gas activities. Direct jobs 

associated with drilling, support industries, extraction, wholesale trade, and construction were estimated 

to be 20,090 (see Exhibit 9.5), of which 17,982 are associated specifically with the oil and gas industry. 

There is considerable government employment associated with oil and gas activities: 25,149 government 

employees. 

The estimated employment multiplier is 3.65, as shown in Exhibit ES-1 For example, for all the direct jobs 

generated (20,090 jobs) as a result of oil and gas activities, there are 3.65 times as many total direct and 

down stream jobs (73,229 jobs). Exhibit 9.5 summarizes these direct and downstream jobs within the 

various sectors within the economy. Similarly, the earnings multipliers indicate that every dollar of direct 

oil and gas employee salary earnings results in an additional $1.57 in indirect and induced salary 

earnings. 

 

Exhibit ES-1. Total Economic Contribution for Oil and Gas Activities in Wyoming (2007$)* 

Type of 

Impact 

Drilling, 

Completion, and 

Recompletion 

Extraction 

Private 

Mineral 

Royalty & 

Lease 

Payments1

Extraction 

Taxes2

Total Economic 

Contribution 

Economic 

Output $3,513,052,106 $11,963,561,646 $231,827,774 $2,908,623,519 $18,617,065,044 

Total 

Employment 

 

26,701 

 

11,765 

 

1,447 

 

33,316 

 

73,229 

Total Labor 

Earnings $1,458,093,669 $736,813,207 $42,461,473 $1,677,264,966 $3,914,633,314 

Earnings per 

Worker $54,608 $62,628 $29,344 $50,344 $53,457 

Employment 

Multiplier 

 

1.67 2.86 NA NA 

 

3.65 

Earnings 

Multiplier 

 

1.32 

 

1.75 NA NA 

 

2.57 

*

 These figures encompass direct, indirect, and induced economic impacts. 1 These payments to households and companies are treated as 

all secondary induced impacts; that is, these payments are considered income of which a portion is spent in the economy. 2 These tax 

payments to state and local governments are treated as all secondary indirect impacts; that is, these payments are considered downstream 

beneficiaries of oil and gas activities. 

Oil and gas activities contribute to the economic well-being of many other industries within the state of 

Wyoming as well. From all of the oil and gas activities in the state (including extraction taxes and mineral 

royalty payments), approximately 25 percent of the employment is specific to the mining industry (which 

encompasses the oil and gas industries), while approximately 34 percent is in public administration or 

government (for example, Federal, state, and local government, public elementary, high school and 

higher education). Due in part to the considerable extraction taxes paid to the state in Wyoming, oil and 

gas-related activities account for 38 percent of government employment in the state. Other important 

sectors that benefit from downstream employment generated by oil and gas activities are retail trade 

(6.7%), healthcare and social services (5.2%), and accommodations and food service (4.8%). These are 

the major industries benefited by oil and gas activities within the state in terms of employment. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

iv

Exhibit ES-2 summarizes some of the estimates of the economic indicators for oil and gas activities (and 

generated downstream economic activity) in Wyoming and compares these indicators to state totals. This 

study indicates that oil and gas activities within Wyoming account for an estimated 32 percent of the 

state’s total economic output or gross revenues, 20 percent of employment, 25 percent of total earnings, 

and 43 percent of Gross State Product.3

 In general, the oil and gas activities, including private mineral 

royalty payments and extraction taxes and the associated downstream activity, generate estimated 

average earnings of approximately $53,000, or 28 percent higher than the state average. 

 

3

 Gross State Product measures the value-added of all goods and services in the state. Value-Added is 

defined as economic output (or gross sales or revenues) less intermediate inputs, which are goods and 

services purchased in the production process (or input or operational expenses). GSP is the state 

counterpart of Gross Domestic Product for the nation (Downey, 2006). 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

v

Exhibit ES-2. 2007 Oil and Gas Activity as a Fraction of the State’s Economy (2007$) 

Indicator 

All Oil and Gas 

Activities in 

Wyoming 

All Economic 

Activity in Wyoming 

Percent of Oil and 

Gas to State Source 

Total Economic Output $18,617,065,044 $58,831,050,621 31.6% IMPLAN 2006 

Total Employment 73,229 369,5653 19.8% IMPLAN 2006 

Total Labor Earnings $3,914,633,314 $15,487,363,835 25.3% IMPLAN 2006 

Average Earnings $53,457 $41,907 127.6% IMPLAN 2006 

Gross State Product 

(i.e., Value Added) 

$13,329,075,050 $31,205,616,410 42.7% IMPLAN 2006 

Severance Tax $666,397,115 $882,383,479 75.5% WY Department of 

Revenue Annual Report 

2007 

Mineral Ad Valorem Levies $712,637,118 $913,011,683 78.1% WY Department of 

Revenue Annual Report 

2007 

Assessed Valuation 

(Taxable Value)1

$11,303,378,284 $21,491,267,438 52.6% WY Department of 

Revenue Annual Report 

2007 

Federal Mineral Royalties 

(WY Disbursements, 50%)2

$515,500,646 $931,394,926 55.3% Minerals Management 

Service, 2007 

State Mineral Royalties $90,031,996 $138,201,502 65.1% Wyoming Office of State 

Lands and Investments 

2007 

Sales and Use Taxes 

 $50,344,215 $906,973,329 5.5% 

Wyoming Depart of 

Revenue Annual Report 

2007 

1 The assessed valuation, severance taxes, and ad valorem taxes are based on 2006 production. Severance and ad valorem taxes 

are paid to the state in 2007. 2

 This estimate is from the Minerals Management Service (MMS), and it includes Federal Mineral 

Royalties from carbon dioxide, coalbed methane, condensate, gas plant products, oil, processed and unprocessed gas, and 

royalties associated with rents, bonuses, and other revenues. Fifty percent of royalties return to Wyoming and 50 percent are paid 

to the federal treasury (U.S. Minerals Management Services, http://www.mrm.mms.gov/Stats/pdfdocs/formulas.pdf). Native 

American royalties are not included in this estimate and therefore the receipts paid to reservations are not captured in this analysis. 3

This employment figure is from IMPLAN, whose estimates are derived from U.S. Bureau of Economic Analysis. This includes fulltime, part-time, self employed, small business owners, and farm employment. The Wyoming Department of Employment figures are 

lower than those reported here (May, 2007 labor force estimate is 285,553), as they do not include farm employment, self-employed 

and small business owners (Wyoming Department of Employment Labor Trends, Volume 45, No. 7, July, 2008). The Bureau of 

Economic Statistics estimates that Wyoming had 85,987 self-employed (proprietor) jobs in 2006. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

vi

Oil and gas activities significantly contribute to state and local governments through royalties and tax 

payments. Extraction tax receipts paid to state and local governments were gathered from secondary 

sources for severance, ad valorem, federal and state royalty, and extraction sales and use taxes for 2007, 

as described in Section 7.4. In 2007, approximately $2.0 billion was paid to state and local governments 

in all extraction tax payments by the oil and gas industry. Oil and gas ad valorem and severance tax 

receipts account for 78 percent and 76 percent, respectively, of all these associated state tax payments 

within Wyoming. Federal and state oil and gas royalties (paid to the state of Wyoming) account for 55 

percent and 65 percent of all mineral royalties paid to the state in 2007, respectively. 

Drilling, completion, and recompletion investments were estimated by basin and depth of the well drilled 

from primary data provided by the industry in Wyoming and secondary data obtained from the Wyoming 

Oil and Gas Conservation Commission (WYOGCC) database. The large and broad set of primary data 

collected from operators and service companies (described in Section 5) indicated that expenditures per 

well varied considerably by basin (see Exhibit ES-3). Average capital investments were lowest in Powder 

River Basin, at approximately $402,000 per well, while investments in the Pinedale Anticline and Jonah 

fields were almost $3.9 million per well. Across the state, capital investments average $1.5 million per 

well, of which 45 percent remain within Wyoming, contributing to the state’s economy. 

Exhibit ES-3. Drilling, Completion, Facility, and Recompletion Investments for Wyoming, by Basin 

(2007$) 

Greater Green 

River and 

Overthrust 

(less Pinedale 

and Jonah) 

Pinedale and 

Jonah Fields* Bighorn Wind River Powder River 

Laramie, 

DenverCheyenne, 

Hanna Total 

Total 

Investments $1,496,975,056 $2,607,664,488 $72,654,549 $277,504,668 $876,527,426 $30,734,060 $5,362,060,246 

Investments 

that Remain 

within WY $696,820,537 $1,188,365,632 $35,800,476 $116,540,850 $361,806,402 $15,592,479 $2,414,926,375 

State 

Purchase 

Coefficient 47% 46% 49% 42% 41% 51% 45% 

Number of 

Wells 

Drilled & 

Completed 654 

662 Drilled 

449 Completed 79 102 2,180 20 3,697 

Total 

Investments 

per Well $2,288,953 $3,939,070 $919,678 $2,720,634 $402,077 $1,536,703 $1,450,381 

WY 

Investments 

per Well $1,065,475 $1,795,114 $453,171 $1,142,557 $165,966 $779,624 $653,212 

 * Pinedale Anticline and Jonah field expenditures were extrapolated separately for drilling and completion. 

Exhibit ES-4 summarizes the royalty and lease payments made to homeowners and interest owners by 

the industry for access to private minerals and surface lands. Our analysis suggests that approximately 

26 percent of these payments were made to Wyoming residents and businesses. From the regional 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

vii

economic model, IMPLAN’s, Social Accounting Matrix, an estimated of 82 percent of this income is 

considered the marginal propensity to spend, which is income spent on consumer goods and is assumed 

to be spent in the Wyoming economy. Once this percentage is applied to these total in-state payments, 

there is approximately $184 million of additional spending or economic activity within the state per year as 

a result of these payments to households and businesses. This impact creates downstream economic 

activity in Wyoming for a total economic contribution of private mineral royalty payments of $231.8 million. 

Exhibit ES-4. Private Mineral Royalties and Lease Payments in Wyoming (2007$) 

 

Sales and use taxes paid to the state were also estimated as a result of extraction, and drilling, and 

completion activities. Total sales and use taxes paid by the oil and gas industry in Wyoming are 

estimated to be $63 million for Sector 2131, Support for Mining, ($50.3 million for sales tax and $12.4 

million for use tax) and $11.5 million for Sector 2111, Extraction Sector, for a total of $74.3 million paid in 

sales and use taxes in 2007. The oil and gas portion of these taxes represents 5.5 percent of all sales 

and use taxes collected by the state in 2007. Booz Allen believes this is a conservative estimate of the 

sales and use taxes paid by the oil and gas industry in Wyoming. This observation is based on the fact 

that some purchases that are potentially taxable have likely been excluded from the analysis, such as 

rental or leasing of drilling equipment or contracts related to certain trade industries such as construction, 

electrical and earth work. 

Oil and gas activities in Wyoming and the economic activity that they generate contribute significantly to 

the Wyoming economy, with an estimated $18.6 billion in economic output, equaling 32 percent of the 

state’s total economic output or gross revenues. Oil and gas activities, investments and payments 

account for 43 percent of Wyoming’s Gross State Product. Additionally, oil and gas activities contribute 

20 percent of the employment in the state with $3.9 billion in labor earnings annually and 38 percent of all 

government employment in the state (including public education employment). The average annual 

earnings per worker for these activities are approximately $53,000, which is 29 percent higher than the 

state average. Oil and gas activities generate approximately $2.0 billion in extraction tax revenue and 

$62.8 million in sales and use taxes from development activities. 

Wyoming’s oil and gas industry is a vital and significant economic driver of state’s economy. For every 

job that the oil and gas industry directly employs, there are an additional 2.65 jobs created in downstream 

economic activity through businesses supporting this industry and employees spending their money in the 

economy. There is considerable downstream state and local government and educational jobs and labor 

earnings associated with the substantial state and local taxes paid by the industry. This industry is 

unique in creating these types of considerable rollover employment and earnings effects in the Wyoming 

economy. 

Payment/Impact Type 

Mineral Royalties and Lease 

Payments 

Within State Payments $224,172,370 

Out of State Payments $639,239,767 

Total Payments $863,412,137 

State Purchase Coefficient (SPC) 26% 

Percent of Payment Assumed to be Spent in 

the Wyoming Economy 82% 

Total Spending in the Wyoming Economy as a 

Result of Royalty Payments $183,821,343 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 1

1. Introduction 

This first-ever original and comprehensive study was commissioned by the Wyoming Heritage Foundation 

to better understand and more accurately estimate the economic contribution of the oil and natural gas 

industries in Wyoming. This study, which began in February, 2008, has been peer-reviewed and was 

also reviewed by a Review Team of 18 individuals. A study such as this one provides a baseline 

economic picture of the oil and gas industries and their direct and downstream impacts on Wyoming’s 

economy. Additional and concurrent economic contribution studies of other important industries in 

Wyoming, such as mining, healthcare and construction, would create a better understanding of industry 

interdependencies within state’s economy and their relative economic contribution to the state. This 

study provides a framework and launch-pad from which other studies could be conducted. 

As part of this study, a customized input-output model was developed for the state to estimate the 

economic contribution of the oil and gas industry in Wyoming. Although existing input-output (IO) models 

provide a foundation for estimating relative impacts and contributions of the industry at a national level, 

these models, which use national production functions, are not specific to local economies and 

environments. Additionally, a sales tax model was also developed to assess the contribution to the local 

and state governments from sales and use taxes associated with oil and gas activities. 

In 2005, Booz Allen successfully estimated economic contribution of oil and gas activities in Colorado in a 

peer-reviewed analysis (CERI, 2007, available at: www.ceri-mines.org/cerioil&gas.pdf). The current study 

utilized a methodology similar to that in the Colorado study. A regional economic modeling approach was 

used to evaluate the contribution of oil and gas activities to the state of Wyoming. The approach included 

an extensive effort to gather site specific information needed to complete the analysis, such as capital 

investments, average cost to drill and complete a well, average production costs, royalty and lease 

payments to private landowners, and service company costs and locations. Secondary source data was 

also obtained, including number of wells drilled and completed for each basin, oil and gas prices, oil and 

gas production, employment, etc. The primary and secondary data were then used in combination with a 

customized regional economic model, IMPLAN, to estimate economic contributions of Wyoming oil and 

gas activities in 2007. 

This economic contribution study focuses on financial injections (i.e., capital investments, revenues, 

payments) to the Wyoming economy associated with oil and gas activities in Wyoming. As such, the 

regional economic modeling approach measures economic benefits in terms of jobs, labor earnings, 

economic output, Gross State Product (GSP), and fiscal payments to state and local governments. It 

does not assess environmental, governmental services, or social costs of oil and gas activities or other 

economic benefits. For example, wells located on private property can influence property values (either 

positively or negatively); this value change is not included in this study. Boom oil and gas development, 

as is currently occurring in the Pinedale and Jonah fields, can have considerable environmental, 

governmental service, and social costs to local communities, wildlife, and local economies. This can 

include wildlife habitat fragmentation, stresses on community infrastructure and local governments (i.e., 

increased needs for law enforcement, fire, education, highways, utilities, and others) air quality 

degradation, hotel and housing shortages, tourism impacts, reductions in personal income, and others. 

These costs are not measured in this study. 

This report describes both the methodology and results of the oil and gas economic contribution study. 

Section 2 briefly presents a discussion of the objectives and design of this study. In Section 3, a brief 

overview of the oil and gas industry in Wyoming is given for background and context. Section 4 describes 

the input-output model, IMPLAN, used for the analysis and the model customization approach. Section 5 

summarizes the types of information collected from the Wyoming oil and gas industry and the response 

rate of the collection effort. In Section 6, the secondary data sources are briefly described. Section 7 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 2

explains the methods to extrapolate the capital investments and mineral royalty payments to the state. 

Section 8 reports the economic contribution results, and Section 9 summarizes the relative importance of 

the industry. Section 10 describes the sales and use taxes analysis and results. Section 11 concludes 

the report. 

2. Objective and Design of the Project 

This project sought to estimate the total economic contribution of oil and gas activities on the state of 

Wyoming for the calendar year 2007. Economic contribution was defined as the direct, indirect, and 

induced impacts in terms of: 1) economic output (i.e., gross revenues or sales); 2) Gross State Product 

3) labor earnings; and 4) employment. These terms are defined in Section 4.1 and Appendix B. 

The oil and gas industry is generally comprised of two primary activities, development and extraction. 

Development activities consist of drilling, completing, and recompleting wells, which are typically 

completed in a few of months. Recompletion activities involve restimulating or reactiviting the wells after 

they have been producing for a period of time. Extraction or production is the act of removing the oil or 

gas from the mineral formations, and it occurs continually over a longer period of time. Taxes and 

royalties are paid to the state on the value of the production. Royalties are also paid to the owners of the 

minerals from which the production occurs: state government, Federal government, or private households 

and businesses. All of these taxes and royalties are reported through various state sources except the 

ones paid to private households and businesses. 

Therefore, the following oil and gas activities were analyzed to assess their economic contribution: 

• Drilling, completing, and recompleting wells 

• Extraction operations 

• Mineral royalties and lease payments for access to private minerals 

• Extraction tax payments to state and local governments. 

Other capital investments, pipeline investments, and refinery impacts are not captured in this analysis. 

The project design comprised four major analytic tasks: 

1. Customize a regional economic impact model (IMPLAN) with local industry data, and specify the 

model for operations in the state of Wyoming 

2. Collect information from the Wyoming industry on capital investments, production costs, and 

private mineral royalty payments 

3. Utilize the newly specified model and the primary data to estimate 2007 economic contribution of 

the industry in the state 

4. Develop a Fiscal Model to determine the oil and gas contribution to state and local government 

entities from sales and use taxes. 

3. Brief Overview of Oil and Gas Industry and Activities in Wyoming 

In 2007, Wyoming ranked 7th nationally in terms of crude oil production. Wyoming ranked 3th nationally 

for gross natural gas production and 2nd in terms of natural gas marketed production in 2006 (Energy 

Information Agency, Accessed 8/15/2008). The year 2007 marked the highest level of production of 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

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natural gas (in units) in the state, with a total of 2.253 trillion cubic feet produced, on average 6.2 billion 

cubic feet a day (Wyoming Oil and Gas Conservation Commission (WYOGCC), May 2008). Crude oil 

production peaked in 1970 and has fallen until 2005. Since then it has increased, and the state produced 

54 million barrels of oil in 2007 (WYOGCC). 

In 2007, there were approximately 37,350 producing wells, distributed as illustrated in Exhibit 3.1. Twenty 

of twenty-three counties in the state produce oil and gas. Of the twenty counties in Wyoming producing 

crude oil and natural gas, Campbell County produced the most crude oil and Sublette County produced 

the most natural gas (WYOGCC). According to WYOGCC, there were 8,122 combined oil, gas and 

Coalbed Methane Natural Gas (CBM) Applications for Permits-to-Drill (APD) approved in 2007. In 2007, 

the most active county in terms of APDs was Campbell (Powder River Basin), followed by Sublette 

(where Pinedale Anticline and Jonah fields are located), and Sweetwater (Greater Green River Basin). 

There are seven primary oil and gas basins within Wyoming: Bighorn (BHB), Denver-Cheyenne, Greater 

Green River (GGR), Laramie, Overthrust Belt, Powder River (PRB), and Wind River Basin (WRB). For 

the analysis, Pinedale Anticline and Jonah fields were removed from the Greater Green River Basin as 

this area has unique conditions, production, and investments. 

Further description of a number of these basins is provided below: 

Bighorn Basin – The Bighorn Basin is located in a remote section of Northern Wyoming, between the 

Yellowstone Uplands and the Bighorn Mountains. The large majority of the Bighorn Basin is public lands 

owned by the Bureau of Land Management (BLM), which has recently increased its oil and gas leasing in 

the area. With the increase in gas prices, this area has seen an increase in exploratory drilling. The area 

also has a wealth of wildlife. 

Greater Green River Basin – The Greater Green River Basin encompasses the Bridger, Great Divide, 

Kindt, Washakie, Green River, and Hobak Basins. It is primarily located in the Southwestern part of 

Wyoming, and it extends into parts of Utah and Colorado. The basin has large amounts of oil shale and 

natural gas reserves. In addition to having a long history of oil and gas exploration and production, it has 

also experienced an increase in well drilling and oil exploration in recent years. 

Powder River Basin – The Powder River Basin is in the North-central and North-eastern part of 

Wyoming and also extends into Montana. The Powder River Basin is most known for its coal deposits—it 

is the single largest source of coal mined in the United States. A substantial amount of the state’s 

coalbed methane is produced in this basin, 98 percent. 

Wind River Basin – The Wind River Basin is located in central Wyoming. It has hydrocarbon source 

rocks, reservoir rocks, and hydrocarbon traps. Wind River Basin is thought to contain a significant 

amount of undiscovered oil, gas, and CBM resources. 
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Exhibit 3.1. Distribution of Producing Wells in Wyoming, 2007 

 Source: WYOGCC, May, 2008. Circles or dots are shown larger than would be depicted on a map; they are not are not drawn 

 to scale. 

Oil and gas development across Wyoming in 2007 is depicted in Exhibit 3.2. Across the state, the 

Powder River Basin had the highest number of wells drilled in Wyoming (59%), followed by Greater 

Green River (35%), and Pinedale and Jonah fields (18%). Exhibit 3.3 summarizes both the development 

and production statistics by basin in Wyoming in 2007. However, the average depths of the wells drilled 

in Powder River are the shallowest in the state, contributing to the lesser amount of investment per well in 

this Basin compared to other basins. Deeper wells in Pinedale and Jonah fields and the Greater Green 

River Basin require significantly more investments on average. 

The Powder River Basin has the highest amount of oil production (34%) and coalbed methane production 

(98%) in the state. Bighorn Basin is the second largest producer of oil in Wyoming, with 27% of oil 

production. Pinedale and Jonah fields have the highest amount of conventional gas production (39%) 

followed by gas production in Greater Green River Basin (27%). The magnitudes of these production 

differences among basins are illustrated in Exhibit 3.4. 
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Exhibit 3.2. Wells Drilled in Wyoming in 2007 

 Source: WYOGCC, May, 2008. Circles or dots are shown larger than would be depicted on a map; they are not are not drawn 

 to scale. 
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Exhibit 3.3. Wyoming Drilling and Production Statistics, by Basin, 2007 

Basin 

Number of 

Wells Drilled 

in 2007 

(% of State 

Total Drilled) 

Average 

Depths of 

Wells 

Drilled 

Number of 

Wells in 

Production 

Barrels of Oil 

Production 

(% State Oil 

Production) 

MCF of Nat. Gas 

Production 

(% State 

Conventional Gas 

Production) 

MCF of CBM 

Production 

(% State CBM 

Production) 

Big Horn Basin 

(BHB)

79 

(2%) 

4,085 2,651 14,472,633 

(27%) 

20,744,008 

(1%) 

0 

(0%) 

Denver-Cheyenne 

Basin

10 

(0.3%) 

7,654 91 401,478 

(1%) 

114,138 

(0%) 

0 

(0%) 

Greater Green River 

Basin (GGR) (less 

Pinedale and Jonah 

Fields)

644 

(35%) 

9,113 6,880 9,184,839 

(17%) 

495,906,098 

(27%) 

5,089,343 

(1%) 

Pinedale Anticline 

and Jonah Fields 

662 

(18%) 

12,757 1,959 6,393,722 

(12%) 

714,178,060 

(39%) 

0 

(0%) 

Laramie & Hanna 

Basins

10 

(0.3%) 

4,226 125 174,199 

(0%) 

121,627 

(0.01%) 

0 

(0%) 

Overthrust Belt 

Basin

10 

(0.3%) 

5,028 506 1,443,556 

(2%) 

361,019,726 

(20%) 

0 

(0%) 

Powder River Basin 

(PRB)

2,180* 

(59%) 

1,833 23,435 18,081,295 

(34%) 

27,839,379 

(2%) 

429,049,308 

(98%) 

Wind River Basin 

(WRB)

102 

(3%) 

8,666 1,703 3,776,864 

(7%) 

196,573,699 

(11%) 

1,826,016 

(1%) 

TOTAL 3,697 5,326 37,350 53,983,312 1,816,496,735 435,964,667 

Source: Wyoming Oil and Gas Conservation Commission (WYOGCC) database, May, 2008. 

* Includes 11 Enhanced Oil Recovery Wells Drilled. 
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Exhibit 3.4. Production by Basin in Wyoming, 2007 

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

MMCFE

BHB Denver

Cheyenne

Pinedale/Jonah GGR Hanna/Laramie Overthrust PRB WRB

Oil (MMcfe)

Gas (MMcf)

CBM (MMcf)
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4. Regional Economic Modeling 

Booz Allen utilized a regional economic modeling approach to evaluate the economic contribution of the 

oil and gas industry to the state of Wyoming. This approach included an extensive data collection effort 

to identify site-specific information needed to complete the economic contribution analysis. Data 

collected included capital investments, average costs to drill and complete a well, average production 

costs, royalty and lease payments to private mineral owners, and service company expenditure 

allocations. Secondary data was also obtained and included: the number of wells drilled and completed, 

recompleted, or reactivated for each basin; oil and gas prices; oil and gas production; employment levels; 

etc. The primary and secondary data was then used in combination with a common regional economic 

model to estimate economic contributions as described below. 

Input-output (IO) modeling is a systematic method used to describe production and consumption sectors 

within a particular economy through a series of linkages among industries, households, and government.4

Booz Allen utilized the IMPLAN® economic impact model data and software system as the basic regional 

economic model (IO) for this analysis. IMPLAN provides certain advantages over other IO modeling 

systems in that study area data can be upgraded using local data and conditions to more accurately 

represent the industry economic profiles, providing more accurate multipliers. In addition, IMPLAN gives 

the user full access to the model for added flexibility, allowing numerous manipulations to be made at any 

time during the analysis. 

For this analysis, Booz Allen initially populated IMPLAN Software Version 2.0 with 2006 data sets and 

structural matrices from the Minnesota IMPLAN Group (MIG). The data set included state-level Wyoming 

production functions for 509 industrial sectors. This off-the-shelf model was customized with both 

secondary and primary data specific to the oil and gas industry in the state. The following sections 

describe the approaches that were used to modify the parameters of the model. 

4.1 Types of Economic Impacts or Economic Contribution 

Changes to purchases of goods and services for final consumption (final demand change) drive IO 

models. Each industry that produces goods and services generates demands for other goods and 

services. When oil and gas firms purchase supplies or services, such as construction services, drilling 

contracts, or well stimulation services, their suppliers must make purchases from their own suppliers and 

pay wages to their own employees. These secondary suppliers similarly make purchases and pay 

wages, generating additional economic activity. Multipliers describe these iterations (IMPLAN Manual, 

2003). 

Impacts or effects can be described through the following definitions. 

• Direct effects are the changes in the industries to which a final demand change is made. In 

this case, we have direct impacts from extraction, support activities for oil and gas activities, 

drilling industries, wholesale trade, and construction. 

• Indirect effects are the changes in inter-industry purchases as they respond to the new 

demands of the directly affected industries. A direct change increases economic activity for 

businesses that support the direct industries (i.e., geological services, trucking, power 

 

4

 See Miller and Blair (1985) for a more detailed explanation of input-output analysis. 
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generation, hotels and lodging, etc.), businesses supporting these suppliers, and so on up 

the supply chain. 

• Induced effects are the increases in household income expenditures generated by the direct 

and indirect effects (e.g., food and beverage stores, motor vehicle dealers, healthcare, etc.). 

A type SAM (Social Accounting Matrix) multiplier, as modeled by IMPLAN, is the estimated sum of the 

direct, indirect and induced effects, divided by the direct effect. It shows the total amount of economic 

activity per unit of direct economic stimulus. Multipliers close to 1.0 indicate very little additional activity 

beyond the direct expenditures, whereas larger multipliers indicate more indirect and induced economic 

activity. 

In IMPLAN, SAM multipliers include all households by default, but other institutions can also be included. 

Institutions include households, federal government, state and local government, capital, and trade. 

Since the current study is a state analysis, multipliers for “state and local non-education” and “state and 

local education” institutions were included in the multipliers that were generated by IMPLAN. Public 

Education Institutions include purchases for elementary, high school, and higher education. NonEducation Institutions are for purchases for all other government activities, like state government 

operations, police protection and sanitation. Private education purchases are not counted here. 

Since not all expenditures by the oil and gas industry and its employees will necessarily remain in 

Wyoming, the full volume of indirect and induced impacts will not be realized within Wyoming. These 

economic leakages can have considerable implications for the modeling results. To address this issue, 

Booz Allen collected information and created a model to estimate the fraction of these impacts that leak 

outside of the state for capital investments and private mineral royalty payments. 

For drilling and completion activities, the oil and gas industry is purchasing from a number of industries to 

drill, complete and recomplete wells – these are the direct effects considered by this analysis. For the 

extraction industry, Booz Allen assumes that most of the oil and gas being produced is exported outside 

the state of Wyoming for processing; this allows the modeling of total industry sales or revenues as the 

direct effect.5

 Royalty payments are assumed to be all induced impact as these are payments to 

households, which spend a proportion of those payments in the economy. Extraction tax payments are 

paid by industry to state and local governments; these impacts are considered to be all indirect economic 

contribution. 

4.2 Customizing the IMPLAN Model 

One of the first steps in customizing the IMPLAN model involved the modification of the industry specific 

data and value-added components reported in the Wyoming model. Three industrial sectors within the 

IMPLAN framework were modified: 

• Oil and Gas Extraction 

• Drilling Oil and Gas Wells 

• Support Activities for Oil and Gas Operations. 

For these three sectors, adjustments were made to the model parameters for the following economic 

measures, based upon detailed primary and secondary data obtained during the study: 

• Total Industry Output 

 

5

 In reality, a small portion of the product is sent to Wyoming’s four refineries. 
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• Earnings 

• Employment 

• Value Added. 

The resulting study area parameters used in the model are provided in Appendix C. Since the IMPLAN 

data sets used had 2006 as a base year, these figures are converted to 2006 dollars. An important part 

of modifying the Value Added components for the extraction industry involves specifying the costs of 

production. Section 4.2.4 describes how this parameter was determined. 

The following sections describe how the updated model parameters were derived. 

 

4.2.1 Oil and Gas Extraction (IMPLAN Sector 19) 

Total Industry Output - The extraction sector’s total industry output was based on 2007 WYOGCC data on 

oil and gas production quantities in Wyoming. These production volumes were determined to be: 

• Oil – 54,051,671 barrels 

• Conventional Gas – 1,817,181,173 mcf 

• CBM – 436,306,044 mcf 

These quantities were converted to dollar amounts using the 2007 preliminary prices from the Wyoming 

Department of Revenue. The index prices for calendar year 2007 were $58.88 per barrel (Bbl) for oil and 

$4.65 per thousand cubic feet (Mcf) for gas (WY Department of Revenue). These prices were converted 

to 2006 dollars to be consistent with the IMPLAN model resulting in $56.31 per barrel of oil and $4.45 per 

mcf for gas. The gas price is a composite price of both conventional and coalbed methane gas. In 

actuality, CBM gas sells at about $1/mcf less than conventional gas. This is due to CBM’s low BTU 

content, which requires that approximately six percent of the volume be used for compressor fuel to 

move the low pressure CBM to the interstate pipelines. 

The deflators used for the conversion were sector specific estimates obtained from the IMPLAN 

database. The deflated prices were then multiplied by the production volumes to estimate total industry 

output for extraction in Wyoming. Total industry output in 2006 dollars was determined to be: 

• Oil -- $3,043,813,207 

• Conventional Gas -- $8,081,505,125 

• CBM -- $1,940,373,136 

• Total -- $13,065,691,468 

For natural gas, production data is assumed to include the total volume of all gas produced in Wyoming, 

including methane, carbon dioxide, natural gas liquids, and all other related products. For oil production, 

data is assumed to include the total volume of all oil produced in Wyoming including stripper, tertiary, 

other oil, and lease condensate (Consensus Revenue Estimating Group, Wyoming State Government 

Revenue Forecast: Fiscal Year 2008-Fiscal Year 2012, January 2008, Table 3). 

Once the Value Added Components were modified (as described below) to zero out the Indirect Business 

Taxes and remove Private Mineral Royalty Payments, Total Industry Output was reduced to $10.3 million 

in 2006 dollars. For the extraction industry, most of the oil and gas being produced is exported outside 

the state of Wyoming for processing. Since there are a few refineries in the state, this is a simplifying 

assumption. For consistency with this model requirement, the Extraction Sector Regional Purchase 
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Booz Allen Hamilton 11

Coefficient (RPC) within the model was zeroed out. This allows the modeling of total industry sales or 

revenues as the direct effect. 

Employment – Based on employment data from the Bureau of Labor Statistics, extraction employment 

was estimated to be 4,115. 

Earnings – Information on the number of extraction jobs and the earnings associated with these jobs were 

obtained from the BLS website for Wyoming. This employment data was multiplied by the benefitsadjusted average earnings per job from BLS to estimate total earnings for the extraction sector, 

$402,070,349. Total earnings were then allocated between employee compensation and proprietor 

income based on the ratio between the two as reported in the IMPLAN model. With employment and 

total earnings, average earnings per job can be estimated for the extraction sector in Wyoming. Average 

earnings per job was adjusted to include benefits based on the 2006 national ratio of wage and salary 

accruals for compensation of employees for the oil and gas extraction. This ratio was obtained from the 

August 2007 Survey of Current Business. Average earnings were estimated to be $97,708 in 2006 

dollars. 

Total Value Added - Total Value Added for the extraction sector is the residual of total industry output 

minus the cost of production (excluding labor and indirect business taxes). The cost of production was 

determined to be $1.10 per mcfe. There is considerable variation in the costs of production depending on 

a number of factors, including the depth of the well, type of reserves, and produced fluid characteristics 

related to the lifecycle of a well. Generally, there are three types of costs associated with production as it 

is defined in the extraction sector: lifting costs; in-basin gathering, processing and treatment; and in-basin 

transportation costs. For the purposes of this modeling effort, these costs should exclude labor, finding 

and development, administrative, overhead, profit, and taxes. Many of these costs have already been 

accounted for as separate components in the model. These production costs are used to allocate a 

certain proportion of value added to final demand. Further description of the approach to estimate the 

cost of production is provided in 4.2.4. 

The following section and section 4.2.4 describe this production cost data collection and estimation 

process in more detail. Other property income and indirect business taxes are the residual of total value 

added minus employee compensation and proprietor income. Labor earnings for the extraction sector 

were taken from the Bureau of Labor Statistics (BLS) for the extraction sector in Wyoming, as described 

above (North American Industry Classification System [NAICS] code 211). Labor earnings were allocated 

between the employee compensation and proprietor income based on the ratio from IMPLAN. Since the 

extraction taxes were being run through the model as impacts, the Indirect Business Taxes within the 

Value Added Components were zeroed out, so as to not double count these economic contributions. 

Once this model adjustment was made, this reduced the total value added and total industry output as 

these tax payments reduce revenues to the extraction sector. 

4.2.2 Drilling Oil and Gas Wells (IMPLAN Sector 27) 

Employment and Earnings - Component estimates of value added for the drilling sector was based on 

2006 data from BLM for the drilling sector (NAICS code 213111) in Wyoming. Information on the number 

of drilling jobs and the earnings associated with these jobs in 2006 was obtained from the BLS website for 

Wyoming. BLS estimates of drilling sector employment were adjusted to include self-employed 

individuals based on the ratio of total employment to wage and salary employment from the Bureau of 

Economic Analysis for mining support services in Wyoming in 2005. As such, drilling employment in 

Wyoming was estimated to be 4,047. BLS estimates of labor earnings were adjusted to include benefits 

based on the 2006 national ratio of wage and salary accruals to compensation of employees for the 

mining support activities, which was obtained from the August 2007 Survey of Current Business. The 

adjusted BLS estimates of employment and labor earnings were then used to estimate total earnings for 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

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the drilling sector. Total earnings were then allocated between employee compensation and proprietor 

income based on the ratio between the two in the standard IMPLAN model for Wyoming. 

Total Industry Output and Value Added – Total industry output was based on output per employee 

estimates from the 2002 Economic Census for drilling oil and gas wells in Wyoming. This ratio ($208,876 

per employee in 2006 dollars) was multiplied by the adjusted employment estimates to estimate total 

industry output of $845 million in 2006 dollars. Total value added for drilling was estimated based on the 

ratio of total value added to total industry output from IMPLAN. It is estimated to be approximately $508 

million. Other property income and indirect business taxes were then estimated as the residual of total 

value added minus employee compensation and proprietor income. This residual amount was allocated 

between the two components based on the ratio from IMPLAN. 

4.2.3 Support Activities for Oil and Gas Operations (IMPLAN Sector 28) 

Employment and Earnings - Component estimates of value added for the support sector were based on 

2006 data for the support sector in Wyoming (NAICS code 213111) that was obtained from the BLM 

website for BLS. BLS estimates of support sector employment were adjusted to include self-employed 

individuals based on the ratio of total employment to wage and salary employment from the Bureau of 

Economic Analysis for mining support services in Wyoming in 2005. Employment for the oil and gas 

support sector was estimated to be 9,959. BLS estimates of labor earnings was adjusted to include 

benefits based on the 2006 national ratio of wage and salary accruals to compensation of employees for 

the mining support activities, which was obtained from the August 2007 Survey of Current Business. The 

adjusted BLS estimates of employment and labor earnings were then used to estimate total earnings for 

the support sector. The total was then allocated between employee compensation and proprietor income 

based on the ratio between the two in IMPLAN. 

Total Industry Output and Value Added – Total industry output was based on output per employee 

estimates from the 2002 Economic Census for oil and gas support services in Wyoming. This ratio 

($138,583 per employee in 2006 dollars) was multiplied by the adjusted employment to estimate total 

industry output to be approximately $1.4 billion. Total value added components are based on the ratio 

from IMPLAN of total value added to total industry output. Other property income and indirect business 

taxes are estimated as the residual of total value added minus employee compensation and proprietor 

income. This residual amount was allocated between the two components based on the ratio from 

IMPLAN. 

4.2.4 Production Cost Approach and Estimate 

Data was collected from industry in Wyoming on production costs for each basin of operation and by type 

of product produced, where possible. A total of 18 companies, out of 19 that provided data, were able to 

provide this information with the components that were required. As stated in Section 4.2.1, the 

production cost needed to comprise certain cost components and exclude others. The model required 

costs specific to the extraction sector, including lifting costs and in-basin gathering, compression 

treatment costs, and in-basin transportation costs. However, company labor, overhead, taxes, profits, 

major workovers or capital investments, and finding and development costs should not be included in the 

estimates as they are captured elsewhere in the model. The final production cost for the state was used 

to modify the Value Added components in the Extraction Sector, as described in Section 4.2.1. 

Once these industry costs by basin were collected, they were all converted to a cost per mcfe if they were 

not provided in that format. Cost per barrel or Barrel of Oil Equivalent (BOE) were converted to mcfe by 

applying a factor of six. The operator costs were weighted by the percentage of the operator’s production 

by product to the total sample production accounted for by basin. This weighted cost was then applied to 

all production to determine a production cost per basin. The basin costs were weighted by basin 
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production volumes to estimate the production cost for all operations in the state. In general, the costs 

were less in Pinedale and Jonah fields and the Wind River Basin and higher in Bighorn and Powder River 

Basins. Overall, the average cost was estimated to be $1.10 per mcfe. 

4.2.5 Trade Flows Data 

Version 2.0 of IMPLAN utilizes Regional Purchase Coefficients (RPCs) to represent the proportion of 

intermediate demands and final demands for a specific commodity that will be satisfied by local 

production. They are derived from a calculation encompassing production, consumption, total imports, 

foreign imports, and domestic imports. RPCs represent the proportion of the total supply of a good or 

service used to fulfill the demands of a region that is supplied by the region to itself. RPCs can be critical 

to the accuracy of the model. 

The new version of IMPLAN not yet released incorporates a new approach to measuring RPCs: the 

IMPLAN National Trade Flows Model. This new approach utilizes a doubly-constrained gravity model 

using IMPLAN’s county-level estimates of commodity demand and supply. In general terms, the import 

and export flows between regions are thought to be proportional to the “mass,” “attractiveness,” or “size” 

of an economy and inversely proportional to the “distance” or cost of moving goods and services between 

them. There are three main databases used in the Trade Flows Model: the Oak Ridge National 

Laboratory county-to-county distances by mode of transportation, the Commodity Flows Survey ton-miles 

data by commodity, and the IMPLAN commodity supply and demand by county. As such, the Trade 

Flows RPCs have been shown to reveal much more accurate economic movement between counties and 

regions than the RPCs embedded in IMPLAN Version 2. 

Although the new version of IMPLAN was not available, Booz Allen has obtained the new Trade Flows 

Microsoft Access Databases from MIG, created with new Trade Flows RPCs, and has imported them into 

the Wyoming model developed for this analysis. This was done by aggregating all Wyoming counties for 

each Wyoming-produced commodity (i.e., sector) that was shipped within Wyoming, providing a 

percentage of total consumption that is satisfied by Wyoming demand for the commodity. The RPC is 

the amount shipped within Wyoming as a percentage of total commodity demand, which is obtained from 

the Commodity Summary report in IMPLAN. 

After the state study area value added components were adjusted, the gravity-fed Trade Flow RPCs were 

inputted and the multipliers were recalculated. 

5. Primary Data Collection and Storage Approach 

Booz Allen identified a representative sample of oil and gas industry representatives to interview. 

According to WYOGCC, in 2007, the top ten operators in Wyoming produced 57, 82, and 86 percent of 

the oil, conventional gas, and CBM gas in the state. Data collection focused on the largest operators to 

collect a significant amount of data and information without interviewing an exhaustive number of industry 

contacts. 

The data collection effort also included service companies or vendors. Service companies are a major 

source of the oil and gas development activity across the state. Both operators and service companies 

were contacted initially with a phone call, and then with an email which described the project in more 

detail. Once the correct point of contact was located within the company, Booz Allen ensured that they 

received a “Data Request Document,” (see Appendix D) understood the requirements, and could provide 

the information within the time frame required. Often there were three (and sometimes more) points of 

contact within each company (e.g., drilling and completion, production, and mineral royalties). Generally, 

standard reporting forms such as Authority for Expenditure (AFE) for drilling and completion were 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 14

requested from the operator for an average well within the various basins of operation. Once information 

was received from the operators, interviews were scheduled to clarify and obtain additional information 

needed for the study. 

Since the actual costs of the various services for drilling, completion, and production can be obtained 

from operators, interviews with service companies were focused on the breakdown of the revenue 

received from the operator (the operator’s cost) by labor, materials and equipment, overhead and 

administration costs. For each of these areas, Booz Allen gathered the percentage of revenues that 

remained within the state and identified those expenditures that moved out of the state. 

5.1 Operator Data Collection 

5.1.1 Approach 

This section describes the types of information collected on operator expenditures for exploration, 

development, and production of oil, natural gas, and CBM. As indicated previously, it was determined 

that most operators contracted much of their well drilling, completion, and recompletion work to service 

companies. Therefore, interview efforts were undertaken to collect data from service company 

representatives, which are further described in Section 5.2 and Appendix D. 

Operator expenditures were separated into three categories: 

• Drilling, completion, and recompletion expenditures 

• Production cost 

• Mineral and override royalty payments, lease and bonus payments, and surface land damages 

for access for private minerals. 

Information was also obtained on the names and location of vendors utilized, the expenditures that were 

incurred within the company (versus contracted), the locations of field, district, and headquarter offices, 

and materials versus equipment expenses. 

To simplify the data collection effort and the impact on each company, Booz Allen requested an example 

Authority For Expenditure (AFE) document for drilling and completing a well for each basin where 

exploration and development occurs. These forms were requested for a typical well in each basin of 

operation for 2007. Booz Allen also requested additional information, which was usually conveyed 

verbally in follow-up interviews, on clarifying the types of expenditures. Further, additional information was 

requested on the largest expenses, the names of service companies utilized and their locations, and 

other pertinent information. All operators were able to provide us drilling and completion information; the 

majority of operators were able to furnish recompletion information as well. 

Recompletions occur throughout Wyoming to improve well production, before choosing the costly 

alternative of drilling a new well. Therefore, the corresponding cost categories for recompletion 

operations are similar to those for well completion and incurred to revitalize production in an aging well. 

Booz Allen collected operator’s information on the number of wells recompleted in 2007 or other 

information relevant to expenditures spent in 2007 on recompletion, restimulation, or reactivation 

activities. 

The drilling, completion, and recompletion costs were grouped into categories that were both consistent 

across operators and mapped to the relevant sectors in IMPLAN. A sample of the cost categories are 

shown below in Exhibit 5.1. 
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Booz Allen Hamilton 15

Exhibit 5.1. Example Well Drilling & Completion Cost Categories 

Drilling Completion and Recompletion 

Main Drill Contract Stimulation and Cementing (main contract) 

Earthwork Earthwork 

Services (e.g., insurance, permitting) Tube & Pressure inspectors 

Supervision (labor) Water & Transport 

Well Logging Complete Workover Equipment (Rig & Unit) 

 Casing & Tubing (surface and production) 

 Tanks & Equipment; Flowlines 

 Downhole Equipment 

 Roustabout 

 Labor (Supervision, Administration) 

 Overhead 

In this way, Booz Allen was able to group Drilling, Completion, and Recompletion expenditures into four 

IMPLAN sectors: Drilling, Support Activities for Oil and Gas Industries, Construction, and Wholesale 

Trade. 

Information was also requested from operators on production cost and royalty payments to private 

mineral owners. This included information on private mineral royalties, override royalties, payments for 

leases and bonuses, and surface land damages all for access to private minerals. Specific information 

requested on these expenditures and investments are shown in Appendix D. 

5.1.2 Response Rates 

Booz Allen staff contacted 27 oil and gas operating companies and over 120 operator personnel with 

operations located in Wyoming. Of these 27 companies, Booz Allen collected information from 19, a 

response rate of 70 percent. The remaining 8 companies either did not responded to our calls, were not 

interested in participating in the study, or did not have the time to collect the information within our time 

frame. From the companies who have provided information, these 19 operators accounted for 63%, 

70%, and 71% of the oil, conventional gas, and CBM production in the state, respectively, in 2007. This 

response rate seems reasonable considering the fairly onerous request for information. 

5.2 Service Company Data Collection 

5.2.1 Approach 

During interviews with Booz Allen staff for this project, operators provided information on the total 

expenditures incurred for services rendered as well as the names of the particular vendors and service 

companies regularly utilized in 2007. Booz Allen interviewed some of the larger service companies to 

obtain an understanding of what and where these operator expenditures and vendor revenue were 

allocated. Since the expenditures by operators are revenues for the service companies, the interviews 

with service companies targeted both the allocation of expenses among labor, materials, and 

administrative, and where the revenues were allocated (within Wyoming and out of Wyoming). For 

example, many of the materials for completing a well come from out of the state; understanding what 

percentage of those materials come from local sources and what percent are paid to downstream 

materials suppliers outside of Wyoming can have important implications for the model results. 

The service company information collection was focused on two general issues: whether the service was 

primarily labor- or materials-based; and the location of the company, labor pool or source of material 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 16

(e.g., within or out-of-state). Once these service company allocations were determined, they were 

averaged to estimate the “within state” and “out-of-state” percentages for the related contracted vendor 

expenditures. 

Vendors were targeted that provided services and materials that account for the highest percentage of 

total costs incurred by operators. Examples of these services are: 

• Main drilling contract 

• Well completion stimulation and cementing 

• Well head equipment, tubing and casing 

• Facilities expenditures. 

The interviews with service companies were focused on the following categories and their related portion 

of total costs: 

• Labor 

• Materials, supplies, and equipment 

• Overhead and administrative costs 

• Margin. 

For each of the above categories, information was obtained on the percentage of allocations that were 

incurred within and outside Wyoming. This process allowed us to obtain a general breakdown of the 

operator’s expenditure (and corresponding service company allocation) within the state and out-of-state. 

The following example demonstrates how the service company allocations were estimated. This example 

will also explain how the information is utilized from service company interviews and applied to operator 

expenditures for the related services in the database. Exhibit 5.2 illustrates an example summary of data 

from a service company collected during an interview. This is an example drilling company with a local 

and regional office in Wyoming and corporate headquarters in Texas. This company provides a turnkey, 

main drilling contract service to the oil and gas operators in a given basin of operation. The percent of 

total allocation is applied to the in-state and out-of-state location breakdown and aggregated to determine 

the total percentage of the company’s revenues that stay within Wyoming (67%) and those that move 

outside the state (33%). 

Exhibit 5.2. Example Drilling Company Location Allocation 

X Drilling Company – Main Drill Contract 

Local and Regional Office in WY / Corporate HQ in TX 

 Location Breakdown 

(Percent of revenue amount for each 

category) 

Category 

Percent of Total 

Allocation 

(of total revenue 

received) In-State Out-of-State 

Labor 31.0 94 6 

Materials/Supplies 42.0 70 30 

Overhead/Admin 2.5 100 0 

Margin 24.5 25 75 

Total Cost Breakdown 

(Percent of total revenue received) 67.1 % 32.9% 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 17

Booz Allen received the labor, materials, and overhead/administrative categories and their corresponding 

allocations during interviews with service companies. Through interviews with service companies, profit 

was assumed to move to the location of the corporate headquarters, although some service companies 

do report that a small percentage did stay at the regional office. This was consistent with idea that 

partners and managers may receive a share of profits and the company could pay out bonuses to 

employees. 

After collecting data from service company interviews, the next step was to determine the allocation 

profile for other companies in the basin providing similar services. Three location profiles were applied for 

each service company allocation: 

• Small In-state Field Office; Regional & Corporate Headquarters out of Wyoming 

• Large In-state Field Offices (may or may not include regional office); Corporate Headquarters out 

of Wyoming 

• Field, Regional Offices, and Corporate Headquarters in Wyoming. 

Information obtained in the interviews from similar companies was used to extrapolate for companies 

providing similar services and with similar office locations. For services on which data was not collected, 

such as smaller expense items (e.g., legal, surveying, etc.) secondary information was collected on 

whether the company was typically either more labor-based or more material-based and on the location 

of the offices. Then, data from similar service company allocations and locations for those with activities 

in multiple basins were interviewed to ascertain the differences in expenditure profiles among the basins. 

If there were significant differences, the service company location allocations were adjusted as needed, 

and additional company interviews were undertaken to accurately reflect both economic leakages and 

investments that remain within Wyoming and contribute to the local economy. 

5.2.2 Company Selection and Response Rates 

Since a majority of the drilling and completion activities in Wyoming for 2007 were focused in two basins, 

the interviews focused on the Greater Green River Basin, Pinedale and Jonah fields, and Powder River 

Basin. Over 90 percent of 2007 drilling and completion activities in the state took place in one of these 

three areas. It was determined that most of the same companies providing services in these areas were 

also providing services in the other Wyoming basins, so their location allocations were applied as 

appropriate to other basins. 

Five drilling companies provided information for the study; these companies had operations in one of the 

three areas, Powder River, and Green River, or the Pinedale and Jonah fields. Booz Allen also contacted 

an additional five drilling companies, but did not receive any data from them. When an operator reported 

using a drilling company from which we did not receive information, the company was researched via the 

internet or from information from the operator in terms of where the drilling company’s offices were 

located, and the appropriate office location and corresponding service company location allocation was 

applied. 

Four major stimulation and cementing service companies were contacted, and information was received 

from two companies. One of the companies only participated in an “informal” interview to discuss general 

operations and expenditure patterns and locations regarding their Wyoming businesses. Although this 

interview did not provide specific numbers, it did validate the numbers captured from one major company 

for the stimulation and cementing expenditure allocations. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

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We contacted six distributors of casing, tubing, flowlines, and well head equipment, and received 

information from two companies, both of whom provided products to operators in the three main 

development areas. A fluid servicing company who provides product and services throughout Wyoming 

also provided data for the study. Three earthwork and construction companies were also contacted, two 

of which provided information regarding general allocations in their businesses. 

5.3 Data Storage and Querying Approach 

Booz Allen developed a Microsoft Access database to incorporate both the operator and service company 

(vendor) data, which also provided the percentages for in-state and out-of state expenditures. This 

standard reporting process allowed the team to incorporate and maintain data integrity and easily perform 

data queries to aggregate and manipulate the data to map to the IMPLAN sectors. The database has 

expenditure categories that mirror those in AFE forms, as most operators provided these general types of 

categories. The database was developed with two electronic forms by which primary data was entered: 

an “Operator Well Information” form; and a “Cost” form. 

The Operator Well Information form was used to enter general well capital investment information for an 

operator in a particular basin (or multiple basins). Generally this information was gathered directly from 

operating companies, but occasionally secondary sources (primarily WYOGCC database) were used to 

fill in the gaps that were not known by the operator (i.e., number of wells drilled, average depths of wells 

drilled). 

The second “Cost” form provided an interface to enter and house the development expenditures. These 

cost categories were broken down for drilling, completion, facility, and recompletion expenditures. Each 

of these major categories was then further disaggregated. For example, completion comprised of a 

number of categories, including: casing/tubing, equipment, roustabouts, stimulation and cementing, other 

services, fuel, etc. The expenditures for the operators were then entered into the relevant expenditure 

category. If the service was contracted to a vendor, then the corresponding service company location 

allocation was applied to the contracted cost. If the expenditure was incurred in-house for the operator, 

then the operator provided a percentage breakdown (or general idea) of where the expenditure was paid. 

In this way, both operator and service company information was entered into the Microsoft Access 

database. 

Queries were developed within the database that aggregate the operators’ expenditures by IMPLAN 

sector, displaying both within state and out-of-state expenditures. For example, the activity of drilling was 

broken into four categories for estimating the economic contribution in the IMPLAN model: 

• Drilling Sector (#27) – includes all expenditures related directly to drilling a well (e.g., drill rig 

rental, mobilization, and anything related directly to the actual drilling of the well 

• Construction Sector (#39) – includes all necessary expenditures to prep and reclaim a well site 

location (e.g., earthwork, road and pit construction, re-vegetation) 

• Support Activities for the Oil and Gas Industry (Sector #28), which includes Engineering & 

Geology, Open Hole Logging, Drilling Water, Chemicals, etc. 

• Wholesale Trade Sector (#390) – includes equipment and goods that are purchased through a 

wholesale distributor. An example from our study is surface casing. 

Completion and recompletion activities were all assigned to either Support Activities for the Oil and Gas 

Industry (Sector #28) or to Wholesale Trade (#390) for the IMPLAN model. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

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6. Secondary Data Collection 

Throughout this study, Booz Allen collected data from secondary sources to supplement the data 

received directly from oil and gas operators and service companies. The source used most often during 

the study was 2007 data obtained from the Wyoming Oil and Gas Conservation Commission database 

including the number of wells drilled, completed, recompleted, and 2007 annual production. Booz Allen 

requested the needed fields from WYOGCC, and the customized data was provided to Booz Allen at the 

end of May, 2008. 

In conducting the economic analyses, numerous secondary sources were used in addition to the data 

received and/or derived from the WYOGCC database. Most of the additional secondary sources assisted 

Booz Allen in developing and adjusting the study area and economic parameters for IMPLAN. This 

included employment, labor earnings, oil & gas prices, ratios of wage and salary to compensation, among 

others. 

Exhibit 6.1 lists all of the secondary sources used. A description of how each secondary source was 

used in the modeling effort was given previously in Section 4.2. 

Exhibit 6.1. Secondary Source Data Used to Modify Model Parameters 

Source Data Received Data Details 

WYOGCC: Well Spud and - # Drilled and Completed by Basin & Operator 

Completion Reports 

2007 Wyoming Oil and Gas Wells Drilled, 

Completed, and Recompleted - Average & Median Depths 

WYOGCC: Production 

Data 

2007 Wyoming Oil & Gas Production - By Operator, by Basin, by type (Oil, Conventional 

Gas, and CBM determined from “gas type” field) 

Bureau of Economic 

Analysis 

Ratio of total employment to wage and 

salary employment 

- Mining support services 

- Self Employment Adjustment Ratios 

Bureau of Labor Statistics Employment and earnings estimates - Oil & Gas Extraction industry 

- Oil & Gas Drilling sector 

- Support Activities for Oil & Gas 

2002 Economic Census Output to employee ratios - Used to estimate Total Industry Output for Drilling 

and Oil and Gas Support sectors 

Mineral Management 

Service 

2007 Federal Mineral Royalty Revenues - Natural Gas Liquids output estimate 

- Federal Mineral Royalties that are paid to WY 

WY Department of 

Revenue 

Sales and Use Taxes; Severance Taxes; 

Ad Valorem Taxes; Oil and Gas Index 

Prices for 2007 

- Used for extraction tax impacts and sales and use 

tax estimates; Prices used to estimate Extraction 

Total Industry Output. 

Wyoming Office of State 

Lands and Investments 

State Mineral Royalties - Used for oil and gas extraction tax impacts 

Bureau of Economic 

Analysis, August 2007 

Survey of Current 

Business 

National ratio of wage and salary accruals 

to compensation 

- Used to adjust earnings for benefits 

- For the oil and gas extraction 

- For mining support activities (used for drilling 

sector) 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 20

7. Extrapolation Methods and Estimating the Direct Oil and Gas Impacts 

This section describes the four oil and gas activities on which this study focuses to estimate the economic 

contribution of oil and gas activities in Wyoming. These are: 

1. Drilling, completing and recompleting activities 

2. Extraction operations 

3. Mineral royalty payments to households and business for access to private minerals 

4. Extraction taxes paid to the state and counties of Wyoming. 

Other capital investments, pipeline investments, and refinery impacts have not been included in this 

analysis. 

This section will summarize the data collected and explain the approach to utilize both the primary data 

from industry and the secondary data from WYOGCC to estimate state oil and gas economic 

contributions. 

7.1 Drilling, Completion, and Recompletion Activities 

The economic contribution of drilling, completion, and recompletion activities was estimated using the 

modified IMPLAN model for Wyoming. These expenditures were inclusive of facility and surface 

equipment investments captured on a per well basis, where possible. Drilling and completion capital 

investments support many industries across Wyoming. These operator expenditures or capital 

investments become revenue or sales for the recipient industries providing these services (e.g., drilling, 

stimulating and cementing, construction, etc.). The analysis commenced with the categorization of the 

database housing the primary data -- drilling, completion, and recompletion capital investments -- into 

appropriate IMPLAN sectors, as summarized in Exhibit 7.1. 

Exhibit 7.1. IMPLAN Sectors for Direct Capital Investments for Drilling, Completion, 

and Recompletion Activities

Type of Expenditure Title of Sector IMPLAN Sector Number 

Drilling Sector 26 

Construction 39 

Support Industries for Oil and Gas Activities 27 

Drilling 

Wholesale Trade 390 

Completion Support Industries for Oil and Gas Activities 27 

Wholesale Trade 390 

Recompletion Support Industries for Oil and Gas Activities 27 

Wholesale Trade 390 

7.1.1 Drilling and Completion Investments 

Total drilling, completion, and facility investments per basin were aggregated into the relevant IMPLAN 

category with queries from the database. Information was entered on where the costs were incurred by 

both operators and service companies, which allowed an estimate from each operator of the in-state and 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 21

out-of-state costs for each IMPLAN sector category. Information obtained from service companies and 

vendors allowed appropriate percentages of state expenditures to be estimated and applied for each type 

of service or material needed for drilling, completion, and wholesale trade investments (see Section 5.2 

and Appendix E for more details). This resulted in a total estimated expenditure for each itemized cost 

that remained within Wyoming, It also identified investments that moved out of Wyoming and do not 

contribute to the Wyoming economy. 

After the primary data was mapped and aggregated to the various IMPLAN sectors, the expenditures 

needed to be estimated for the remaining drilled and completed wells in the state that were not captured 

by the data collection process. This extrapolation process was based on development by basin and the 

depth of the well drilled. 

The total numbers of wells drilled as well as the depth of the various wells were obtained from the 

WYOGCC database (see Exhibit 3.3). After comparing the drilling (spud) and completion reports for the 

state and assessing the operator data, it was determined that there were few differences between the 

number of spuds and completions except in the Pinedale and Jonah fields. Total number of wells 

spudded in the state was 3,697, and total number of completions was 3,462, a difference of 235. The 

Pinedale and Jonah fields had 662 spuds and 449 completions, which accounts for 213 of the 235 

difference.6

 Therefore, it was decided that all basins would be extrapolated for drilling and completion 

together except the Pinedale and Jonah fields, which would require both a drilling and a completion 

extrapolation. 

A few of the basins were combined for extrapolation purposes due to limited data collection in these 

areas. There were 10 wells drilled in the Overthrust basin, in which the field also reported to the Greater 

Green River basin. The depths appeared to be about the same as those reported by a company drilling 

in the western portion of the Greater Green River and so these 10 wells were included with those in the 

Greater Green River Basin extrapolation. In the Hanna and Denver-Cheyenne Basins, there were 16 

wells drilled of which we did not obtain any information from the data collection process. These wells 

were determined to have similar depth distributions to those in the Laramie Basin and so these three 

basins were extrapolated together. There was considerable operator data from all the other basins in 

Wyoming: Bighorn, Wind River, Greater Green River, Powder River, and Pinedale and Jonah Fields. 

The extrapolation process was implemented by mapping operator information about drilling and 

completing at various depths to the well depth distribution of the basin in total as reported by WYOGCC 

database. For example, in the Greater Green River Basin, 11 operators provided information on average 

costs for 12 wells drilled and completed from depths ranging from 1,500 to 13,000 feet. From assessing 

the operator cost/depths and the well depths of all wells drilled in the basin, it was determined that the 

operators costs should be mapped to the following depths: less than 3,000 feet, between 3,000 and 

9,000 feet, between 9,000 and 12,000 feet, and more than 12,000 feet. Within each of these depth 

distributions, operator costs were weighted depending on how many wells they drilled to more accurately 

represent the total basin drilling and completion costs. In this way, the individual operator costs were 

mapped to: 

 1) The number of wells drilled for each operator as a percent of drilled wells reported; and 

 2) The total basin drilled depths. 

 

6 In the Pinedale and Jonah fields, a number of wells were spudded and then suspended after setting the 

surface conductor pipe; several had to suspend completion operations because of various wildlife 

stipulations (Personal Communications with Don Likwartz, August 1, 2008). 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 22

This was done for each the drilling, support, and wholesale trade sectors. Earthwork and site 

construction expenditures for drilling were extrapolated based only on the number of wells drilled by the 

operator as a percent of the reported total wells drilled and were not based on depths of wells drilled. 

7.1.2 Recompletion Investments 

Booz Allen used both primary and secondary source information to determine capital investments for 

recompleted or restimulated wells across Wyoming. Operating companies provided data on the number 

of recompleted or reactivated wells in all basins of operation and the average cost of these investments 

per basin. 

Booz Allen also collected secondary source information from WYOGCC on all recompletions and 

workovers across Wyoming in 2007. This WYOGCC data was accessed by selecting “recompletion” in 

the "type of completion" field. This recompletion field was only added to WYOGCC data collection 

website last year so it may be the case that some operators are not using this new selection approach to 

report their recompletion activity. Booz Allen therefore used not only the recompletion field, but also 

restimulations, workovers, and other reactivations as provided by the WYOGCC’s database. These 

included the following categories: 

• Types of completion, which include "recompletion", "conversion", and "convert to production"

• "Reactivation" type of completion with a spud (drill) date prior to 2006 

• "New Well" type of completion, with a spud (drill) date of prior to 2006 

• "Work Over" type of completion, but with a spud (drill) date of prior to 2006. 

The primary and secondary data was compared. If there were more or fewer recompletions reported by 

operators than what were reported in the WYOGCC database, the number was adjusted based on the 

difference between the figures. This adjustment process was only required in Bighorn and Wind River 

Basins. It was determined that there were 304 recompletion, workovers, and reactivations across 

Wyoming in 2007. Exhibit 7.2 summarizes the recompletions by basin in Wyoming in 2007. 

The average costs then needed to be extrapolated to the remaining recompletions across Wyoming. This 

was based on the reported number of recompletions by an operator in a basin as a percentage of the 

total basin recompletion sample, and then multiplied by the total number of recompletions that occurred 

within the basin. The total amount was then allocated between support sector expenditures (75%) and 

equipment and materials (25%). The within state percentages were adjusted based on the service 

companies that the operators were using for completion activities. 

 

Exhibit 7.2. 2007 Well Recompletions, Workovers, and Reactivations by Basin

Basin Number 

Greater Green River and Overthrust 24 

Pinedale and Jonah Fields 3 

Wind River 13 

Bighorn 104 

Powder River 160 

Laramie, Hanna, and Denver-Cheyenne NA 

Total 304 

 Source: WYOGCC 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

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There were 304 recompletions across the state with an average cost of $174,616, 47 percent of which 

remains within Wyoming. Most of the recompletion activity occurred in Bighorn and Powder River Basin 

(264 recompletions). 

7.2 Extraction Operations 

The economic contribution of oil and gas extraction (also called production) in Wyoming was analyzed 

directly through one of the IMPLAN sectors (Sector 19) because it is a self-contained sector which 

includes all economic activity associated with oil and gas extraction. This differs from the approach used 

for drilling, completion, and recompletion since these activities involve a number of different sectors in the 

IMPLAN model, as described in the previous section. The oil and gas industry also differs in that 

extraction represents annual operating expenses and revenues while drilling, completion, and 

recompletion are more of a one-time capital investment. 

The economic contribution of production was based on total industry revenues or sales for the oil and gas 

extraction sector, which was derived from WYOGCC data on 2007 quantities of oil and gas production in 

Wyoming and Wyoming indexed 2007 oil and gas prices (see Exhibit 7.3). The contribution of the 

extraction sector was assumed to be set at 100 percent local, as all of the production is occurring in 

Wyoming. An estimate of the production costs is used to allocate total industry sales between the valueadded component and intermediate payments for the extraction sector within the IMPLAN model as 

discussed in Section 4.2.4. 

Exhibit 7.3. Extraction Volumes, Prices, and Revenues

Product 2007 

Production 

(mcfe)1 

(A) 

Price3

(2007$) 

Price4

(2006$) 

(B) 

Oil and Gas 

Production 

Revenues 

(2006$) 

(A x B) 

Oil 324,310,0262 $9.81 $9.39 $3,043,813,207 

Gas 1,817,181,173 $4.65 $4.45 $8,081,505,125 

CBM 436,306,044 $4.65 $4.45 $1,940,373,136 

Total 2,577,797,243 $13,065,691,468 

 1Source: WYOGCC; 2Oil production was 54,051,671 barrels, which was multiplied by 6 to estimate 

 the 324,310,026 mcfe of oil; 3

 Source: WY Department of Revenue; 4 Deflated with IMPLAN’s WY 

 inflation rates for the extraction sector for 2007/2006 of 1.046. 

 

Total industry output (i.e., oil and gas extraction revenues) for the extraction industry was reduced since 

model modifications to the Indirect Business Taxes within the Value Added components were zeroed out. 

This was required as extraction taxes were collected and run exogenously through the model. 

Additionally, private mineral royalty payments were also removed from the extraction revenues since they 

are paid with the extraction revenues; without removing these payments, they would be double counted. 

Exhibit 7.4 shows the reductions and the resulting extraction revenue direct impact. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 24

Exhibit 7.4. Direct Impact -- Extraction Operations*

Extraction 

Revenues 

(A) 

Private Mineral 

Royalty 

Payments 

(B) 

Extraction 

Taxes 

(C) 

Direct Impact 

for Extraction 

(A-B-C) 

2007 Dollars $13,661,277,948 $863,412,137 $1,996,024,906 $10,801,840,905 

2006 Dollars $13,065,691,468 $825,770,227 $1,909,004,830 $10,330,916,411 

 *See Section 7.3 and Exhibit 7.5 for methodology to estimate private mineral royalty payments and extraction taxes. 

 IMPLAN’s inflation factor of 1.045584 was utilized. 

 

7.3 Private Mineral Royalties and Payments 

As part of the data collection effort, operators across Wyoming were asked about their expenditures and 

payments to gain access to both minerals and surface lands from households and companies. 

Information was obtained on a number of expenditures, including: 

• Royalties to private mineral owners 

• Override royalties (e.g., finder’s fees) 

• Payments for leases and bonuses 

• Payments for surface land damages. 

Additionally, information was collected from operators about the location of the these recipients of mineral 

and override royalties, surface land damages and lease and bonus payments as well as the percentage 

of wells or percentage of operator production that comprised private mineral ownership (i.e., fee lands). 

For both private mineral and override royalties, operators were asked about the percentage of operating 

wells or production in the basin receiving these private royalties, and the average royalty rate typically 

applied to the value of production. Average 2007 prices were utilized from the WY Department of 

Revenue database to determine the value of production. Company and basin-wide production was also 

determined from the WYOGCC database. For the purposes of the extrapolation, barrels of oil were 

converted into mcfe by multiplying by a factor of six. For each operator, a royalty value per mcfe was 

determined for privately-owned mineral production, weighted by the operator production, and multiplied 

by total basin production to determine a total payment for mineral and override royalties. Operators also 

provided general information about the locations of the recipients of these payments. These percentages 

(both within and out of state) were weighted by operator production by basin and applied to the mineral 

and override royalties to obtain in-state and out-of-state payments by basin. These basin figures were 

aggregated to determine the state totals. 

Total lease payments and bonuses for private mineral production were collected from operators, weighted 

by the operator production as a portion of the sample’s production, and applied to total basin production. 

All basins were aggregated to estimate all payments for the state. The within state percentages from the 

override and mineral royalty payments for the state were applied to the lease and bonus payments. 

Information was also collected on surface land damages, including the percentage of wells drilled in 2007 

where this payment applied, an average payment per well drilled, and the location of the recipients of 

these payments. These payments were calculated for the number of wells drilled, weighted based on 

number of wells drilled by operator, and applied to the total number of wells drilled in the basin. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 25

Operators also provided information on on-going damage payments to surface owners for producing 

wells. This information was also extrapolated based on the basin, number of producing wells as a 

percentage of the total sample, the percentage of wells this applies to, and then was applied to total 

producing wells in the basin. All basins were aggregated to estimate total surface land damage 

payments for wells drilled and annual damage payments for producing wells for the state. 

Once the in-basin totals were calculated for surface land damages, royalties and overrides, and lease 

payments and bonuses, they were aggregated to yield total within state payments to Wyoming 

households and companies for access to private minerals. To ascertain how much of this payment was 

spent within the state, it was necessary to determine the disposable income or amount spent (versus 

being saved or paid to the government) for each basin and for the state overall. 

IMPLAN provides an Aggregate Social Accounting Matrix (SAM) report that identifies a matrix delineating 

the relationships among industries in total, commodities, value added components, households, federal 

and state institutions, capital, and foreign and domestic trade. The percentage of household expenditures 

spent on commodities, foreign, and domestic trade provides an estimate of the marginal propensity to 

spend. This percentage (82%) was applied to the Wyoming mineral and override royalties, damage and 

lease payments to provide an estimate of spending in the Wyoming economy. 

The private mineral royalties are paid to both households and businesses. To simplify this approach, 

Booz Allen assumed that all of these payments were made to households. Therefore, we needed to 

determine the correct household sector to which these payments apply. IMPLAN estimates that the 

average income per household in Wyoming in 2006 was approximately $100,283. Since this estimate 

was fairly close to two household sectors ($75,000 to $100,000 and $100,000 to $150,000) and it seemed 

relatively high, the $75,000 to $100,000 household sector was determined to be a more reasonable 

household income range to utilize. Therefore, this sector was imported into IMPLAN and the marginal 

propensity to spend (i.e., 82%) was determined from the IMPLAN model. 

7.4 Extraction Taxes 

Extraction taxes are also an important contributor to Wyoming’s state and local governments and its 

economy. These production taxes contribute to Wyoming’s economy as the governments spend this 

money in the state’s economy. Wyoming’s Department of Revenue collects severance, ad valorem, and 

sales taxes; these 2007 receipts are based on 2006 production levels. 

Minerals Management Service collects royalties from production on Federal minerals. Half of all federal 

mineral royalties return to the state of Wyoming (U.S. Minerals Management Service, 

http://www.mrm.mms.gov/Stats/pdfdocs/formulas.pdf). Total oil and gas Federal royalties were over $1 

billion in 2007, of which half were returned to the state of Wyoming. Royalties paid to Wyoming for 

production from state minerals were obtained from the Wyoming Office of State Lands and Investments 

(Personal Communication, Billie Hunter 6/18/2008); state royalties from oil and gas products in 2007 are 

approximately $90 million. Sales and use taxes paid by the Extraction Sector (Sector 2111) are collected 

by the Wyoming Department of Revenue and are estimated to be $11 million. 

Exhibit 7.5 summarizes 2007 estimates of ad valorem, severance, and sales taxes, as well as state and 

federal mineral royalty payments to the state and counties of Wyoming. These extraction taxes were run 

through the State and Local Government Sector within the Wyoming IMPLAN model to determine the 

total economic contribution of these taxes to the state of Wyoming. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 26

Exhibit 7.5. Extraction Taxes Paid by Wyoming Oil and Gas Industry (2007$) 

Type of Tax Tax Receipts Source 

Severance Taxes $666,397,115 WY Department of Revenue Annual Report, 2007 

Ad Valorem Taxes $712,637,118 WY Department of Revenue Annual Report, 2007 

Federal Royalties $515,500,6462 Minerals Management Service 

State Royalties $90,031,996 

Wyoming Department of State Lands and 

Investments 

Sales Tax1 $11,458,031 WY Department of Revenue 

Total $1,996,024,906 

1This sales tax figures is only for the extraction industry, and not for development activities, as only extraction or production-based 

taxes are run through the Extraction Sector in the IMPLAN model to determine economic output, employment and labor earnings 

impacts. Sales and use taxes are also collected from the Support Sectors (i.e., Drilling and Support); see Section 10 for the Sales 

and Use Tax Analysis and Results. 2

 This estimate is from the Minerals Management Service (MMS), and it includes 

Federal Mineral Royalties from carbon dioxide, coalbed methane, condensate, gas plant products, oil, processed and 

unprocessed gas, and royalties associated with rents, bonuses, and other revenues. Fifty percent of royalties return to 

Wyoming and 50 percent are paid to the federal treasury (U.S. Minerals Management Services, 

http://www.mrm.mms.gov/Stats/pdfdocs/formulas.pdf). Native American royalties are not included in this estimate, and 

therefore the receipts paid to reservations are not captured in this analysis.

8. Economic Contribution 

Through the approach outlined in the previous section, the direct economic impacts for drilling, 

completion, and recompletion, private mineral royalty and lease payments, oil and gas extraction, and 

extraction taxes were calculated and run through the modified IMPLAN model. Other capital investments, 

such as for pipelines or other major infrastructure, or refining sector impacts were not included in this 

analysis.7

 The new Trade Flows RPCs are utilized in the indirect and induced impacts that occur from this 

initial investment or monetary injection into the state economy. The results therefore yield direct, indirect, 

and induced economic contribution of these activities. 

This section will initially describe how the direct economic contribution is run through the IMPLAN models. 

This is followed by the direct economic contribution estimates, and the results of the economic 

contribution analysis from IMPLAN. 

 

7

 Although pipeline investment was not included, flowline costs per well were included. This includes the 

costs of purchasing and installing flowlines from the well head to the pipeline. Other facility and surface 

production equipment was also included in these estimates. Pipeline investment for five projects by the 

Overthrust Pipeline Company, Overland Pass Pipeline, Fort Union Gas Gathering Company, and the 

Wyoming Interstate Company were estimated to be $540 million in 2007 (Personal Communication with 

Brian Jeffries, Executive Director of Wyoming Pipeline Authority, 8/10/2008). 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 27

8.1 Analyzing Direct Impacts through IMPLAN Model Sectors 

The extrapolated 2007 Wyoming capital investments were deflated to 2006 dollars using IMPLAN 

deflators to be consistent with the IMPLAN software, and then were run as direct impacts through the 

state model. The results of the IMPLAN model were then reinflated to 2007 dollars utilizing the same 

industry inflators for IMPLAN. 

The activities of oil and gas drilling and completion require a considerable amount of material and 

equipment purchases from wholesale trade industries in Wyoming. As indicated in the service company 

section, in general, these industries acquire considerable equipment and materials from outside of 

Wyoming. These ‘retail’ sectors are treated differently in IMPLAN and typically have to be ‘margined’ to 

determine the warehouse mark-up of the merchandise. Through the assessment of the vendors 

supplying this equipment and materials in the service company database, Booz Allen has utilized primary 

data to estimate appropriate margins for these wholesale trade industries. In this way, the margins as a 

percentage of total expenditures have been determined through the database process, and it has not 

been necessary to utilize IMPLAN’s margins. 

For the mineral royalties and lease payments, it was necessary to import the correct institutional sector. 

Although these payments are made to both businesses and households, it was assumed that the 

payments were all made to households. This likely provides are more conservative estimate of the 

downstream impacts to the state. As described in Section 7.3, it was determined that the appropriate 

household income sector was $75,000 to $100,000. Therefore, this household sector was imported into 

IMPLAN to run the analysis. These direct impacts were deflated to 2006 dollars to be consistent with the 

IMPLAN model; the IMPLAN results were then reinflated with IMPLAN inflation factors to report the 

impacts in 2007 dollars. Extraction taxes were run through the State and Local Government Institution 

sector in IMPLAN, sector 12001. 

The economic contribution of production is based on total industry sales for the oil and gas extraction 

sector, less the Extraction Taxes and Private Mineral Royalty Payments. To be consistent with the 

IMPLAN model, the 2007 oil and gas prices were converted to 2006 dollars. An estimate of the 

production costs ($1.10/Mcfe) was used to allocate total industry sales between the value-added 

component and intermediate payments for the extraction sector. The derivation and explanation of this 

production cost was previously explained in Section 4.2.4. For the extraction industry, most of the oil and 

gas being produced is exported outside the state of Wyoming for processing; this allows the modeling of 

total industry sales or revenues as the direct effect. Therefore, the RPC for the extraction sector within 

Wyoming was set to zero. 

8.2 Drilling, Completion, Recompletion Activities 

All basin extrapolated expenditures were aggregated across the relevant drilling, completion, and 

recompletion IMPLAN sectors to determine overall in-state capital investment for drilling, completion, 

facilities expenditures, and recompletion. Exhibit 8.1 summarizes these development investments. 

Overall, 45 percent of these expenditures remained within the state, while over half of these investments 

move outside the state. This was primarily due to a large amount of materials and equipment that come 

from out-of-state, including cement, casing, tubing and other materials. States where these materials 

were purchased include California, Oklahoma, and Texas. Overall, operators paid approximately $5.4 

billion in 2007 in capital investments for drilling, completing, facility requirements, and recompletion 

investments. On average, it cost $1.45 million to drill and complete a well in Wyoming in 2007. However, 

across the basin, these costs varied significantly (see Exhibit 8.1). 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

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Exhibit 8.1. Drilling, Completion, Facility, and Recompletion Investments for Wyoming (2007$) 

Exhibit 8.2 summarizes the drilling and completion expenditures by basin in Wyoming (these do not 

include recompletion investments). Although there were three times the number of wells drilled in Powder 

River Basin than in Greater Green River or in Pinedale and Jonah fields, the total investments were 

almost two to three times higher in Greater Green River and Pinedale and Jonah area due to the 

investments needed per well. In Powder River, there were generally three different types of wells being 

drilled, 95 percent of which were CBM wells. The CBM wells are shallower, generally less than 3,000 

feet, and on average, cost $319,000 per well. The remaining 5 percent of the wells are either oil wells or 

Enhanced Oil Recovery wells which are typically much deeper and more costly to drill. However, overall, 

the Powder River Basin comprises wells that cost on average $400,000 to drill and complete. In 

comparison, the Greater Green River and Pinedale and Jonah fields are requiring significantly more 

investment per well drilled and completed, $2.3 million and $3.9 million, respectively. 

 

Type of Investment 

Drilling, Completion, and 

Facilities Costs 

(Per Well) 

3697 Wells D&C

Recompletions 

(Per Recompletion) 

304 Recompletions

Total Drilling, 

Completion, and 

Recompletion 

Investments 

Investments that Stay within the 

State $653,212 $81,713 $2,439,767,029 

Investments that Move Outside the 

State $797,169 $90,903 $2,974,768,404 

Total Investments $1,450,381 $172,616 $5,414,535,433 

Percent that Stays within the State 

(State Purchase Coefficient) 45% 47% 45% 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 29

Exhibit 8.2. Drilling, Completion, and Facility Investments for Wyoming (2007$) 

Greater Green 

River and 

Overthrust 

(less Pinedale 

and Jonah) 

Pinedale and 

Jonah Fields* Bighorn Wind River Powder River 

Laramie, 

DenverCheyenne, 

Hanna Total 

Total 

Investments $1,496,975,056 $2,607,664,488 $72,654,549 $277,504,668 $876,527,426 $30,734,060 $5,362,060,246 

Investments 

that Remain 

within WY $696,820,537 $1,188,365,632 $35,800,476 $116,540,850 $361,806,402 $15,592,479 $2,414,926,375 

State 

Purchase 

Coefficient 

(SPC) 47% 46% 49% 42% 41% 51% 45% 

Number of 

Wells 

Drilled & 

Completed 654 

662 Drilled 

449 Completed 79 102 2,180 20 3,697 

Total 

Investments 

per Well $2,288,953 $3,939,070 $919,678 $2,720,634 $402,077 $1,536,703 $1,450,381 

WY 

Investments 

per Well $1,065,475 $1,795,114 $453,171 $1,142,557 $165,966 $779,624 $653,212 

 * Pinedale Anticline and Jonah field expenditures were extrapolated separately for drilling and completion. 

The State Purchase Coefficients (SPC) in each of the basins ranged from 41 percent to 51 percent, with 

the state average for all basins being 45 percent (i.e., 45 percent of these development expenditures 

remain within Wyoming). As mentioned previously, the out-of-state wholesale trade purchases primarily 

lower the SPC. There were both Wyoming and non-Wyoming drilling companies; expenditures that 

reduced the SPC for some of the drilling companies included non-local labor pools, capital improvements, 

major rig maintenance, and non-Wyoming companies to where administration, overhead and profit costs 

are generally allocated. 

There were some notable SPC differences among the basins. Greater Green River Basin and Pinedale 

and Jonah fields had SPCs that were very close to the state SPC, while Wind River and Powder River 

Basins were lower with 42 percent and 41 percent respectively. Greater Green River and Pinedale and 

Jonah’s percentages represent the average state numbers since 76 percent of the state’s drilling and 

completion expenditures were in these two basins. In the Wind River Basin, the SPC was slightly lower 

due to the use of non-Wyoming-based drilling companies. 

The wholesale trade expenses brought the SPC for the Powder River Basin lower than the state average. 

This was due to the fact that the Powder River wells cost much less to drill, although the amount of 

wholesale trade investments (casing, tubing, equipment) increases proportionally to overall costs, which 

decreased the SPC numbers in this basin compared to other basins. 

Bighorn Basin’s SPC for development investments was higher than the state average, which was due in 

part to the more extensive use of rental equipment in this area. Rental equipment typically provides more 

local economic value as there is more overhead and other expenditures (i.e., trucking, fuel, storage 

yard/facilities, etc.) compared to wholesale trade purchases. The relatively higher SPC for Laramie, 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 30

Denver-Cheyenne, and Hanna Basins can be attributed to a very small sample size of operators that 

provided data and its influence on the 20 wells drilled and completed. 

The within-state capital investments were run through the IMPLAN model as direct effects ($2.4 billion). 

According to this analysis, the capital investments in Wyoming support almost 27,000 jobs in Wyoming., 

16,000 of which are in the drilling, oil and gas support industries, wholesale trade or construction. This 

development activity has an employment multiplier of 1.67, indicating that for each job created in drilling, 

support activities, wholesale trade, and construction, there is an additional 0.67 jobs created in 

downstream or supporting businesses. Exhibit 8.3 summarizes the economic contribution of these 

capital investments for the state. A total of $3.5 billion in sales or revenues was generated from this 

investment activity in 2007, supporting approximately 26,700 jobs and $1.5 billion in labor earnings. 

Exhibit 8.3. Drilling, Completion, Facility and Recompletion Economic Contribution for Wyoming 

(2007$) 

Type of Impact Revenue Employment Labor Earnings Earnings per 

Worker 

Direct $2,439,767,029 15,975 $1,104,682,651 $69,151 

Indirect $269,838,803 1,735 $69,005,578 $39,773 

Induced $803,446,273 8,991 $284,405,440 $31,632 

Total $3,513,052,106 26,701 $1,458,093,669 $54,608 

Multiplier 1.44 1.67 1.32 

8.3 Extraction Operations 

In Wyoming, total industry revenues were used to estimate the direct economic contribution of the 

extraction industry. As described in Section 7.2, the direct impact was determined to be $10.8 million in 

2007 dollars and $10.3 million in 2006 dollars. This direct impact was run through the extraction sector in 

IMPLAN to estimate the total economic contribution of extraction in Wyoming, which is summarized in 

Exhibit 8.4. 

Exhibit 8.4. 2007 Extraction Economic Contribution for Wyoming (2007$) 

Type of Impact Revenue Employment Labor Earnings Earnings per 

Worker 

Direct $10,801,840,905 4,115 $420,397,957 $102,162 

Indirect $772,763,456 3,667 $192,952,907 $52,619 

Induced $388,957,284 3,983 $123,462,343 $30,997 

Total $11,963,561,646 11,765 $736,813,207 $62,628 

Multiplier 1.11 2.86 1.75 

A total of $10.8 billion in total industry revenues was generated by oil and gas extraction operations and 

indirect and induced economic activity in Wyoming in 2007. This industry has a high employment 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 31

multiplier of 2.86. With each extraction industry job created, there are an additional 1.86 jobs created in 

supporting industries and through increased household spending. Extraction industry employment was 

4,115 in 2007, but it supported an additional 7,650 jobs in the state. Average earnings for the extraction 

industry ($102,162) are significantly higher than those of other downstream industries (indirect jobs -- 

$52,619 and induced jobs -- $30,997). 

As indicated in Section 7.2, direct extraction impacts are determined by the average indexed price of oil 

and gas in Wyoming multiplied by the volume of production, less Extraction Taxes and Private Mineral 

Royalty Payments. As such they are highly sensitive to the price of oil and gas. In 2007, gas prices were 

lower than they have been in the past few years due to pipeline constraints (Personal communication, 

Don Likwartz, WOGCC Supervisor, 7/2/08). For example, in 2006 the gas price was $5.85 per mcf, while 

in 2007 the price of gas was estimated to be $4.65 per mcf and the price of oil was $58.88 per barrel. 

The first three months of 2008 indicate that prices may be considerably higher than those in 2007 

(Personal communication, Don Likwartz, WYOGCC supervisor, 7/2/08) as more pipeline capacity comes 

on line. Prices for the first three months averaged $7.38 per mcf for gas and $85.08 per barrel for oil. 

Static Input-Output models such as IMPLAN can not assess the impacts of price changes on employment 

and earnings estimates. Price changes would primarily affect tax revenue receipts and profits to 

companies. With higher prices, the extraction industry would likely employ more people in a number of 

areas including: exploratory and geological engineering, seismic services, land departments, and other 

areas. However, these jobs and earnings increases would occur over time as operating companies invest 

additional funds and therefore cannot be estimated in a static model. (See Section 8.5 for a assessment 

of 2008 price changes on tax receipts). 

8.4 Private Mineral Royalties and Payments 

Overall, there is a considerable amount of income paid to homeowners and interest owners to access 

private minerals and surface lands (see Exhibit 8.5). This is in the form of private mineral royalties, 

surface land damages, lease payments and bonuses, and override royalties. Twenty-six percent of these 

payments stay within Wyoming, in general. Overall, the marginal propensity to spend for the state is 

estimated to be 82 percent (IMPLAN, 2006), indicating that 82 percent of these payments are spent on 

consumer items. Therefore, total payments estimated to be spent in the Wyoming economy are $183.8 

million. 

Exhibit 8.5. Wyoming Private Mineral Royalties and Lease Payments (2007$) 

As a result of private mineral royalty payments, households were estimated to spend $183.8 million in the 

Wyoming economy, which generated $45.3 million in additional economic activity for a total of $231.8 

million in economic activity as summarized in Exhibit 8.6. Labor earnings were approximately $42 million 

in total, while earnings per worker on average were $29,300 per year. Overall these private mineral and 

Type of Impact 

Total Mineral Royalties and 

Lease Payments 

Within State Payments $224,172,370 

Out of State Payments $639,239,767 

Total Payments $863,412,137 

State Purchase Coefficient (SPC) 26% 

Percent of Payment Assumed to be Spent in 

the Wyoming Economy $183,821,343 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 32

lease payments support 1,450 people in the state. These impacts are all considered to be induced 

economic contribution. 

Exhibit 8.6. Economic Contribution of Private Mineral Royalties and 

Lease Payments for Wyoming (2007$) 

Economic Activity Employment Labor Earnings 

Earnings Per 

Worker Per Year 

Total Economic Impact $231,827,774 1,447 $42,461,473 $29,344 

8.5 Extraction Taxes 

Extraction taxes receipts were collected from a number of secondary sources (see Exhibit 7.5) for a total 

of $2.0 billion paid to state and local governments in 2007. The extraction taxes create additional 

economic revenue for the state as a result of payrolls, spending, etc. which includes the direct impact of 

almost $2.0 billion in extraction tax payments and $913 million in indirect and induced impacts of these 

payments rolling over in the economy, benefiting households and indirect industries. Total employment 

from extraction taxes in 2007 was approximately 33,300 and labor earnings from these impacts are 

estimated to be $1.7 billion. Exhibit 8.7 summarizes this induced economic contribution. 

Exhibit 8.7. Economic Contribution of Extraction Taxes in Wyoming (2007$) 

Economic Activity Employment Labor Earnings 

Earnings Per 

Worker Per Year 

Total Economic Impact $2,908,623,519 33,316 $1,677,264,966 $50,344 

Oil and gas prices can have considerable repercussions on the fiscal receipts paid to state and local 

governments by the oil and gas industry. The Consensus Revenue Estimate Group (CREG) Forecast 

and Legislative Services Office predicted the change in revenue to the state with a unit change in price of 

both oil and gas. The revenue sources include severance taxes, federal mineral royalties, and the school 

foundation portion of ad valorem taxes. Exhibit 8.8 shows the tax receipt increases or decreases 

associated with a unit price change for oil and gas. 

Exhibit 8.8. State and Local Tax Receipts with a Unit Price Change (2007$) 

Type of Product Price Change 

State and Local 

Tax Receipt Increase or 

Decrease 

Oil $1.00 per barrel $6 million 

Gas $0.10 per mcf $25 million 

Source: CREG Forecast and Legislative Services Office, January 2008. 

According to the first three-month oil and gas prices for 2008 discussed in Section 8.3, this could equate 

to some significant revenue increases to the state associated with extraction tax receipts paid by the oil 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 33

and gas industry. Exhibit 8.9 shows the estimated increases in state and local government revenues 

associated with these price increases. These oil and gas price changes from 2007 to 2008 would yield 

an estimated additional $831 million in extraction taxes paid by the oil and gas industry in Wyoming. 

Exhibit 8.9. State and Local Tax Receipts with a Unit Price Change (2007$) 

Type of Product 

State and Local 

Tax Receipts 

with Unit Price 

Change1 

2007 Price 2008 Price2

Price 

Change 

2007-2008 

State and Local 

Government 

Revenue 

Increase 

Oil 

$6 million 

with Increase of 

$1/Bbl 

$58.88 $85.08 $26.20 $156 million 

Gas 

$25 million 

with Increase of 

$0.10/mcf 

$4.65 $7.38 $2.73 $675 million 

Total $831 million 

 1CREG Forecast and Legislative Services Office, January 2008. 2 Estimate of 2008 prices from first three months of 

 2008, CREG. 

8.6 Total Economic Contribution of All Oil and Gas Activities 

Aggregating over all of the economic impacts from drilling, completion, and recompletion capital 

investments, extraction revenues, private mineral royalties and lease payments, and extraction taxes, 

there is estimated to be considerable economic contribution from these combined activities. To avoid 

double counting these impacts, private mineral royalty payments ($863 million) and extraction taxes were 

removed from the extraction revenues, since these payments to households, industries and state and 

local government would be embedded in these extraction revenues. This allows an aggregation across 

economic impacts to determine total economic contribution of the industry to the state. Since private 

mineral royalty payments were not endogenous to the model it was not necessary to zero out the indirect 

business taxes for this sector. The overall economic contribution of oil and gas and the associated 

downstream activities in Wyoming in 2007 has been estimated and is summarized in Exhibit 8.10. This 

Exhibit summarizes total economic contribution, encompassing direct, indirect and induced impacts of all 

oil and gas activities within the state. 

Overall, over 73,000 people are estimated to be employed either directly or through indirect and induced 

downstream activities associated with the oil and gas industry. Direct industries include extraction, 

drilling, support industries for oil and gas, wholesale trade, and construction. Indirect industries are 

additional businesses that support these direct oil and gas industries. Induced impacts are those 

associated with direct and indirect employees spending their money in economy. The majority of the 

employment impacts is associated with drilling and completion (36%) and tax payments to state and local 

governments (45%). As described in the following section, oil and gas extraction taxes are vital source of 

revenue for state and local governments, significantly contributing to government employment, labor 

earnings and economic activity. 

Extraction operations account for the most amount of economic activity, but in terms of employment, are 

not as important as extraction taxes and drilling and completion activities. Total indirect and induced 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 34

impacts include the tax payments to state and local governments and the royalty and lease payments to 

private households and companies, creating higher multipliers due to this considerable downstream 

economic activity. The employment multiplier is noteworthy, estimated at 3.65, where with each job 

directly created by the oil and gas industry, there are an additional 2.65 jobs generated. Direct 

employment is 20,090, which creates an additional 53,139 jobs (see Exhibit 8.11), for a total of 73,229 

jobs. Similarly, the earnings multiplier is estimated to be 2.57, which indicates that with each dollar of 

labor income paid to oil and gas workers, an additional $1.57 in labor earnings is generated in the state’s 

economy. 

Exhibit 8.10. Total Economic Contribution for Oil and Gas Activities in Wyoming (2007$) 

Type of 

Impact 

Drilling, 

Completion, and 

Recompletion 

Extraction 

Mineral 

Royalty & 

Lease 

Payments1

Extraction 

Taxes2

Total Economic 

Contribution 

Total 

Economic 

Output $3,513,052,106 $11,963,561,646 $231,827,774 $2,908,623,519 $18,617,065,044 

Employment3 26,701 11,765 1,447 33,316 73,229 

Labor 

Earnings $1,458,093,669 $736,813,207 $42,461,473 $1,677,264,966 $3,914,633,314 

Earnings per 

Worker $54,608 $62,628 $29,344 $50,344 $53,457 

Employment 

Multiplier 

 

1.67 2.86 NA NA 

 

3.65 

Earnings 

Multiplier 

 

1.32 

 

1.75 NA NA 

 

2.57 

*

 These figures encompass direct, indirect, and induced economic impacts. 1 These payments to households and companies are treated as 

all secondary induced impacts; that is, these payments are considered income of which a portion is spent in the economy. 2 These tax 

payments to state and local governments are treated as all secondary indirect impacts; that is, these payments are considered downstream 

beneficiaries of oil and gas activities. 

Oil and gas activities contribute to the economic well-being of many other industries within the state of 

Wyoming. Exhibit 8.11 and Exhibit 8.13 summarize the industries that benefit through employment and 

labor earnings from all the oil and gas activities within the state in 2007. Only 27 percent of the 

employment is estimated to be direct employment associated with oil and gas, wholesale trade, and 

construction jobs, and the remaining 73 percent is estimated to be indirect and induced employment. 

Our estimates suggest that almost 34 percent or 25,149 of the employment associated with these 

activities is government employment, including federal, state and local government jobs. According to the 

Wyoming IMPLAN model (estimates derived from U.S. Bureau of Economic Analysis), total state 

government employment in 2006 was 66,204 (See Appendix C, Sectors 495-506). Oil and gas activities 

therefore comprise approximately 38 percent of government employment in the state. 

Approximately 25 percent of the employment is specific to the mining sector, which encompasses oil and 

gas industries, followed by 7 percent in retail trade, 5 percent in health care and social services, and 5 

percent in accommodations and food services. Of the 18,001 mining sector jobs, all but 20 jobs or 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 35

17,982 are specific to oil and gas industry. These oil and gas industry jobs are summarized in Exhibit 

8.12. 

 

Exhibit 8.11. 2007 Employment Impacts by Industry Associated with All Oil and Gas Activities 

IMPLAN Sector 

Direct 

Employment 

Downstream 

Employment (i.e., 

Induced and Indirect) 

Total 

Employment 

Percent of Total Oil 

and Gas 

Employment 

Public Administration/Government 0 25,149 25,149 34.3% 

Mining (includes Oil and Gas) 17,146 855 18,001 24.6% 

Retail Trade 0 4,893 4,893 6.7% 

Health Care & Social Assistance 0 3,801 3,801 5.2% 

Accommodations & Food Service 0 3,548 3,548 4.8% 

Other Services (except public 

administration) 1,768 887 2,654 3.6% 

Wholesale Trade 0 2,748 2,748 3.8% 

Professional & Technical Services 0 2,086 2,086 2.8% 

Administrative & Waste Services 0 1,582 1,582 2.2% 

Construction 1177 543 1,720 2.3% 

Transportation & Warehousing 0 1,430 1,430 2.0% 

Finance & Insurance 0 1,388 1,388 1.9% 

Real Estate & Rental & Leasing 0 1,218 1,218 1.7% 

Arts, Entertainment, & Recreation 0 828 828 1.1% 

Information 0 528 528 0.7% 

Manufacturing 0 409 409 0.6% 

Private Educational Services 0 375 375 0.5% 

Utilities 0 377 377 0.5% 

Management of Companies & 

Enterprises 0 313 313 0.4% 

Agriculture/Forestry/Fishing/Hunting 0 181 181 0.2% 

Totals 20,090 53,139 73,229 100.0% 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 36

Exhibit 8.12. 2007 Oil and Gas Industry Employment in Wyoming 

Sector Employment 

Extraction 4,127

Drilling Oil and Gas Wells 2,950

Support Activities for Oil and Gas 

Operations1 10,905

Total Oil and Gas Industry Employment 17,982

Total Mining and Oil and Gas 

Employment 18,001 

 1 For the purposes of this analysis, this sector includes all drilling and 

 completion activities except the main drilling contract, wholesale trade 

 purchases (for example, tangibles), and construction. 

Labor earnings generated by the oil and gas activities in 2007 follow a similar trend to the employment 

figures. An estimated thirty-nine percent of the labor earnings from this activity are directly related to the 

oil and gas activity (i.e., drilling, support industries, extraction, wholesale trade, and construction) and the 

remaining 61 percent is associated with downstream activity. 

Government earnings are estimated to be highest, with 37.5 percent of all earnings from these activities, 

followed by mining (36.5%). Oil and gas-related public administration or government labor earnings 

comprise 42 percent of the total government labor earnings in the state; total government labor earnings 

are estimated to be $3.5 billion in 2007 dollars (See Appendix C, Sectors 495-506; inflated with IMPLAN’s 

ratios). 

Other industries that benefit in terms of the total amounts paid to workers from oil and gas activities 

include wholesale trade (4.1%), health care and social services (3.8%), retail trade (3.0%), and 

professional and technical services (2.3%). The mining sector labor earnings comprise 99.9 percent oil 

and gas earnings, and 0.1 percent mining earnings. 

In terms of both employment and labor earnings, the top indirect industries that are estimated to benefit 

economically from oil and gas activities in the state are state and local governments, retail trade, health 

care and social services, among many others. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 37

Exhibit 8.13. Labor Earnings Impacts by Industry Associated with All Oil and Gas Activities 

(2007$) 

IMPLAN Sector 

Direct Labor 

Earnings 

Downstream Labor 

Earnings (i.e., 

induced and 

indirect) 

Total 

Labor Earnings 

Percent of Total 

Oil and Gas Labor 

Earnings 

Public Administration/Government $0 $1,469,170,391 $1,469,170,391 37.5%

Mining (includes Oil and Gas) $1,367,226,287 $62,294,535 $1,429,520,822 36.5%

Wholesale Trade $106,668,471 $53,508,809 $160,177,280 4.1%

Health Care & Social Assistance $0 $147,534,019 $147,534,019 3.8%

Retail Trade $0 $119,347,080 $119,347,080 3.0%

Professional & Technical Services $0 $89,428,251 $89,428,251 2.3%

Construction $55,745,280 $25,388,703 $81,133,983 2.1%

Finance & Insurance $0 $51,523,086 $51,523,086 1.3%

Real Estate & Rental & Leasing $0 $39,489,572 $39,489,572 1.0%

Transportation & Warehousing $0 $58,529,555 $58,529,555 1.5%

Other Services (except public 

administration) $0 $44,629,435 $44,629,430 1.1%

Accommodations & Food Service $0 $56,627,522 $56,627,522 1.4%

Administrative & Waste Services $0 $33,091,985 $33,091,985 0.8%

Utilities $0 $35,921,343 $35,921,343 0.9%

Management of Companies & 

Enterprises $0 $27,300,570 $27,300,570 0.7%

Information $0 $21,375,380 $21,375,380 0.5%

Arts, Entertainment, & Recreation $0 $19,824,371 $19,824,371 0.5%

Private Educational Services $0 $6,892,840 $6,892,840 0.2%

Manufacturing $0 $20,087,307 $20,087,307 0.5%

Agriculture/Forestry/Fishing/Hunting $0 $3,028,528 $3,028,528 0.1%

Totals $1,529,640,037 $2,384,993,282 $3,914,633,314 100.0%

 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 38

9. Relative Importance of Wyoming’s Oil and Gas Activities 

Wyoming’s oil and gas activities are vitally important to the state of Wyoming. This section will compare 

the Wyoming oil and gas economic indictors with those of the state, the Wyoming travel industry, and oil 

and gas activities in Colorado in 2005. 

9.1 Relative Importance of Oil and Gas Industries in the State of Wyoming 

Exhibit 9.1 summarizes some of our model’s estimates of the economic indicators for the oil and gas 

industry in Wyoming and compares these indicators to state totals. Oil and gas activities within the state 

account for an estimated 32 percent of the state’s total economic output (or total sales or revenues), 20 

percent of employment, 38 percent of government employment, and over 25 percent of total earnings. 

Estimated oil and gas value added represents almost 43 percent of gross state product (GSP)8

 in 

Wyoming. 

In general, oil and gas activities, including private mineral royalty payments and extraction taxes and the 

associated downstream activity, generate estimated average earnings that are considerably higher than 

the state average, $53,000 or 28 percent higher than the state average. However, considering only those 

industry sectors directly impacted by drilling, completion, and extraction activities, the average earnings 

are estimated to be $75,912 annually, in 2007 dollars. Although not all the jobs and income are directly 

associated with the oil and gas industry, without these activities in the state, these downstream jobs and 

associated earnings would not exist. 

 

8

 Gross State Product measures the value-added of all goods and services in the state. Value-Added is 

defined as economic output (or gross sales or revenues) less intermediate inputs, which are goods and 

services purchased in the production process (or input or operational expenses). GSP is the state 

counterpart of Gross Domestic Product for the nation (Downey, 2006). 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 39

Exhibit 9.1. Oil and Gas Industry Activity as a Fraction of the State’s Economy 

(2007$) 

 Indicator All Oil and Gas 

Activities in Wyoming 

All Economic 

Activity in Wyoming 

Percent of 

Oil and Gas 

to State 

 Source 

Total Economic Output $18,617,065,044 $58,831,050,621 31.6% IMPLAN 2006 

Total Employment 73,229 369,5653 19.8% IMPLAN 2006 

Total Labor Earnings $3,914,633,314 $15,487,363,835 25.3% IMPLAN 2006 

Average Earnings $53,457 $41,907 127.6% IMPLAN 2006 

Gross State Product 

(i.e., Value Added) $13,329,075,050 $31,205,616,410 42.7% IMPLAN 2006 

Severance Tax 

$666,397,115 $882,383,479 75.5% WY Department of 

Revenue Annual Report 

2007 

Mineral Ad Valorem

Levies (i.e., Property 

Taxes) 

$712,637,118 $913,011,683 78.1% WY Department of 

Revenue Annual Report 

2007 

Assessed Valuation 

(Taxable Value)1 $11,303,378,284 $21,491,267,438 52.6% WY Department of 

Revenue Annual Report 

2007 

Federal Mineral Royalties 

(WY Disbursements, 

50%)2

$515,500,646 $931,394,926 55.3% Minerals Management 

Service, 2007 

State Mineral Royalties $90,031,996 $138,201,502 65.1% Wyoming Office of 

State Lands and 

Investments 2007 

Sales and Use Taxes 

 $50,344,215 $906,973,329 5.5% Wyoming Depart of 

Revenue Annual Report 

2007 

1 The assessed valuation, severance taxes, and ad valorem taxes are based on 2006 production. Severance and ad valorem taxes 

are paid to the state in 2007. 2

 This estimate is from the Minerals Management Service (MMS), and it includes Federal Mineral 

Royalties from carbon dioxide, coalbed methane, condensate, gas plant products, oil, processed and unprocessed gas, and 

royalties associated with rents, bonuses, and other revenues. Fifty percent of royalties return to Wyoming and 50 percent are paid 

to the federal treasury (U.S. Minerals Management Services, http://www.mrm.mms.gov/Stats/pdfdocs/formulas.pdf). Native 

American royalties are not included in this estimate and therefore the receipts paid to reservations are not captured in this analysis. 3

This employment figure is from IMPLAN, whose estimates are derived from U.S. Bureau of Economic Analysis. This includes fulltime, part-time, self employed, small business owners, and farm employment. The Wyoming Department of Employment figures are 

lower than those reported here (May, 2007 labor force estimate is 285,553), as they do not include farm employment, self-employed 

and small business owners (Wyoming Department of Employment Labor Trends, Volume 45, No. 7, July, 2008). The Bureau of 

Economic Statistics estimates that Wyoming had 85,987 self-employed (proprietor) jobs in 2006. 

Severance taxes from oil and gas activities comprise almost 76 percent of all severance taxes collected 

by the state and 78 percent of all mineral ad valorem (i.e., mineral property) taxes. Oil and gas taxable 

valuation from production activities accounts for 53 percent of all assessed valuation within the state. Oil 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 40

and gas revenues provide for 55 percent of all Federal mineral royalties dispersed to the state and 65 

percent of all state mineral royalties. The oil and gas industry is a vital Wyoming industry that contributes 

significant revenue to state, local, and federal governments, with considerable industry revenues, 

employment, labor earnings, average earnings and state and local fiscal contributions. See Section 8.5 

for a discussion in increased state and government revenue (i.e., extraction taxes) associated with oil and 

gas price increases. 

9.2 Oil and Gas Industry Compared to the Travel Industry in Wyoming 

The travel industry in Wyoming is another integral part of the state’s economy, as are many other 

industries in Wyoming. The tourism industry has seen steady growth for a number of years; 2007 

visitation in Yellowstone National Park was at the highest levels ever, up almost 10 percent from 2006 

levels (U.S. National Park Service, 2008). The travel industry, through the Wyoming Division of Tourism, 

has been assessing its economic benefits in Wyoming through studies undertaken by Dean Runyan and 

Associates, which utilizes similar input-output modeling approaches. It is the only industry that has 

consistently assessed its economic contributions and for this reason, the most recent Travel Industry 

study is further described below, and the figures are compared with those of the oil and gas industry. A 

study on the economic impacts of Agriculture in Wyoming was done 17 years ago in 1991, and therefore 

its figures are quite dated and are not described here. Studies regarding the economic benefits of wildlife 

and hunting/fishing also have been undertaken but are not examined here. 

Additional studies of other important industries in Wyoming, such as mining, healthcare, construction, and 

agriculture, would create a better understanding of industry interdependencies within state’s economy 

and their relative economic contributions to the state. Ideally, a series of concurrent and comprehensive 

studies assessing five to seven key Wyoming industries would be a valuable informational tool for state 

policy-makers. Such a series of state-funded studies could be done every five to ten years. 

Travel and oil and gas industries are very different, which should be noted in their comparison. Generally 

the oil and gas extraction industry is an exporting and goods-producing industry, while tourism or travel 

industry, as a service-provider, imports visitors to the state. Oil and gas requires considerable investment 

and returns considerable revenues, while the tourism industry requires lower investments and has more 

moderate returns. Oil and gas extraction is considered to be a consumptive or depleting use of natural 

resources, while tourism and travel are thought to be generally sustainable or non-consumptive in their 

use of natural resources. 

Dean Runyan and Associates finished a study in 2007, Economic Impact of Travel on Wyoming 1997-

2006 (herein referred to as Travel Industry Report). This Travel Industry Report estimates the impacts of 

both leisure and business travel on the state of Wyoming. Oil and gas business travel is likely embedded 

in the Travel Industry Report figures, and therefore tourism or leisure travel figures are somewhat lower 

than those reflected in Exhibit 9.2. 

Exhibit 9.2 summarizes some of the major economic indicators for both the oil and gas and travel 

industries in Wyoming, which are provided in 2007 dollars. Therefore, the Travel Industry Report figures 

have been inflated with IMPLAN’s inflation factors to represent 2007 dollars. The oil and gas revenue, 

employment, and earnings impacts and multipliers are summarized to both include and exclude the 

impacts of the tax receipts to state and local governments. The Travel Industry Report estimates travel 

industry tax revenues, but does not include these fiscal impacts in terms of employment, labor earnings, 

and revenues. To be consistent with this analysis, economic contribution of tax receipts have been 

removed from the figures. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 41

Exhibit 9.2. Economic Comparison of Oil and Gas and Travel Activities in Wyoming (2007$) 

1

 Source: Dean Runyan Associates, Economic Impact of Travel on Wyoming 1997-2006, September, 2007. 2 The travel industry 

state and local tax revenues include lodging, sales, use, and gasoline taxes and do not include property taxes. The oil and gas tax 

payments include ad valorem, severance, extraction sales taxes, federal and state royalties, but do not include development sales 

and use taxes, lodging, or gasoline taxes. The oil and gas tax receipts figure was deflated with IMPLAN’s ratios for this institutional 

sector for reporting in 2006 dollars. 

Activities related to the oil and gas industry generate approximately five times as many direct industry 

revenues as those generated by the travel industry, although the travel industry comprises about 3,500 

more jobs than the oil and gas industry. However, if tax payment contribution is included with the 

employment indicators, the oil and gas activities account for considerably more annual jobs than those of 

the travel industry. Labor earnings for the travel industry are about half those of the oil and gas industry 

without tax impacts included; with tax impacts included, the oil and gas activities account for almost four 

times those of the travel industry. The average earnings per worker for the oil and gas industry are more 

than twice those of the travel industry. Gross state product figures for the oil and gas activities are from 

12 to 15 times those of the travel industry. Oil and gas tax payments to state and local governments are 

almost 19 times higher than those of the travel industry. 

In Wyoming, oil and gas, mining, agriculture, and tourism are generally considered the most important 

economic drivers in the state. However, there are other important and growing industries, such as health 

care, construction, telecommunications, and others, that should be further evaluated to better understand 

their value, industry independence, and growth over time in the Wyoming economy. A study on the 

economic contribution of government payrolls, purchases and spending within Wyoming would also 

provide insightful information for policy-makers. 

Oil and Gas Activities Ratio of Oil and Gas Industry to 

Travel Industry Economic Indicator Travel Activities1

Excluding Tax 

Impacts 

Including Tax 

Impacts 

Excluding Tax 

Impacts 

Including Tax 

Impacts 

Direct Revenue Impacts $2,601,751,748 $13,425,429,277 $15,421,454,183 516% 593% 

Total Employment 43,430 39,913 73,229 92% 169% 

Total Earnings $1,054,083,793 $2,237,368,349 $3,914,633,314 212% 371% 

Gross State Product (i.e., 

value added) $933,484,517 $11,184,440,523 $13,329,075,050 1198% 1428% 

Average Employee 

Earnings $24,271 $56,056 $53,457 231% 220% 

Employment Multiplier 1.45 1.99 3.65 137% 251% 

Earnings Multiplier 1.65 1.47 2.57 89% 156% 

State and Local Tax 

Payments2 $106,595,239 $1,996,024,906 1873% 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 42

9.3 Wyoming and Colorado Oil and Gas Activities 

A similar study was undertaken for oil and gas activities in Colorado in 2005.9 Exhibit ES 1-1 in the 

Colorado report is represented below in Exhibit 9.3, with a couple of changes. All revenues, earnings and 

average earnings have been inflated to 2007 dollars for comparison with those of Wyoming. IMPLAN 

factors for the two-year adjustment, 2005 to 2007 were used for both the revenues or economic 

contribution (1.13) and labor earnings (1.04). The Colorado employment has not been changed and 

therefore reflects 2005 employment. All employment and labor earnings associated with mineral royalty 

and lease payments and extraction taxes are assumed to be downstream, either indirect (taxes) or 

induced (royalty payments), as consistent with the analysis in this report; therefore, the employment 

multiplier for all activities has been modified to reflect this adjustment. 

Exhibit 9.3. Total Economic Contribution for Oil and Gas Activities in Colorado in 2005 (2007$) 

Type of Impact Drilling, 

Completion, and 

Recompletion 

Extraction Mineral Royalty 

& Lease 

Payments 

Extraction 

Taxes 

Total Economic 

Contribution 

Total Economic 

Output 

$2,476,710,893 $21,307,460,524 $1,021,852,168 $1,203,773,627 $26,009,797,212 

Total 

Employment 19,307 32,471 7,257 11,744 70,779 

Total Labor 

Earnings 

$1,161,294,251 $2,484,957,581 $278,222,501 $568,673,410 $4,493,147,743 

Earnings per 

Worker 

$60,149 $76,529 $38,339 $48,422 $63,481 

Employment 

Multiplier 

2.01 5.63 NA NA 4.54 

 1 CO’s revenues and labor earnings inflated with IMPLAN’s (2006) inflation factors. 

Exhibit 9.3 can be compared to Exhibit 8.10 summarizing the economic contribution of Wyoming’s oil and 

gas activities. A few of these figures are directly compared in the Exhibit summarized below (Exhibit 9.4). 

Colorado’s economy is much larger than Wyoming’s economy; in terms of economic output (or gross 

revenues or sales), Colorado had over seven times more economic output than Wyoming in 2007. 

Colorado’s oil and gas-related employment is slightly smaller than that of Wyoming, with 71,000 

employed in Colorado and over 73,000 employed in Wyoming, yet total labor earnings in Wyoming are 

approximately $600 million less due to the lower average earnings in Wyoming. Earnings per worker are 

approximately $10,000 less in Wyoming than in Colorado. 

However, when compared to the state’s economy, it is apparent how important oil and gas is to Wyoming. 

In Wyoming, oil and gas activities comprise 32 percent of economic output or gross revenues (6% in 

Colorado), 20 percent of all employment (2% in Colorado), and 25 percent of all labor earnings (3% in 

Colorado). The oil and gas contribution to GSP in Wyoming is 43 percent of the state’s GSP, while in 

Colorado, it only accounts for 7 percent of the GSP. 

 

9

 The Colorado Oil and Gas Economic Impact study is available at: www.ceri-mines.org/publications. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 43

Exhibit 9.4. Comparison of Wyoming and Colorado Economic Indicators (2007$) 

Indicator 

All Oil & Gas 

Activities in 

Wyoming 

Percentage of Oil 

and Gas to 

Wyoming State 

Total 

All Oil & Gas Activities 

in Colorado2

Percentage of Oil 

and Gas to Colorado 

State Total 

Total Economic Output1 $18,617,065,044 31.6% $26,009,797,212 6.1% 

Total Employment 73,229 19.8% 70,779 2.2% 

Total Earnings1 $3,914,633,314 25.3% $4,493,147,743 3.2% 

Average Earnings $53,457 $41,9073 $63,481 $48,0733

Gross State Product $13,329,075,050 42.7% $17,764,844,651 7.1% 

Assessed Valuation $11,303,378,284 52.6% $7,223,758,012 7.2% 

1 CO’s revenues and labor earnings inflated with IMPLAN’s (2006) inflation factors. 2 Source for Colorado’s figures is Colorado Energy 

Research Institute, Oil and Gas Economic Impact Study, June, 2007, Report 2007-1. 3These are average earnings for the associated states. 

Exhibit 9.5 illustrates the breakdown in Wyoming and employment associated with these activities. In 

Wyoming, extraction taxes comprise the bulk of the employment (45%) compared to 17 percent in 

Colorado. This is likely due to the differences in tax payments between the two states. In Colorado, there 

was approximately $718 million (see Exhibit 3-7 in CERI report) paid in extraction taxes, while in 

Wyoming the extraction industry paid $2.0 billion. In 2005, assessed valuation was $5 billion in Colorado 

(see Exhibit 2-47 in CERI report), which was based on much higher 2005 oil and gas prices, $59.93 and 

$7.39, respectively. In Wyoming, the oil and gas assessed valuation was $11 billion based on relatively 

lower prices in 2007 of $58.88 and $4.65 for oil and gas respectively. Obviously, the oil and gas 

production in Wyoming in 2007 (2.8 billion mcfe) was much higher than that in Colorado in 2005 (1.3 

billion mcfe), more than twice as much. 

Mineral royalty payments to private mineral owners are higher in Colorado (10%) than in Wyoming (2%), 

likely due to the larger proportion of federal lands in Wyoming. According to one source, there was 35 

percent federal land ownership in Colorado versus 48 percent in Wyoming in 1993 

(www.colorado.edu/libraries/govpub/fedlands.htm). Federal mineral ownership is likely an even higher 

percentage. Extraction industry employment is much higher in Colorado (46%) than in Wyoming (16%). 

The Denver area comprises considerable extraction employment, as this area supports both Colorado 

extraction but also extraction operations across the Rocky Mountain West. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 44

Exhibit 9.5. Oil and Gas Employment by Activity in Colorado and Wyoming 

Wyoming Employment

Drilling, 

Completion, and 

Recompletion 

36%

Extraction

16%

Private Mineral 

Royalty Payments

2%

Extraction Taxes

46%

Colorado Employment

Drilling, 

Completion, and 

Recompletion

27%

Extraction

46%

Mineral Royalty & 

Lease Payments

10%

Extraction Taxes

17%

The extraction employment multiplier for Colorado is 5.63, while in Wyoming, it is 2.86. This is likely due 

to the larger and more diversified Colorado economy, which, as a result, is able to retain the dollars 

generated by oil and gas extraction sector, influencing the employment multiplier. Overall, the oil and gas 

employment multipliers are much higher than other industries, 4.54 in Colorado, and 3.65 in Wyoming 

(see Exhibit 9.6). 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 45

Exhibit 9.6. Colorado and Wyoming Employment and Labor Earnings Multipliers 

Employment Labor Earnings (2007$) 

Type of Impact Colorado Wyoming Colorado Wyoming1

Direct 15,601 20,090 $1,838,704,678 $1,529,640,037 

Total (Direct, Indirect, 

and Induced) 70,779 73,229 $4,493,147,743 $3,914,633,314 

Multiplier 4.54 3.65 2.44 2.56 

 1 CO’s labor earnings inflated with IMPLAN’s (2006) inflation factors. 

There was higher drilling and completion activities in Wyoming (3,697 wells drilled) than there were in 

Colorado in 2005 (2,570), resulting in 37 and 27 percent of the employment in Wyoming and Colorado 

respectively. Overall, there were $5.4 billion in capital investments in Wyoming (compared to $2.4 billion 

in Colorado), with approximately 45 percent (in Colorado it was 50%) remaining within the state. The 

lower SPC in Wyoming is likely due to the fact that Denver supports much of the operations in both 

states, increasing the Colorado percentage. Investments per well in Wyoming were $1.45 million 

(2007$), while in Colorado they were $816,000 (2005$). One reason for this difference is that Booz Allen 

included facility and surface equipment costs in average capital investments where possible in Wyoming, 

while these costs were only captured in Colorado if they were included in the Authority for Expenditure 

form. 

Exhibit 9.7 summarizes some of the fiscal contributions to state and local governments for both the 

states. For consistency with this report, the tax receipts have been obtained for 2007 in Colorado based 

on the source cited in the Exhibit, and therefore do not coincide with those figures identified in the CERI 

report. All tax payments to state and local governments in Wyoming are higher than those in Colorado, 

severance taxes and Federal Mineral royalties are over five times higher. Wyoming oil and gas assessed 

valuation is one and a half times that in Colorado, consistent with higher production in Wyoming. 

Exhibit 9.7. Comparison of Colorado and Wyoming’s Fiscal Contributions (2007$) 

 

Indicator 

All Oil & Gas 

Activities in 

Wyoming 

(% of state total) 

All Oil & Gas 

Activities in 

Colorado 

(% of state total) 

Percent of WY 

to those of 

Colorado’s Source for CO’s Figures 

Severance Tax 

$666,397,115 

(75.5%) 

$126,244,455 

(88.7%) 

527.9% CO Department of Revenue, 

2007 Annual Report 

Assessed Valuation 

(Taxable Value)1

$11,303,378,284 

(52.6%) 

$7,223,758,000 

(7.2%) 

156.5% CO Department of Local 

Affairs, 2007 Annual Report 

Federal Mineral 

Royalties (WY 

Disbursements, 50%) 

$515,500,646 

(55.3%) 

$98,775,127 

(76.5%) 

521.9% Minerals Management 

Service 2007 

State Mineral Royalties 

$90,031,996 

(65.1%) 

$24,727,282 

 (59.8%) 

364.1% CO State Lands Department 

 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 46

10. Fiscal Analysis: Estimate of Sales Taxes 

Wyoming State Statute W.S. 39-15-103(a)(i)(K) imposes a sales and use tax on oil and gas services.10 

The statute requires that taxes be imposed on the sales price paid for all services needed for real or 

tangible property within an oil or gas well site. These taxes are distributed to either the counties or the 

state. Taxes are imposed on all services throughout the productive life of a well and include those 

performed at the wellbore to any point within a 250 foot radius. Sales taxes are applied to purchases of 

tangible property and services that occur within the state while use taxes are applied to out of state 

purchases of tangible property. The state of Wyoming does offer a sales tax credit to tax payers if they 

also pay sales taxes on tangible property that is purchased out of state. This credit is applied to relevant 

sales tax liability due to the state of Wyoming. 

A distinction is made by the state of Wyoming between two phases of a productive well including: 1) preproduction phase and 2) production casing phase. Typical activities included in the pre-production phase 

include seismographic and geophysical services, well site development (e.g. earth work, digging of 

reserve pits), rigging up, drilling, coring, logging and testing. All these services are considered part of the 

pre-production phase and are therefore not subject to a sales tax. Note that sales or leases of tangible 

personal property used or consumed during the pre-production phase is taxable. This includes the 

purchase, lease or rental of items such as: 

• Casing or cement 

• Rigs 

• Drilling Fluids 

The production casing phase begins with the setting and cementing of production casing.11 Services 

within the second phase are considered those that are required for the production of any oil and gas. All 

services needed during the second phase of a well (production casing phase) are taxable under Wyoming 

State Statues. Types of services during this phase that are subject to sales tax include: 

• Labor associated with site maintenance (mowing, weed control, trash hauling) and reclamation 

• Services related to the measurement of gas flows and gas sampling 

• Cathodic well protection systems 

• Testing of lines, tanks and flow systems 

• Installing or replacing equipment or parts 

The state of Wyoming’s Department of Revenue publishes monthly reports summarizing the sales taxes 

collected by industry and county throughout the state as part of their Sales and Use Tax Distribution 

Reports.

12 The series includes reports titled Minor Industry Code, by month/year, which breaks down the 

 

10 State of Wyoming, Department of Revenue, Excise Tax Division, “Excise Tax Division, Tax Pub #5 – 

Oil, Conventional Natural Gas & Coal Bed Methane,” January 30, 2004. 

11 For open hole completions, the production casing phase begins upon reaching total depth or the 

completion of the under-reaming. 

12 The Sales and Use Distribution Reports can be accessed at 

http://revenue.state.wy.us/PortalVBVS/DesktopDefault.aspx?tabindex=3&tabid=10. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 47

sales taxes collected for industries defined by the four digit codes defined by North American Industry 

Classification System (NAICS). Discussions with personnel from the Wyoming Department of Revenue 

indicated that sales taxes earned from activities associated with oil and gas occur within the following 

sectors: 

• 2111 – Oil and Gas Extraction 

• 2131 – Support Activities for Mining 

According to NAICS definitions, both sectors include activities to develop and operate oil and gas wells on 

a contract or fee basis. Sector 2131 can also include other “mining” activities such as contract services to 

support the mining (coal and non-metallic minerals) and quarrying of mineral resources (excluding site 

preparation and related construction activities).13 

Sales and use tax data for each of the counties in Wyoming for all months during 2007 were downloaded 

from the Wyoming Department of Revenue and are summarized for sectors 2111 and 2131 in Exhibit 

10.1. The state reported that these two sectors generated over $148 million in sales tax revenue during 

calendar year 2007. 

Exhibit 10.1. 2007 Total Annual Sales and Use Taxes 

for Sectors 2111 and 2131 

Sector Annual Sales Tax 

2111: Extraction $11,458,031 

2131: Support of Mining $136,905,194 

Total $148,363,225 

The sales and use taxes earned within these two sectors for each of the basins in Wyoming was 

estimated as summarized in Exhibit 10.2. 

 

13 NAICS codes and definitions can be viewed at http://www.census.gov/naics/2007/index.html. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 48

Exhibit 10.2. 2007 Sales and Use Tax Estimates for Sectors 2111 and 2131

Basin County 

Sales and Use 

Tax for 2007 

(Sector 2111) 

Sales and Use Tax 

for 2007 

(Sector 2131) 

Bighorn Basin 

Park $1,196,814 $1,189,673 

Big Horn $34,747 $457,571 

Hot Springs $382,008 $765,993 

 Total $1,613,570 $2,413,237 

Laramie, Hanna, Denver-Cheyenne

Albany $6,170 $142,311 

Laramie $15,191 $474,435 

Goshen $552 $28,060 

Platte $133 $26,658 

 Total $22,045 $671,464 

Greater Green River/Overthrust

Sweetwater $2,147,288 $31,684,798 

Lincoln $652,242 $3,146,467 

Uintah $46,826 $1,767,571 

Carbon $834,096 $10,825,168 

 Total $3,680,452 $47,424,003 

Pinedale Anticline and Jonah 

Sublette $3,123,584 $35,962,241 

 Total $3,123,584 $35,962,241 

Wind River

Fremont $640,832 $6,509,763 

Natrona* $13,855 $4,869,101 

Washakie $20,995 $868,966 

 Total $675,682 $12,247,829 

Powder River

Sheridan $28,142 $4,736,553 

Campbell $2,162,981 $19,936,301 

Johnson $20,153 $4,846,343 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 49

Converse $60,022 $2,242,641 

Niobrara $45,089 $541,051 

Weston -$5,703 $583,364 

Crook $14,400 $353,125 

Natrona* $13,855 $4,869,101 

 Total $2,338,938 $38,108,480 

No Basin

Teton $18,438 $77,916 

 Total $18,438 $77,916 

State Total $11,472,709 $136,905,171 

 *Sales taxes for Natrona were divided evenly between Wind River and Powder River Basins. 

 

The percentage of total sales and use taxes by sector for each basin is summarized in Exhibit 10.3 with 

Greater Green River/Overthrust, Pinedale/Jonah and Powder River generating a significant percentage of 

total sales taxes for these two sectors throughout the state. 

Exhibit 10.3. Percentage of Sales and Use Taxes by Basin 

Industry Basin 

2111 2131 

Big Horn Basin 14.08% 1.76% 

Laramie, Hanna, DenverCheyenne 0.19% 0.49% 

Greater Green River and 

Overthrust 32.12% 34.64% 

Pinedale and Jonah 27.26% 26.27% 

Wind River 5.90% 8.95% 

Powder River 20.41% 27.84% 

Further analysis of sales and use taxes associated Sector 2131 was undertaken to determine how much 

of these taxes are due to activities directly associated with oil and gas activities. For Sector 2111, an 

assumption was made that all sales and use taxes associated with this sector were due to oil and gas 

activities. This is based on the NAICS code definitions which only include extraction and support services 

for oil and gas activities. This is not the case with Sector 2131 which, according to the NAICS codes, 

includes other mining activities. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 50

Utilizing data collected through economic contribution study, it is possible to apply the average sales and 

use tax rates to those portions of the drilling and completion investments to which these taxes apply. 

Booz Allen first determined an average sales tax rate for each of the basins as shown in Exhibit 10.4. 

The figures were determined by averaging tax rates across the counties included in each basin. 

Exhibit 10.4. Estimated Average Sales and Use Tax Rates for Basins within Wyoming 

Basin Average Sales Tax Rates 

Bighorn Basin 0.05 

Laramie, Hanna, Denver-Cheyenne 0.0556 

Greater Green River/Overthrust 0.0525 

Pinedale/Jonah 0.04 

Wind River 0.045 

Powder River 0.055 

State of Wyoming 0.050 

 Source: Wyoming Department of Revenue, Sales/Use Tax Rates by Locality, Effective 4-1-07 

 (http://revenue.state.wy.us/PortalVBVS/uploads/MASTERTAXRATECHART_4-1-07_Final.pdf)

The average sales tax rates were used in conjunction with drilling and completion costs as discussed in 

Sections 7.1 and 8.2. Exhibit 10.5 provides a summary of these costs estimates by basin and the state of 

Wyoming. Note that expenses specified as main drilling contract, support of drilling activities and earth 

work have been excluded from total drilling and completion costs due to the stipulation in the Wyoming 

State Statutes that sales tax rates will not be applied to services provided in the “pre-production” phase of 

the development of oil and gas wells. The services included in these three categories are more 

associated with drilling a well than completing the well. The fourth drilling category, wholesale trade, was 

included in this analysis as it is considered tangible private property which is taxable under the Wyoming 

State Statutes. Only Wyoming expenditures are included below to estimate sales taxes on these state 

purchases and services. 

The average sales tax rates were applied to the remaining expenditures, shown in row three of Exhibit 

10.5. which provided an estimate of sales tax revenue for completion and wholesale trade as summarized 

in the last row. Sales tax revenues range from $248,000 in the Laramie, Denver-Cheyenne and Hanna 

Basins to $19 million in Pinedale and Jonah fields (which is Sublette County). When applying an 

average sales tax rate to the applicable drilling and support industry costs for the state of Wyoming, the 

total estimate sales tax was estimated to be over $50 million. This is slightly higher than the sum of all 

the basins ($47 million). The difference is likely due to the different sales tax averages used for the 

different basins and the state. 
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Exhibit 10.5. Sales Tax Estimates by Basin for Wyoming Oil and Gas Activities 

Cost Categories Greater 

Green River 

& Overthrust 

Pinedale and 

Jonah Bighorn Wind River Powder River 

Laramie, 

DenverCheyenne, 

Hanna 

WYOMING 

In State Drilling and 

Completion $701,672,727 $1,188,859,663 $49,346,008 $119,004,117 $365,292,035 $15,592,479 $2,439,767,029 

Total In State Drill 

Rig, Drilling Support 

and Earth Work 

$460,863,949 $713,555,781 $18,347,564 $62,063,661 $176,696,409 $11,118,833 $1,442,646,196 

Total Estimated 

Taxable Expenses $240,808,778 $475,303,882 $30,998,443 $56,940,456 $188,595,626 $4,473,647 $997,120,833 

Average Sales Tax 

Rate (Basin) 0.057 0.04 0.05 0.045 0.055 0.056 0.050 

Estimated Sales Tax $13,726,100 $19,012,155 $1,549,922 $2,562,320 $10,431,695 $248,846 $50,344,215 

As stated earlier in this section, the state of Wyoming also collects use tax on out of state purchases of 

tangible property. At this point, it has been difficult to estimate use taxes using data collected in the 

economic contribution study. This is due to the complexity of the use tax application which also involves 

the award of credits for sales taxes paid out of state, and the uncertainty of how the state is actually 

applying this tax to relevant purchases. For instance, according to the data collected in the economic 

contribution study, oil and gas vendors operating in Wyoming during 2007 incurred $1.26 billion in out of 

state wholesale trade purchases associated with materials and equipment needed in the drilling and 

completion of wells (Exhibit 8.1 and Exhibit 8.2). If all of these expenditures were liable to the use tax, 

estimated taxes would exceed $63 million, utilizing the average use tax rate of 5 percent. 

However, in 2007, the state of Wyoming reported that use taxes from Sector 2131 were $12.4 million. 

Given the high level of out of state purchases made by the oil and gas industry that may be taxable, Booz 

Allen assumed that all of the $12.4 million in use taxes for Sector 2131 are due to oil and gas activities. 

There is uncertainly around this figure due to the above mentioned tax credits and state implementation 

and enforcement. 

Total sales and use taxes paid by the oil and gas industry in Wyoming are estimated to be $62.8 million 

for sector 2131 (Support for Mining Sector) ($50.3 million for sales tax and $12.4 million for use tax) and 

$11.5 million for sector 2111 (Extraction Sector), for a total of $74.3 million paid in sales and use taxes in 

2007. The total estimated sales and use tax for Wyoming represents 50 percent of the total sales and 

use tax estimate ($148 million) for Sector 2131 and 2111 for 2007 as reported by the state of Wyoming. 

These sales and use taxes paid by the oil and gas industry comprise 5.5 percent of all sales and use 

taxes collected by the state. 

Booz Allen believes these figures are conservative estimates of the sales and use taxes paid by the oil 

and gas industry in Wyoming. This observation is based on the fact that some purchases that are taxable 

have likely been excluded from the analysis. For instance, the Wyoming Statues state that the “purchase, 

rental or lease” of drill rigs is a taxable expense. This expense would likely be included in the category 

called Drilling Rig Expenses which have been excluded from the portion of expenditures that is taxable. 

Determining the portion of drilling company expenses that are the purchase, rental or lease of drill rigs 

could not be undertaken. It is also likely that these purchases or rental fees are going to out-of-state 
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providers. In addition, it is also possible that other purchases being made by oil and gas operators or 

service companies are not being accounted in either Sector 2111 or 2131. Examples include services 

related to construction and earth work contracts that may be credited to other industries. 
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11. Conclusion 

The oil and gas industry in Wyoming significantly contributes to the Wyoming economy. This study 

estimates that oil and gas activities contribute: 

• $18.6 billion in economic output or 32 percent of total economic activity in the state 

• 43 percent of Wyoming’s Gross State Product 

• 73,229 total employment or 20 percent of the employment in the state 

• 25,149 oil and gas-related government employment, 38 percent of all government employment in 

the state 

• $3.9 billion in labor earnings annually or 25 percent of the state’s total labor earnings 

• Average annual earnings per worker for these activities are $53,000, which is 28 percent higher 

than the state average 

• $2.0 billion in extraction tax revenue and over $62.8 million in sales and use taxes from 

development activities. 

Wyoming’s oil and gas industry is a vital and significant economic driver of state’s economy. For every 

job that the oil and gas industry directly employs, there are an additional 2.65 jobs created in downstream 

economic activity through businesses supporting this industry and employees spending their money in the 

economy. There is considerable downstream state and local government and educational jobs and labor 

earnings associated with the substantial state and local taxes paid by the industry. This industry is 

unique in creating these types of considerable rollover employment and earnings effects in the Wyoming 

economy. 

Additional studies of other important industries in Wyoming, such as mining, healthcare, construction, and 

agriculture, are vital to create a better and more comprehensive understanding of industry 

interdependencies within state’s economy and their evolving relative economic contributions to the state. 

Ideally, a series of concurrent and comprehensive studies assessing five to seven key Wyoming 

industries would be a valuable informational tool for state policy-makers. Such state-funded studies 

would ideally be conducted every five to ten years. 
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Appendix A: Acronyms 

AFE Authority for Expenditure 

APD Applications for Permits to Drill 

B Billion 

Bbl Barrel 

BEA Bureau of Economic Analysis 

BLS Bureau of Labor Statistics 

CBM Coalbed Methane 

DOE Department of Energy 

DOR Department of Revenue 

EIA Energy Information Agency 

GSP Gross State Product 

IMPLAN Impact Analysis for Planning 

IO Input-Output 

LOE Lease Operating Expenses 

NAICS North American Industry Classification System 

M Million 

Mcf Thousand cubic feet 

Mcfe Million cubic feet equivalent 

MIG Minnesota IMPLAN Group 

RPC Regional Purchase Coefficient 

MMS Minerals Management Service 

SAM Social accounting matrix 

SPC State Purchase Coefficient 

WYOGCC Wyoming Oil & Gas Conservation Commission 
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Appendix B: Glossary 

Direct Impact The set of expenditures or revenues as a result of activity in the geographic 

location of the basin, which are run through the IMPLAN model as the direct effect. 

Disposable Income The amount of income left to an individual after taxes have been paid available for 

spending and personal savings. It is also known as take-home pay. 

Economic Output Economic Output or Total Industry Output is the value of production by industry for 

a given time period. Output can be measured either by total value of purchases by 

intermediate and final consumers, or by intermediate outlays plus value-added. 

Output can also be thought of as a value of sales plus or minus inventory. 

Employment The work in which one is engaged; an occupation by which a person earns 

income. The percentage or number of people gainfully employed. 

Final Demand Consist of purchases of goods and services for final consumption as opposed to 

an intermediate purchase where the good will be further remanufactured. 

Gross State Product GSP, also know as value added, is equal to its gross industry output (i.e., sales or 

receipts and other operating income, commodity taxes, and inventory change) 

minus its intermediate inputs (i.e., consumption of goods and services purchased 

from other US industries or imported). 

IMPLAN A software program that estimates input-output (IO) models using data and 

assumptions to social accounts and multipliers for various scenarios and 

economics impacts. 

Indirect Impact The inter-industry impact of IO analysis that measures the economic activity 

associated with the directly impacted industries selling and purchasing goods and 

services to/from other industries. 

Induced Impact The effects of increased consumer spending resulting from direct and indirect 

income changes. 

Industries The collection of businesses in an economy within a given region purchasing good 

and services and paying workers. 

Inflation/Deflation The rate at which the general level of prices for goods and services is rising or 

falling, causing purchasing power to fall or rise. Inflation/deflation rates can be 

applied to create an assessment of constant dollars across different time periods. 

In-State Investment These are operator’s expenditures or investments that are incurred or paid within 

the state. 

Institution Institutions refer to the type of final demand sector. An institution can be any 

industry, households, federal or state government. 

Investment An asset or item that is purchased with the intent of generating income or future 

appreciation. The purchase of goods that are not consumed today but are used to 

create future wealth. 

Input-Output (IO) Analysis An economic model that allows the assessment of change in overall economic 

activity as a result of some corresponding change in one or several activities. 

Labor Earnings Represents all forms of employment earnings. In IO analysis, it is the sum of 

employee compensation and proprietor income (income from self-employed 

people). 

Margins Represents the difference between producer and purchaser prices in a retail 

environment. 

Multiplier A factor that quantifies the change in total economic activity as compared to the 

injection of capital investments or revenues which originally fueled the growth. 

The SAM multiplier is estimated as a sum of the direct, indirect, and induced 

effects, divided by the direct effect. 

Out-of-State Investment Capital investments that are either made outside or move outside the state of 

Wyoming. 
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Production Function The relationship between the output of a good and the inputs required to produce 

that good for any given industry. 

Revenues The amount of money that an entity receives during a given time period. The “top 

line” or “gross income” figure from which costs are subtracted to determine net 

income. In input-output analysis, industry revenues are also considered total 

industry output or industry sales. 

Regional Purchase Coefficients 

(RPC) 

Ratios representing the portion of regional production used to satisfy local 

demand. 

Social Accounting Matrices 

(SAMs) 

A set of regional economic accounts which describe transfers between institutions, 

as well as value added components. 

State Purchase Coefficients The percentage of the total investments or expenditures that remain or are 

incurred within the State, which also includes investments within the multi-county 

basin. 

Value-Added Components Payments made by industry to workers, which also includes interest, profits and 

indirect business taxes. In IMPLAN, value added components consist of employee 

compensation, proprietary income, other property type income, and indirect 

business taxes. Value-added is an estimate of Gross State or Regional Product. 
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Appendix C: IMPLAN Study Area Data (Oil and Gas Sectors: 19, 27, and 28) 
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Appendix D: Wyoming Oil and Gas Operators Data Collection Documents 

A number of documents were submitted to industry contacts in order to facilitate communication. This 

includes: 

• A letter of introduction to the project (Exhibit D-1) 

• Confidentiality Measures (Exhibit D-2) 

• Data request document (Exhibit D-3) 

• Supporting letter from the Petroleum Association of Wyoming (Exhibit D-4) 

Booz Allen met with Wyoming Heritage Foundation representatives to obtain an initial list of industry 

contacts. The contacts were prioritized and contacted by phone. A follow-up email was then sent to each 

contact with additional project information. The letter of introduction, shown in Exhibit D-1 was designed 

to provide general information regarding the project. This letter of introduction was sent to all contacts 

and some general information regarding the types of information that was needed from operators. This 

included: drilling, completion, and recompletion expenditures (AFE forms); and production expenditures 

(often obtained through LOE forms); private mineral and override royalties, lease Payments, surface 

Damages – payments for access to the minerals and surface lands. 

Once the appropriate contact was made at the company, the data request document (Exhibit E-3) was 

sent to this contact. The document provided industry contacts with more specific information on the 

expenditure data required for the project. After sending this information, a call was made or an email was 

sent to make sure the requests were understood and to obtain a timeframe in which the company would 

be able to furnish the information. Booz Allen also forwarded a support letter from the Petroleum 

Association of Wyoming (Exhibit E-4) and a copy of the Confidentiality Measures that were put in place to 

ensure that the industry information is handled with care, statistics and impacts are reported in aggregate, 

and other measures were taken to protect the proprietary nature of the information. Telephone or email 

communications were made weekly to follow up with industry contacts to insure deadlines were met. 

Oftentimes, additional contacts were made within the company to obtain information on vendor names 

and locations. 
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Exhibit D-1: Letter of Introduction 

Booz Allen Hamilton Inc. 

Suite 840 

5299 DTC Boulevard 

Greenwood Village, CO 80111-3362 

Tel 1-303-694-4159 

Fax 1-303-694-7367 

March 4, 2008 

Dear XX, 

In recent years, with high prices and increasing demand for domestic oil and gas production, there has 

been considerable oil and gas activity in Wyoming. As a result, the Wyoming Heritage Foundation is 

funding a study to investigate and quantify the economic contribution of these activities on the State in 

2007. Booz Allen Hamilton has been contracted to estimate the direct and downstream economic 

impacts of the oil and gas production, development, private mineral royalty payments, and extraction 

taxes. Booz Allen has utilized a similar methodology to estimate the economic contribution of oil and gas 

activities in Colorado (please see: www.ceri-mines.org/CERIOil&Gas.pdf for a copy of the report). 

As part of this study, it is necessary to customize the economic parameters of the model we use. It is vital 

that your company participate in this data collection process to ensure the accuracy of the oil and gas 

economic contribution to the State. Generally, we are collecting operator information on development 

costs (i.e., average costs to drill and complete wells in various basins), production costs, and private 

mineral royalty payments. We are also collecting information from supporting vendors and service 

companies regarding labor, materials, equipment, office locations, and other pertinent data. 

Your participation in this study will be entirely confidential. The study will only report aggregate data from 

responses to the interviews. Either myself or Jessica Dick with the Booz Allen project team will follow up 

with you to arrange a convenient time for a discussion and interview. We would very much appreciate 

your participation in this effort. 

 Sincerely, 

 Holly Bender, PhD 

 BOOZ ALLEN HAMILTON INC. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 69 

Exhibit D-2: Wyoming Economic Contribution Study Confidentiality Measures 

• No specific company names will be mentioned in any report or correspondence with third parties 

interested in this study. 

• The economic contribution will be estimated using the modified IMPLAN model and will be 

reported in terms of total employment, income, economic output, and tax revenue generated by 

the industry to the State of Wyoming. 

• Average expenditures for well development for both labor and materials expenses within basins 

will be used in combination with publicly available data (e.g. number of wells, production levels) to 

estimate economic contribution. Only aggregated direct expenditures for these activities to 

estimate impacts will be reported as part of a final report. 

• Upon receipt, all company information will be held and stored behind the Booz Allen protected 

firewall. No specific company data will be released behind the firewall. The data will only be 

shared with Booz Allen team members needed to conduct the analysis. Database passwords are 

required to access industry-specific data. 

• The purpose of this study is to better understand the relationships between relevant industries 

that directly or indirectly support oil and gas development in the state. In order to accomplish this 

task, the project team is collecting basin specific expenditure data on drilling and completing wells 

and other capital investments in Wyoming as well as average itemized expenditures, labor and 

material expense breakdowns, and location of services and materials being purchased. This 

information will be used to modify and customize the IMPLAN model. IMPLAN is a regional 

economic model that estimates additional economic activities, in terms of employment and 

income, generated from a primary activity (oil and gas development). Models such as IMPLAN 

are based on national averages that often times do not properly consider these important 

relationships and thus are not accurate in their estimate of total economic contribution. 

The updates to the model will consist of modifications of coefficients that represent expenditure 

relationships between relevant industries. These coefficients are embedded in access database 

files within the software program. As such, there is no requirement to report any specific 

company costs, contactor information or other proprietary information to be released as part of 

this study. However, the study may report on general trends or differences in industry operations 

that can impact expenditures and investments across basins. 

• A Draft Report will be extensively reviewed by industry, academia, and other interested parties 

before it is finalized for publication. 

• The Final Report will be shared and distributed to all operators and service companies that 

participate in the study. 

• Please see the Colorado Oil and Gas Economic Impact Study for an example of the types of 

information that will be reported. The report is located at the following website: www.cerimines.org/CERIOil&Gas.pdf. 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 70 

Exhibit D- 3: Wyoming Oil and Gas Operators Data Request Document 

Booz Allen Hamilton (Booz Allen) is requesting information from your company regarding oil and gas 

development and production expenditures. We are very cognizant of the sensitive nature of this 

information and insure that no specific cost information for any individual company will be revealed. For 

instance, ALL costs, fees, and payments WILL BE AGGREGATED across industries and activities and 

reported only in aggregate to protect the proprietary nature of this information. However, in order to 

accurately estimate the true ECONOMIC CONTRIBUTION of the industry to the State of Wyoming we 

need to have accurate information on the average costs incurred by companies within specific basins. 

This is the number one goal of this effort. We appreciate any help you can provide in facilitating this 

information collection effort and providing the appropriate point of contact to provide these types of 

information. 

 

For your information, Bruce Hinchey with the Petroleum Association of Wyoming is supportive of this 

project. He has written a letter of support the project and provided us with your contact information. 

 

Booz Allen is specifically interested in obtaining the following information from your company for the 

calendar year 2007:

• Total number of wells drilled and completed by basin in Wyoming 

• Average capital investments for drilling and completing wells by basin for oil, conventional gas or 

coalbed methane gas 

• Major service companies utilized for drilling and completing wells and locations of service 

companies 

• Number of producing wells by basin 

• Average production costs for oil, conventional gas, or coalbed methane gas

• Specific royalty and payment information for private mineral production, including average 

surface land damage payments, override payments, royalty payments, and value of private 

mineral lease payments and bonuses 

A major task within this study is to understand to where the capital investments are being paid. 

Therefore, we will also be interviewing service companies to allocate their revenues among those that 

stay within Wyoming and those that move outside the State. 

To facilitate this information collection process, it is necessary to contact and collect information from 

Team Leads for the various basins of operation as well as a Land Group contact. The information 

needed for each is outlined below. 

If this information is difficult to report, we would like to interview (for about an hour) someone 

within your company who has knowledge about capital investment and production costs as well 

as private mineral royalties, fees and payments. We require only ESTIMATES of these costs to 

customize our model, and your subjective knowledge about your company's expenses is better 

than no information at all! 
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Booz Allen Hamilton 71 

For the Team Lead in Each Basin of Operation 

In order to simplify the data collection effort and the impact on each company, we would like to request an 

example Authority for Expenditure (AFE) document for drilling and completing a well. If possible, these 

documents should be for a typical well in each basin where you operate (if possible for oil, conventional 

gas and coalbed methane) for the calendar year 2007. 

Once these forms or cost documents are obtained, we would like to contact you to obtain more 

information on the larger expenses, the names of service companies utilized and their locations, and 

other pertinent information. 

We would also like to obtain information on your 2007 production costs, if possible, by basin of operation 

and type of resource extracted. If possible, this information should be provided in a cost per mcf or per 

barrel unit. If these costs cannot be captured per unit of production, we are willing to work with whatever 

type of reporting units or methods you can provide. Additional data may be requested to convert the cost 

data into per mcf or per barrel production costs, such as number of producing wells, wells per lease, etc. 

For the Land Group (or Division Order) for Each Basin of Operation 

On average across each basin of operation, we would like to obtain the following information for 2007 

(these should be mutually exclusive royalties, payments and fees): 

• Private mineral royalties 

• The percentage of wells with private mineral ownership 

• Average production fee as a percentage of production value paid to private mineral owners 

• Locations of private mineral royalty recipients; provide percentage of royalties paid to recipients 

within Wyoming. 

• Surface land damage payment 

• Percentage of wells that are split estates where surface land damages are paid to private 

surface owners 

• The average surface land damage payment paid in a cost per well 

• Locations of surface land damage payment recipients; provide percentage of payments to 

recipients within Wyoming. 

 

3. Override Payments 

• The number or percentage of wells in the basin where an override payment is made 

• The average override fee as a percentage of production value 

• Locations of private override fee recipients; provide percentage of fees paid to recipients within 

Wyoming. 

4. Average dollar value of leases and bonuses paid for access to private minerals in 2007 
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Exhibit D-4: Supporting Letter from Petroleum Association of Wyoming 

951 Werner Court, Suite 100 fax (307) 266-2189 

Casper, Wyoming 82601 e-mail: paw@pawyo.org

(307) 234-5333 www.pawyo.org

 

February 29, 2008 

Board of Directors 

Petroleum Association of Wyoming 

Casper, Wyoming 

As you know, we have been in the planning stages for the few months and are ready to execute the oil 

and gas industry economic contribution study. The effort, coordinated through the Wyoming Business 

Association and Wyoming Heritage Foundation and in conjunction with economists Dr. Lisa McDonald 

with The Louis Berger Group and Dr. Holly Bender of Booz Allen Hamilton will require your cooperation 

and participation in order to make this project successful. In 2005, Drs. McDonald and Bender estimated 

economic contribution of oil and gas activities in Colorado (see: www.ceri-mines.org/cerioil&gas.pdf) in a 

peer-reviewed, objective and transparent analysis. This study will utilize a similar highly defensible 

methodology to the Colorado study. 

A number of key areas will be examined and require your help in obtaining accurate, specific information. 

For example, we will be examining capital expenditure data for drilling and completing wells, service 

company use and expenditures, production cost data, and other aspects of the industry to demonstrate 

the economic contribution of the industry to the State of Wyoming. Once the data collection effort is 

complete, we will calculate the direct and downstream economic contribution to the State. 

I cannot emphasize enough the importance of your participation in this survey and the need for 

cooperation with the effort. Confidentiality will be of utmost importance and I will work with you 

individually if needed to satisfy any issues you might have. Our industry’s economic contribution to 

Wyoming’s economy is vastly underestimated. 

Dr. Bender or one of her representatives will be contacting you shortly to schedule an interview and follow 

up to collect data. Thank you in advance for your help. Should you have suggestions about areas to 

examine, please feel free to advise me at your earliest convenience. 

Sincerely, 

Bruce Hinchey 

President 
Wyoming Heritage Foundation Oil and Gas Economic Contribution Study 

Booz Allen Hamilton 73 

Appendix E: Vendor and Service Company Allocations 

This section presents the location profiles used to distribute service company expenditures between instate and out-of-state expenditures. These expenditure location allocation and profiles were used for six 

general types of intangibles and tangibles for drilling and completing a well. They are: 

1. Drilling Contract Services 

2. Earthwork and Construction Services 

3. Stimulation, Cementing and Perforation Services 

4. Other Labor-Based Services 

5. Tangibles: Casing and Tubing 

6. Tangibles: Other Materials and Equipment Expenditures 

Exhibit E.1 displays the location allocations used for drilling contract services. Operating companies 

utilized both local Wyoming drilling companies as well as companies with regional and headquarter 

offices outside Wyoming. Booz Allen interviewed one local drilling company and four companies with 

regional and corporate headquarters out of state. The local Wyoming companies were generally smaller 

companies and, as expected, had significantly higher in state expenditure percentages since all or most 

labor and most of the profit remained within the state. 

Exhibit E.1. Drilling Contract Expenditure Location Allocations 

Location Percentage 

Field, Regional, and HQ in 

Wyoming 

Larger Local Field Office 

and HQ out of state 

Small or No Local Field 

Office and Regional and 

HQ Office out –of-state 

Within Wyoming 72 49 30 

Outside Wyoming 28 51 70 

Exhibit E.2 displays the location allocations used for earthwork and construction services expenditures. 

Most of the earthwork companies used by operators were locally-owned and operated companies, many 

of which had multiple WY field offices. Two companies provided input into the expenditure patterns and 

verified the expenditure allocation. These allocations were mostly incurred within Wyoming since these 

construction services utilize local labor and profits remain local as well. 

Exhibit E.2. Earthwork and Construction Expenditure Location Allocation 

Location Percentage 

Field, Regional, and 

HQ in Wyoming 

Larger local field office 

and HQ out-of-state 

Within Wyoming 95 85 

Outside Wyoming 5 15 
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Stimulation, cementing, and perforation services, shown in Exhibit E.3, are often the largest expenses for 

completing an oil or gas well. These activities are largely labor-based services, but do require a 

significant amount of materials (cement, stimulation materials). In Wyoming, two major companies were 

interviewed to assess the location allocations. Since these are fairly technical services, it is often the 

case that these companies need to bring in highly-skilled labor from outside Wyoming to perform these 

services. Required materials and equipment, non-local labor, and non-local profits drive down the local 

Wyoming percentage for these services. 

Exhibit E.3. Stimulation and Cementing Expenditure Location Allocation 

Location Percentage 

Larger Local Field Office and HQ 

out-of-state 

Small or No Local Field Office 

and Most Support from out-ofstate HQ 

Within Wyoming 42 30 

Outside Wyoming 58 70 

Exhibit E.4 summarizes general labor-based services locations allocations for drilling and completing 

wells. These services include pumper labor, roustabouts, drilling or completion supervision, permitting, 

legal, surveying, water hauling or water services, and others. Two well servicing companies were 

interviewed to determine their expenditure location allocations. Knowledge from labor-based service 

operations in Colorado were also utilized. 

Exhibit E.4. General Labor-Based Service Expenditure Location Allocation 

Location Percentage 

Field, Regional, and 

HQ Office in 

Wyoming 

Larger Local Field 

Office and HQ out-ofstate 

Small or No Local Field 

Office and Most Support 

from out-of-state HQ 

Within Wyoming 90 80 60 

Outside Wyoming 10 20 40 

As shown in Exhibit E.5, casing and tubing expenditures for Wyoming have a large out-of-state 

component as these materials are primarily imported to Wyoming. The small Wyoming percentage is 

attributed to the overhead for the storage, transportation, and sales of the product. 

Exhibit E.5. Casing and Tubing Expenditure Location Allocation 

Location Percentage 

WY sales office (yard) & reg 

office in WY / HQ out of 

state 

 WY sales office (maybe yard) 

/ rest out state 

 No local field office / most 

support from out of state 

HQ 

Within Wyoming 20 15 5 

Outside Wyoming 80 85 95 
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Exhibit E.6 shows the equipment and materials expenditure location profile. This profile was used for 

items such as rental equipment, down hole equipment, wellhead equipment, fluid service providers, or 

other general material and equipment items that were not captured in casing and tubing location profile. 

Three companies provided information for these profiles. Rental equipment allocations are generally 

higher for within state expenditures than other wholesale trade items due to the use of Wyoming 

companies with local overhead, transportation, installation and take-down labor. 

Exhibit E.6. General Materials and Equipment Expenditure Location Allocation 

Location Percentage 

Field, Regional, 

and HQ in 

Wyoming 

Larger Local Field Office 

and HQ from out of state 

Small or No Local Field 

Office and Most Support 

from out of state HQ 

Within Wyoming 35 28 10 

Outside Wyoming 65 72 90 

During interviews with operators, a large amount of “facility” expenses were identified for surface 

buildings, housing, storage facilities, and buildings and general facilities for production and well head 

equipment. Since these facilities are primarily a material cost, but also have a labor component for 

overhead, installation labor, transportation, the following allocation was used: 30% within Wyoming and 

70% outside Wyoming. This was based on our discussions with two companies provided these types of 

wholesale trade items. 
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Appendix F: References 

Colorado Department of Local Affairs, Annual Report, 2007. 

Colorado Department of Revenue, Annual Report, 2007. 

Colorado Energy Research Institute, 2007, Oil and Gas Economic Impact Analysis, Colorado School of 

Mines, Report 2007-1, June. 

Colorado State Land Board, 2008, Personal Communication with Pete Melonis, 7/15/2008. 

Consensus Revenue Estimating Group, Wyoming State Government Revenue Forecast: Fiscal Year 

2008-Fiscal Year 2012, January 2008, Table 3. 

Independent Petroleum Association of America, 2007, The Oil and Gas Producing Industry in Your State,

http://www.ipaa.org/reports/econreports/IPAAOPI.pdf, August. 

Dean Runyan Associates, 2007, Economic Impact of Travel on Wyoming: 1997-2006. 

Downey, George K., 2006, Using BEA’s Gross State Product Estimates, U.S. Bureau of Economic 

Analysis, Sept. 8. 

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