Transcript GIS AND THE WEST VIRGINIA COAL VALUATION Procedure

Using GIS Technology for Natural Resource Mass Appraisals
Tyler P. Bragg, GISP
WV Property Tax Division
Mined Minerals GIS Section
What do you call a map of
outhouses in the woods?
A shaded relief map!!!
What kind of maps do spiders
make?
Web-based maps!
What do you call a map guide
to Alcatraz?
A con-tour map!
Discussion Items
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Background Information
Components
Factors and Variables
GIS Analysis
Valuation
Map Courtesy of the West Virginia Geological and Economic Survey, www.wvgs.wvnet.edu
Background Information
Valuation of Reserve Coal is outlined in WV
Legislative Rule §110-1I
 West Virginia is estimated to have between
18-52 billion tons of reserve coal. 1

 What is Reserve Coal or “Reserves”?
○ “those beds of coal, or portions of the beds, which
contain mineable coal, but are not active acres on
an active mining property.” 2

Reserve coal owners are required to file a
listing of their properties on an annual
basis to the State Tax Commissioner
Background Information
All coal ownership in West Virginia is to
be valued and taxed. 2
 State Tax Department responsibilities

 Calculating the appraised value
 Providing values to the counties

State “Infers” Coal
 3 mile buffer from known location
○ USGS Standard (circular 891)
GIS Components

Coal Bed Mapping
 WV Geological and Economic Survey

Parcel Mapping
 Mineral Mapping
○ State Mappers, Vendors, PTD
 Surface Mapping
○ Key component to mapping Minerals
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Factor Mapping
How Much is My Coal Worth?

Factors are the characteristics of a given
area that have a direct effect on the value of
coal in that area and determine the time
mining is expected to commence

Variables are information that constantly
changes and has a direct effect on the value
of coal. This information must be
recalculated every year to maintain currency
How Much Is My Coal Worth?
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Factors
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Market Interest
Market Mine-Ability
Conflicts
Volatility
Environmental
Seam/Prime Seam
T Factor
○ Every factor has
scale - 20, 40, 80
(Some can = 0)

Variables
 Coal Prices
 Royalty Rates
 Capitalization Rate
 Discount Rate
 Criteria for Factors
Factors

Market Interest
 Density of coal related
transactions within 5
miles of property
(sales, leases, permit
applications,
prospecting, etc)
Factors

Market Mine-Ability
 Density of mines
(historic and current)
within 5 miles of
property
 Surface, Deep,
Boom, Historic,
Current Mines (as
defined in the Rule)
Factors

Conflict (Wells)
 Density of Oil and
Gas wells on
property
Factors

Volatility
 The measure of the
coal’s ability to
vaporize
○ Ignition, burn rate,
and energy
emission
○ Higher volatility =
increased value
○ Criteria based on
characteristics of
Steam Coal
Blue = Low
Red = High
Factors

Environmental
 Reflects
environmental
restrictions in an
area that affects
mine-ability and
coal value
 Data from a variety
of sources
Factors

Prime Seam Assignment (Based on Coal
Bed Mapping)
 “thickest, previously mined, stratigraphically-
highest coal bed in the area, with sufficient
mineable tons to sustain mining for two (2)
years…” 2
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T Factor
 Reflects the amount of time that mining
operations are projected to commence on a
given property
 Values - 20, 40, 80 (years)
 The result of combination of all other factors
Factors
(Trans + Mine + Well +Volatility +
Environmental + Prime Seam)/3 = T
(Time) Factor
 20 – Projected mining in 20 yrs – Higher
Values
 40 – mining in 40 yrs – Lower Values
 80 – mining in 80 yrs – Lowest Values
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Variables

Royalty Rate
 Average income
collected by a
landowner for active
mining operations
○ Surface vs. Deep
○ Metallurgical vs.
Steam
 Higher Royalty =
More Valuable Coal
Vaggr = (C$ ave )(ROY ave)(PROD ave)/Cap Rate
Variables

Average Coal Prices
 Forward Weighted Average – 3 Year
 Metallurgical vs. Steam
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Discount Rate
 Rate used to calculate present value of a coal property
based on the time expected before mining takes place
 Present value of future income (determined by T-Factor)
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Capitalization Rate
 Used along with discount rate in determining present
value of coal properties
 Three year running average
 Combines Safe Rate, Risk Rate, Non-liquidity Rate,
Management Rate, and subtracts Inflation Rate
Variables
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Factor Criteria
 To be evaluated biannually based on geo-
statistical analysis of data
○ Market Interest (Transactions)
○ Market Mineability (Mines)
○ Use Conflict (Wells)
○ Environmental
Analysis – Coal Mapping
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Core drilling data
 Point location
○ Coal elevation,
thickness, additional
coal
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Key to GIS analysis
 Attribute properties
with coal information
 Mineable/unmineable acreages
for every parcel, per
coal seam
Analysis – Coal Mapping
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Raster Grid (Thickness) created from
points
Run 3-mile buffer on all points (inferred
coal)
Analysis – Coal Mapping

Elevation Grid created from drill data
 Subtracted from Statewide DEM to
locate absent coal
 Result – Elevation Cutter
○ Cut out areas that have been eroded
(rivers/streams)
Elevation Cutter
Elevation Grid
DEM
-
=
Analysis – Coal Mapping
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Eroded areas are removed from thickness
grid
 For every coal seam
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Grid is trimmed to 3-mile radius of points
Analysis – Coal Mapping
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Contours are generated
 .5 foot intervals
Mined out areas are removed/cut out
 All steps completed for each coal seam (93 total)
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Contours
Mineable/Un-mineable
Analysis – Other Factors
BTU Contour Map
 Sulfur Contour Map
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BTU
Sulfur
Analysis – Other Factors

Production
Analysis – Parcel Mapping
Surface Parcels provide a reference for
mineral parcel boundaries
 Accurate surface parcel mapping is
beneficial

 Mineral parcels are only as accurate as the
surface parcels
WVDTR has field mappers that research
deeds and land books in counties to locate
unmapped mineral parcels
 County GIS contribution

 More up-to-date, accurate surface data = better
mineral data
Analysis –Parcel Mapping
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MMD (Mined Minerals
Dataset)
 Mineral Parcel
Boundaries
○ Includes Surface Parcels
with Mineral Rights
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All factors and variables
are compared to mineral
parcels for each seam on
property
Pertinent info recorded in
attribute table
Valuation
Once all information has been
associated with each parcel (per coal
seam present), values can be
determined
 Coal values are based on an INCOME
approach

 Simply put—based on future royalties,
discounted by calculated Time Factor

RCVM (Reserve Coal Valuation Model)

$/ac/bed=($/mmBTU)X(Roy)X[1±(BTU+S)]X[(1/(1+I)(t+0.5))x(1/106)]X(BTU)X(2000)X(1800)X(RR)X(Thk)
Challenges

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Completion of Coal Bed Mapping
Completion of Surface and Mineral
Mapping
 Until then—Geocoding
○ 4-Mapped Parcel
○ 3-Within a tax index map
○ 2-within a quad 9th
○ 1-within a district
○ 0-within a county
 Anything less than Geocode 4 is valued based
on its respective location (county, district, etc.)

Validating tax returns vs. coal mapping
Thank You!
Tyler P. Bragg, GISP
WV State Tax Department
Property Tax Division
Mined Minerals GIS Section
Phone: (304) 558-4925
Email: [email protected]
References
 1 Taxing
West Virginia’s Coal Reserves:
A Primer, West Virginia Center on
Budget & Policy, May 2009.
(http://www.wvpolicy.org/downloads/CoalReserveTaxationPrimerFINAL-5-19-09%20-%20FINAL.pdf)
 2 Title 110, West Virginia Legislative
Rule, Series 1l, Valuation of Active and
Reserve Coal Property for Ad Valorem
Property Tax Purposes, May 1, 2006.