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

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 responsibilitiesCalculating the appraised valueProviding values to the counties

State “Infers” Coal3 mile buffer from known location

○ USGS Standard (circular 891)

GIS Components

Coal Bed MappingWV Geological and Economic Survey

Parcel MappingMineral Mapping

○ State Mappers, Vendors, PTDSurface Mapping

○ Key component to mapping Minerals

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? Factors

Market Interest Market Mine-AbilityConflictsVolatilityEnvironmentalSeam/Prime SeamT Factor

○ Every factor has scale - 20, 40, 80 (Some can = 0)

VariablesCoal PricesRoyalty RatesCapitalization RateDiscount RateCriteria for Factors

Factors

Market InterestDensity 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

T FactorReflects 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

Variables Royalty Rate

Average income collected by a landowner for active mining operations○ Surface vs. Deep○ Metallurgical vs.

SteamHigher 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

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)

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

Factor CriteriaTo be evaluated biannually based on geo-

statistical analysis of data○ Market Interest (Transactions)○ Market Mineability (Mines)○ Use Conflict (Wells)○ Environmental

Analysis – Coal Mapping Core drilling data

Point location○ Coal elevation,

thickness, additional coal

Key to GIS analysisAttribute properties

with coal informationMineable/un-

mineable acreages for every parcel, per coal seam

Analysis – Coal Mapping 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)

=-

DEM Elevation GridElevation Cutter

Analysis – Coal Mapping Eroded areas are removed from thickness

gridFor every coal seam

Grid is trimmed to 3-mile radius of points

Analysis – Coal Mapping Contours are generated

.5 foot intervals Mined out areas are removed/cut out All steps completed for each coal seam (93 total)

Contours Mineable/Un-mineable

Analysis – Other Factors

BTU Contour Map Sulfur Contour Map

BTU Sulfur

Analysis – Other Factors

Production

Analysis – Parcel Mapping

Surface Parcels provide a reference for mineral parcel boundaries

Accurate surface parcel mapping is beneficialMineral 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 contributionMore up-to-date, accurate surface data = better

mineral data

Analysis –Parcel Mapping

MMD (Mined Minerals Dataset) Mineral Parcel

Boundaries○ Includes Surface Parcels

with Mineral Rights

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 approachSimply 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 Completion of Coal Bed Mapping Completion of Surface and Mineral

MappingUntil 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

Tyler P. Bragg, GISPWV State Tax Department

Property Tax DivisionMined Minerals GIS Section

Phone: (304) 558-4925Email: Tyler.P.Bragg@wv.gov

Thank You!

References

1 Taxing West Virginia’s Coal Reserves: A Primer, West Virginia Center on Budget & Policy, May 2009. (http://www.wvpolicy.org/downloads/CoalReserveTaxationPrimer-FINAL-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.