Economic Impact of Downtown Denver Oil and Gas Industry

Final Report Economic Impact of Downtown Denver Oil and Gas Industry Prepared for: Downtown Denver Partnership Prepared by: Economic & Planning Systems, Inc. EPS #143038

Table of Contents EXECUTIVE SUMMARY... 1 ANALYSIS... 2 Introduction... 2 Findings... 4 List of Tables Table 1 Private-Sector Employment, 2005 & 2014... 5 Table 2 Private-Sector Wages, 2005 & 2014... 6 Table 3 Occupied Office Floor Area Downtown Denver, 2014... 7 Table 4 Oil and Gas Employment Impact Summary, 2014... 8 Table 5 Oil and Gas Output Impact Summary, 2014 (in millions)... 11 Table 6 Oil and Gas Value-Added Impact Summary, 2014 (in millions)... 12 Table 7 Oil and Gas Public Revenue Impact Summary, 2014... 12 List of Figures Figure 1 Downtown Denver Study Area... 2 Figure 2 Comparisons of Employment Multipliers and Output... 11 Figure 3 Survey Result Overview... 13 Figure 4 Business Visitation (Not Convention) Impact... 14 Figure 5 CBRE Downtown Denver Definition... 16

EXECUTIVE SUMMARY The oil and gas industry (Industry) is a significant component of the Downtown Denver economy. While the Industry has been studied at the county, state and national levels, and a small number of analyses have evaluated office space impacts of the Industry s presence in Downtown Denver, no recent study has documented the full economic impact of the Industry s presence in Downtown Denver. As such, the Downtown Denver Partnership (DDP) commissioned a study to detail the Industry s wide variety of economic contributions to Downtown Denver, which are summarized below. All results are as of June 2014 unless otherwise noted. 1. The Industry represents 10,446 jobs in Downtown Denver, and 11 percent of all privatesector jobs Downtown. This is a 115 percent increase over the 4,862 jobs in 2005, when Industry jobs represented 6 percent of private-sector jobs Downtown. 2. The Industry s Downtown presence accounted for 90 percent of total Industry employment in the City and County of Denver in 2014. 3. On average, an individual working in the Industry in Downtown Denver earns $156,005 per year, 180 percent more than the $55,744 average wage of other private-sector industries in the City and County of Denver. 4. The Industry, including indirectly-supported firms, occupies 5.1 million square feet of Downtown office space, which is 22.6 percent of the total private-sector office space in Downtown. 5. The Industry s 10,446 Downtown jobs support an additional 17,748 jobs, which amounts to 1.7 additional jobs for every 1 Industry job (a total multiplier of 2.7). 6. The direct economic output (i.e. demand for the Industry s services) of the Industry s Downtown activity totaled $5.8 billion in 2014, accounting for 8.9 percent of the City s $64.9 billion output in 2014. 7. The Industry s Downtown presence resulted in $542 million in state and local taxes, as well as $608.4 million in federal taxes, in 2014. 8. The Industry accounts for an average 4 percent of the City s annual convention and conference activity (visitation and room nights), generating an average of $20.8 million in direct economic activity annually. 9. The Industry also generates general business visitation activity totaling $30.5 million in lodging revenues ($4.5 million in lodging taxes) and $22.1 million ($1.7 million in sales taxes) in other retail expenditures for Downtown Denver. 10. The Industry gave an estimated $27.9 million in charitable contributions in 2014. Economic & Planning Systems, Inc. 1 Final Report

ANALYSIS I n t r o d u c t i o n Economic & Planning Systems (EPS) was retained by the Downtown Denver Partnership (DDP) to conduct a study of the economic impacts of the oil and gas industry (Industry) on Downtown Denver. The purpose of the effort was to identify the magnitude of the Industry s presence and integration into the fabric of Downtown business activity and the significance of its economic contributions. Economic contributions are defined as the number of jobs held within the definition of the Industry, wages, output, value-added, and public revenue contributions, as well as the portion of Downtown Denver s office space occupied by the Industry, the portion of convention and non-convention visitation generated by the Industry, and other attributes that characterize the demographic complexion of the Industry s workforce, such as educational attainment, place of residence and age distribution. The analysis was conducted according to DDP s definition of Downtown Denver, as illustrated in Figure 1. Figure 1 Downtown Denver Study Area Economic & Planning Systems, Inc. 2 Final Report

Methodology Economic Impact Analysis An economic impact analysis was completed using IMPLAN input-output modeling software. 1 IMPLAN s modeling software is structured to account for trade flows and industry profiles within a defined economic unit (study area), such as the City and County of Denver. Such an analysis provides an estimate of the multiplier effects, or the ripple effect, of an initial impact or demand from the Industry on the area economy. There are three main components to the characterization of the economic impacts: Direct Impacts are the economic activities carried out by the Industry, such as the labor it employs; wages; property and sales taxes paid; and the goods, services and real estate it purchases or leases in its operations. Indirect Impacts derive primarily from business-to-business activities, such as the lease and purchase of equipment for operations, and the legal, financial and administrative services that may be procured in the process of conducting direct activities. In the Industry, indirect impacts most often include manufacturers of equipment, the legal profession, professional and technical services, and finance and insurance. These impacts will quantify the extent of that integration in terms of jobs, contribution to gross regional product (GRP), and wages. Induced Impacts are the ripple effects of the direct and indirect impacts on the larger economy. They include the local expenditures made by households of the direct and indirect industry jobs. These effects are the increases in employment and expenditure created by successive rounds of local spending and hiring, as individuals or firms associated with the Industry buy goods and services in the local economy. The economic impact analysis identifies several measures of economic activity, including output (i.e., total sales or spending), earnings (salaries plus employer-paid benefits including proprietor income), employment (jobs), and value-added (equivalent to GDP). State, local and federal fiscal impacts are also estimated, including payments such as severance taxes, property taxes, and sales taxes associated with the Industry s direct activity in Downtown Denver. 1 Minnesota IMPLAN Group, Inc. (MIG), Hudson, WI, www.implan.com Economic & Planning Systems, Inc. 3 Final Report

F i n d i n g s Industry Definition Economic impact studies evaluating the oil and gas industry generally define it as a set of core sectors whose primary activities encompass the exploration or extraction of oil and gas, as well as vertically-integrated support activities whose business is completely dependent on demand for exploration or extraction. This definition of the Industry typically includes the following sectors according to their North American Industry Classification System (NAICS) codes: 211111: Crude Petroleum and Natural Gas Extraction 211112: Natural Gas Liquid Extraction 213111: Drilling Oil and Gas Wells 213112: Support Activities for Oil and Gas Operations 23712: Oil and Gas Pipeline and Related Structures Construction 4247: Petroleum and Petroleum Products Merchant Wholesalers 324: Petroleum and Coal Products Manufacturing 333132: Oil and Gas Field Machinery and Equipment Manufacturing 45431: Fuel Dealers 486110: Pipeline Transportation A broader definition of the Industry (used in some previous studies) also includes the following mid-stream and service-providing sectors that are more indirectly related: 221112: Fossil Fuel Electric Power Generation 221210: Natural Gas Distribution 237130: Power and Communication Line and Related Structures Construction 424710: Petroleum Bulk Stations and Terminals 424720: Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals) 523910/523999: Miscellaneous Financial Investment Activities 533110: Lessors of Nonfinancial Intangible Assets (except Copyrighted Works) 541: Professional, Scientific, and Technical Services This study uses the narrower definition of the Industry, as defined by the core set of exploration and extraction activities, whose output (i.e., final demand) is dependent on demand for oil and gas production. Economic & Planning Systems, Inc. 4 Final Report

Downtown Denver Private-Sector Employment EPS used 2 nd quarter 2005 and 2 nd quarter 2014 data from the Colorado Department of Labor and Employment s Quarterly Census of Employment and Wages (QCEW) for the following analysis. Between 2005 and 2014, total private-sector employment in the City and County of Denver increased from 357,901 to 395,563, a 1.1 percent annual average increase, shown in Table 1. Over the same period, private-sector employment in Downtown Denver grew from 80,537 to 96,976 jobs, averaging 2.1 percent per year. Employment in the Industry in Downtown Denver grew from 4,862 to 10,446 jobs between 2005 and 2014, averaging 8.9 percent growth per year. 2 As a portion of Downtown Denver s privatesector employment, the Industry expanded from 6 to 11 percent. In the context of the City and County of Denver (which includes the northern portion of the Denver Tech Center), there were 5,596 Industry jobs in the City and County of Denver in 2005 and 11,432 jobs in 2014, making the Industry s presence in Downtown Denver approximately 90 percent of all Industry jobs in Denver. Table 1 Private-Sector Employment, 2005 & 2014 Private-Sector Jobs 2005-2014 2005 (Q2) 2014 (Q2) Total Ann. # Ann. % Downtown Denver Oil & Gas Industry 4,862 10,446 5,584 620 8.9% All Private-Sector Jobs 80,537 96,976 16,439 1,827 2.1% O&G as % of Private-Sector Jobs 6% 11% --- --- --- City & County of Denver Oil & Gas Industry 5,596 11,432 5,836 648 8.3% All Private-Sector Jobs 357,901 395,563 37,662 4,185 1.1% O&G as % of Private-Sector Jobs 2% 3% --- --- --- Source: CDLE, QCEW Microdata; Economic & Planning Systems H:\143038-DDP Oil and Gas Industry Impacts to Downtown Denver\Models\[143038-QCEW_2014_03-04-15.xlsm]t1.3.2-OG 2005 2013 Sum 2 In estimating total oil and gas industry employment, it was discovered that some exploration companies had reported to CDLE under NAICS sectors not aligning with the definition of the direct industry, as provided on page 3 of this report. To identify a more accurate estimate of total industry employment, EPS analyzed establishment-level records from CDLE. The analytical process involved the following steps: 1) mapping CDLE establishment-level records and selecting those that fell within the boundary of Downtown Denver; 2) making an initial estimate of employment using NAICS codes for the industry definition; 3) verifying that the preliminary estimate did not include non-oil and gas employment, e.g., uranium or coal mining; 4) searching through all remaining establishment records using Colorado Oil and Gas Conservation Commission listings of oil and gas businesses in Denver; 5) searching all remaining establishment names for key terms, such as oil, gas, exploration, resource, energy, etc.; 6) eliminating non-industry businesses that may have been captured in the previous step, for example, establishments with names such as wind, solar, or community resource; 7) verifying that all selected establishments were properly reported as single location or a headquarters reporting jobs for the physical site alone; 8) determining final industry employment with the initiallyselected establishments and those selected through the vetting process; and 9) using best available information, verifying that each additional establishment: a) is located Downtown Denver, b) is reporting jobs for Downtown only; and c) is engaged in an activity directly related to oil and gas exploration; for this task, EPS used information from websites and searched Dunn & Bradstreet records. Economic & Planning Systems, Inc. 5 Final Report

As a second point of comparison, a recent study of the Industry s economic and fiscal contributions (produced by the University of Colorado, Leeds School of Business, Business Research Division dated May 2014) estimated that the City and County of Denver contained approximately 31 percent of the state s Industry jobs in 2012. Since the Industry Downtown has historically accounted for approximately 90 percent of the City s Industry employment, this would indicate that the Industry s presence Downtown accounts for approximately 27 percent of the State s total Industry employment. Private-Sector Wages According to analysis of the CDLE s data, average wages in the Industry are higher than wages in other private-sector industries, and wages in Downtown Denver are higher than wages elsewhere in Denver. Moreover, wages for the Industry are also higher among those located in Downtown Denver than those located elsewhere in Denver. Table 2 shows that wages in Denver for the Industry, which averaged $134,670 in 2014, are 140 percent higher than in other private-sector industries, where the average is $55,744. The analysis also shows that Downtown Denver wages in both the Industry and others tend to be higher than elsewhere in Denver. Overall, Downtown Denver private-sector wages are 35 percent higher than elsewhere in Denver, averaging $75,456 in Downtown in 2014 versus $55,744 elsewhere. Within the Industry, average wages are 16 percent higher Downtown than elsewhere, averaging $156,005 versus $134,670 elsewhere. Between 2005 and 2014, average wages in the Industry in Downtown Denver have increased 24.7 percent and 34.0 percent elsewhere in Denver. Average wages in other industries have increased 10.5 percent in Downtown Denver and 22.7 percent elsewhere in Denver. Table 2 Private-Sector Wages, 2005 & 2014 Private-Sector Wages 2005-2014 2005 (Q2) 2014 (Q2) Total Total % Ann. % Oil and Gas Industry Denver $100,510 $134,670 $34,160 34.0% 3.3% Downtown Denver $125,085 $156,005 $30,920 24.7% 2.5% DT Denver % (+ / -) Denver 24% 16% All Other Private-Sector Industries Denver $45,448 $55,744 $10,296 22.7% 2.3% Downtown Denver $68,267 $75,456 $7,189 10.5% 1.1% DT Denver % (+ / -) Denver 50% 35% Source: QCEW Microdata; Economic & Planning Systems H:\143038-DDP Oil and Gas Industry Impacts to Downtown Denver\Models\[143038-QCEW_2014_03-04-15.xlsm]t3.1-OG Wages Economic & Planning Systems, Inc. 6 Final Report

Office Space At the end of the 3 rd quarter 2014, Downtown Denver (using DDP s geographic definition of Downtown Denver) had approximately 35.1 million total rentable square feet of office space with a direct vacancy rate of 9.7 percent, according to information from CoStar. This encompasses all office space, including owner-user buildings. According to research compiled by CBRE for 2014, Downtown Denver (a different geographic definition see Figure 5 at the end of this document) had approximately 25,757,800 square feet of leasable office space (CBRE does not count owneruser buildings or spaces under 10,000 square feet in its inventory) of which 22,666,930 square feet were occupied, shown in Table 3. According to CBRE s research, the Industry occupied 4,400,000 square feet of Downtown Denver s office space, or 19.4 percent. Table 3 Occupied Office Floor Area Downtown Denver, 2014 Direct Indirect Direct & Indirect [Note 1] Occupied Office Floor Area Oil and Gas Direct Industry 4,400,000 731,059 5,131,059 Other 18,266,930 21,935,871 17,535,871 Total [Note 2] 22,666,930 22,666,930 22,666,930 Employment Oil and Gas Direct Industry 10,446 3,128 13,574 Other 86,530 --- 83,402 Total [Note 2] 96,976 96,976 96,976 Floor Area / Job Oil and Gas Direct Industry 421 sqft / job 234 sqft / job 378 sqft / job Other 211 sqft / job --- 210 sqft / job Total [Note 2] 234 sqft / job 234 sqft / job 234 sqft / job [Note 1]: The indirect office floor area estimate assumes that 100 percent of these jobs are located w ithin Dow ntow n Denver. [Note 2]: Office space totals exclude: a) ow ner-user buildings, and b) spaces under 10,000 square feet. Source: CBRE; Economic & Planning Systems H:\143038-DDP Oil and Gas Industry Impacts to Downtown Denver\Data\[143038-Office Impact.xlsx]TABLE 1 - Summary Alt B With approximately 97,000 private-sector jobs in Downtown Denver, this reflects an average usage of 234 square feet per job for all private sector jobs Downtown. Within the Industry, usage averages 421 square feet per job. According to CBRE, the higher average floor space usage per job is attributable to greater storage and amenity space requirements than typical non-industry office users. Higher-level research indicates that Industry users typically require between 400 and 500 square feet per job. Extrapolating from the findings of the economic impact analysis, which is detailed in the following section, EPS estimates that an additional 731,000 square feet of office space is occupied in Downtown Denver by firms indirectly related to the Industry s direct economic activities. Assuming that 100 percent of these indirect jobs are also located in Downtown Denver and that the average 234 square feet per job is relevant, the additional 3,128 indirect jobs bring the total office space impact from the Industry on Downtown Denver to 5.1 million square feet, or 22.6 percent of occupied private-sector office space. Economic & Planning Systems, Inc. 7 Final Report

Economic Impact The following analysis has been completed using IMPLAN input-output modeling software, as described previously. Estimates of jobs, output, value-added and public revenue impacts are based on the direct employment estimates using the preceding analysis of CDLE data. Employment This section presents the results of the analysis in terms of direct, indirect and induced employment impacts. Direct Employment As presented earlier, there are 10,446 direct jobs in the Industry in Downtown Denver, from which demand for an additional 17,748 indirect and induced jobs (3,128 + 14,620 = 17,748) are generated, shown in Table 4. That is, for each job in the Industry, 1.7 additional jobs are generated a multiplier of 2.7, which is discussed later in the report. Of the direct employment Downtown, drilling and extraction employment account for 79 percent (650 + 7,604 = 8,254 jobs of 10,446), support activities for another 13 percent (1,382 jobs), and all other jobs for another 8 percent (810 jobs). The category all other captures a portion of some other industries whose activities are listed below and are directly linked to the exploration and extraction industries. Note: This does not mean that all establishments in Downtown Denver or the City that fit the following categories are directly related to the oil and gas exploration or extraction activities. Financial investment activities Real estate Accounting, tax preparation, bookkeeping and payroll services Architectural, engineering and related services Management consulting services Environmental and other technical consulting services Marketing research and all other miscellaneous professional, scientific and technical services Business support services Construction of nonresidential structures Wholesale trade Table 4 Oil and Gas Employment Impact Summary, 2014 Source Direct Indirect Induced Total Drilling 650 7 0 657 Extraction 7,604 175 14 7,794 Support Activities 1,382 1,044 2 2,428 All Other 810 1,901 14,604 17,315 Total 10,446 3,128 14,620 28,194 Source: IMPLAN; Economic & Planning Systems H:\143038-DDP Oil and Gas Industry Impacts to Downtown Denver\Data\[143038-IMPLAN Results Summary-Mar 5.xlsx]TABLE 2 - Emp Economic & Planning Systems, Inc. 8 Final Report

Indirect Employment There are an estimated 3,128 jobs in Downtown Denver that are indirectly supported by the Industry s activities (i.e. business-to-business spending). Of these, 6 percent (175 jobs) also fall in the extraction category and 33 percent (1,044 jobs) in the support activities category. The largest impact, however, falls in the all other category, accounting for 61 percent (1,901 jobs) of total indirect employment. Not including the all other categories listed previously, the indirect employment impact extends to the following additional employment industries: Monetary authorities and depository credit intermediation Non-depository credit intermediation and related activities Securities and commodity contracts intermediation and brokerage Insurance carriers, agencies, brokerages and related activities Commercial and industrial machinery and equipment rental and leasing Legal services Computer systems design services and related services, including facilities management Advertising, public relations and related services Management of companies and enterprises Employment services Maintenance and repair construction of nonresidential structures Truck transportation Pipeline transportation Couriers and messengers Warehousing and storage Data processing, hosting and related services Investigation and security services Services to buildings Waste management and remediation services Hotels and motels, including casino hotels Restaurants Business and professional associations In understanding these indirect employment numbers, it is important to note that they represent the sum of portions of jobs that are providing goods or services to the Industry. Some indirect industry firms have staff dedicated entirely to providing services to the Industry and some do not. As an example, some insurance carriers, agencies, or brokerage firms may employ one or two staff that spend 100 percent of their time providing services to the Industry. On the other hand, other Insurance firms may only have one or two staff dedicating a third or some portion of their time providing services to the Industry. Across all indirect industries, the portion of time staff spending providing services to the Industry varies widely. Economic & Planning Systems, Inc. 9 Final Report

Induced Employment There are an estimated 14,620 jobs induced by the Industry s direct activities, of which nearly 100 percent fall into the all other employment category. For the most part, induced employment includes services that relate to the expenditures of households, such as personal care services, health care, financial services, restaurants and retail goods or services, and educational institutions. Some industries appearing in the list below also appeared in the list of indirect industries on the previous page. The primary difference is that the demand for induced industry services is created by household, not business-to-business, spending. Insurance agencies, brokerages and related activities Funds, trusts and other financial vehicles Schools and universities Other educational services Physicians, dentists, and other health practitioners Outpatient and home health care centers Hospitals Nursing and community care facilities Individual, family and child day care services Community food, housing, and other relief services, including rehabilitation services Promoters of performing arts and sports and agents for public figures Lodging establishments Restaurants Automotive repair and maintenance, except car washes Personal care services Grant-making, giving and social advocacy organizations Labor and civic organizations Economic & Planning Systems, Inc. 10 Final Report

Total Sector Output (in millions) Employment Multiplier Economic Impact of Downtown Denver Oil & Gas Industry Output Output can be characterized as the total spending that results from demand for an industry s goods or services. Table 5 shows the magnitude of output (i.e. spending for goods and services) related to the Industry s Downtown activity (i.e. direct output), the output associated with indirect industries, and the output associated with induced activity. Direct output is estimated at $5.8 billion, or 8.9 percent of the City s total $64.9 billion in output in 2014. Including the indirect and induced industries, the Industry s total supply chain impact was approximately $8.5 billion. Table 5 Oil and Gas Output Impact Summary, 2014 (in millions) Source Direct Indirect Induced Total (millions) (millions) (millions) (millions) Drilling $308.25 $3.33 $0.01 $311.58 Extraction $4,916.01 $113.36 $9.23 $5,038.60 Support Activities $414.52 $313.20 $0.56 $728.28 All Other $149.31 $405.00 $1,874.70 $2,429.01 Total $5,788.08 $834.88 $1,884.51 $8,507.47 Source: IMPLAN; Economic & Planning Systems H:\143038-DDP Oil and Gas Industry Impacts to Downtown Denver\Data\[143038-IMPLAN Results Summary-Mar 5.xlsx]TABLE 6 - Output Employment Multiplier As indicated previously, each job in the Industry generates demand for an additional 1.7 jobs for a total multiplier of 2.7, as illustrated in Figure 2. This industry employment multiplier is compared with four of Denver s largest sectors by output. Monetary authorities (subsectors of finance and insurance) are the largest employment sector by total output ($7.3 billion), but have a lower total employment multiplier (2.05) than the Industry. Real estate, which accounts for Denver s fifth largest sector by output, has a multiplier of just 1.42. Figure 2 Comparisons of Employment Multipliers and Output $8,000 4 $7,000 $7,307 3.5 $6,000 $5,000 $5,788 2.70 $6,115 3 2.5 $4,000 $3,000 $2,000 2.05 1.94 $4,486 $4,285 1.83 1.42 2 1.5 1 $1,000 0.5 $0 Oil and Gas Industry Source: Economic & Planning Systems Monetary authorities and depository credit intermediation Wholesale trade Air transportation Real estate 0 Economic & Planning Systems, Inc. 11 Final Report

Value-Added Value-added is a measure that approximates an industry s contribution to gross regional product (GRP), more specifically defined as including the total value of income generated from production, employee compensation, payments to government (taxes), and measures of profit or return on investment. As shown in Table 6, the Industry (direct impact) contributed $4.3 billion in GRP, an estimated 6.7 percent of the City s total $64.9 billion GRP. Table 6 Oil and Gas Value-Added Impact Summary, 2014 (in millions) Source Direct Indirect Induced Total (millions) (millions) (millions) (millions) Drilling $230.60 $2.49 $0.00 $233.10 Extraction $3,660.26 $84.37 $6.87 $3,751.51 Support Activities $325.28 $245.78 $0.44 $571.50 All Other $107.51 $256.30 $1,158.45 $1,522.27 Total $4,323.67 $588.94 $1,165.77 $6,078.38 Source: IMPLAN; Economic & Planning Systems H:\143038-DDP Oil and Gas Industry Impacts to Downtown Denver\Data\[143038-IMPLAN Results Summary-Mar 5.xlsx]TABLE 5 - ValueAdded Public Revenue Generation It is estimated that the Industry directly contributed approximately $542 million in state and local taxes in 2014, including employee compensation, taxes on production and imports (such as severance taxes, property taxes, sales taxes, etc.), corporate taxes and other personal taxes. As shown in Table 7, the Industry also contributes approximately $608 million in federal taxes, including social security contributions, taxes on production and imports (such as excise taxes, customs duty, etc.), personal income taxes and corporate profits taxes. Table 7 Oil and Gas Public Revenue Impact Summary, 2014 State and Local Federal Total State and Local Corporate Profits Tax $685,760 $12,114,081 $12,799,841 Personal Tax $89,667,499 $258,688,256 $348,355,755 Social Security Contributions $1,504,172 $255,567,928 $257,072,100 Tax on Production and Imports Excise Taxes $0 $54,020,612 $54,020,612 Custom Duty $0 $22,366,428 $22,366,428 Severance Tax $5,130,270 $0 $5,130,270 Property Tax $196,572,400 $0 $196,572,400 Sales Tax $219,604,544 $0 $219,604,544 Other Taxes $29,075,571 $5,686,380 $34,761,951 Total $542,240,216 $608,443,685 $1,150,683,901 Source: IMPLAN; Economic & Planning Systems H:\143038-DDP Oil and Gas Industry Impacts to Downtown Denver\Data\[143038-IMPLAN Results Summary-Mar 5.xlsx]TABLE 8 - Public Revs B Economic & Planning Systems, Inc. 12 Final Report

Business Survey Findings A survey of oil and gas companies with a Downtown Denver presence was fielded with the assistance of the Colorado Oil & Gas Association between December 2014 and February 2015. The purpose of this survey was to augment the findings of the economic impact analysis and enhance the core set of findings with qualitative characterizations of the Industry, including educational attainment, age distribution, non-conference oriented visitation, and charitable contributions. Jobs, Wages, and Office Space Twenty two firms responded to the request for information. Most of these firms defined themselves as directly engaged in the exploration, extraction and production of oil and gas, and some defined themselves as pertaining to mid-stream and support activities. As illustrated in Figure 3, the employment represented by those direct Industry establishments accounted for 35 percent (3,627) of the Industry s total (10,446) Downtown Denver employment. These firms also occupied a total of 1.7 million square feet of office space in Downtown Denver, representing 39 percent of Industry s total occupied office space (4.4 million) for Downtown Denver. Figure 3 Survey Result Overview 50% 50 40% 30% 3,627 jobs (of 10,446) 35% 39% 40 30 20% 10% Downtown Jobs Represented as a % of Total Direct Industry Jobs Occupied Office Space as a % of Total Direct Industry Space 22 Survey Responses 20 10 0% -10% Source: Economic & Planning Systems 1.7 million sqft (of 4.4 million) 0-10 -20% -20 Economic & Planning Systems, Inc. 13 Final Report

Visitation Two types of visitation activity were considered in the analysis: (1) visitation driven by convention activity, and (2) visitation driven by non-convention business activity, such as affiliates in offices outside of Denver and outside of the state traveling to Downtown Denver via air or ground. The magnitude of visitation activity for each are described below. Convention Visitation According to Visit Denver, convention and conference activity averaged 304,000 visitors and 535,000 room nights per year between 2004 and 2013, of which the Industry accounted for an average of 4 percent. Visit Denver also estimates the direct economic impact of this activity to be approximately $229 million during this period, an average of $20.8 million per year. Business Visitation Through the survey, EPS also collected information on business visitation activity to Downtown Denver in 2014. As illustrated in Figure 4, information showed that activity averaged 7.4 trips per $1 million in output, and that, extrapolating to the entire Industry, more than 42,700 trips were made to Downtown Denver during the year. Depending on the mode of travel, trips averaged 1.2 persons via ground or 1.8 persons via air, and average length of stay ranged from 2.0 days via ground to 3.2 days via air. In total, it is estimated that the Industry generated more than 177,100 visitor-nights in Downtown Denver in 2014. With an average daily rate (ADR) for Downtown Denver of $172 in 2014 (according to the Colorado Hotel and Lodging Association s 2014 Rocky Mountain Lodging Report and Business Travel News 2014 Corporate Travel Index report), it is estimated that the Industry generated $30.5 million in total lodging revenues and $4.5 million in total City and County of Denver lodging tax revenues during 2014. EPS also estimates that with average per-diems of $125 per person (food, car, etc.), an additional $22.1 million in spending was created during 2014, which generated an additional $1.7 million in total sales tax revenues. Figure 4 Business Visitation (Not Convention) Impact Economic & Planning Systems, Inc. 14 Final Report

Educational Attainment The Industry is also notably different from the overall workforce by its high level of educational attainment. According to the U.S. Census, approximately 34 percent of job-holders in the private-sector Downtown Denver held a Bachelor s degree or higher. According to survey information collected from oil and gas firms located in Downtown Denver, 80 percent of the Industry s workforce holds Bachelor s degrees or higher. Age Distribution In terms of age, the Industry s workforce does not differ significantly from the general distribution of workers in the City and County of Denver. According to the most up-to-date information available at the time of this report, (U.S. Census, 2013 American Community Survey), 32 percent of Denver s workforce was younger than 32 years old versus 29 percent of the Industry s workforce. Approximately 43 percent of Denver s workforce was between 33 and 49 years old versus 41 percent in the Industry. Nearly 25 percent of Denver s workforce was 50 or older versus 30 percent of Industry s workforce. Charitable Contributions Firms also provided information regarding charitable contributions. EPS estimated that these contributions equaled approximately 0.5 percent of the Industry s total output, or charitable contributions of $27.9 million in 2014. It was not clear from the information reported by firms, however, whether all or some portion of these contributions were made locally. Economic & Planning Systems, Inc. 15 Final Report

Figure 5 CBRE Downtown Denver Definition Economic & Planning Systems, Inc. 16 Final Report