Data Exercise, Week 5

This week’s data exercise introduces some new tools. There are five objectives for this exercise:

Use the template that I gave you for Assignment 1 if you want a clean RMD to start with, and then anything you see in a code chunk on this page, you should be able to use to populate your file and see if you can get it to run. Add one thing at a time, knit your file, and make sure you understand what each bit is doing. If not, re-read the notes here.

As always start with a code chunk for your packages. I also use knitr::opts_chunk$set(message=F,warning=F) to set the default for all code chunks in my document to suppress any R warnings or messages in my output. This will clean up your HTML a lot, but it also makes it harder for me to see things that might be causing you issues in your code.

#load packages
library(kableExtra)
library(readxl)
library(janitor)
library(tidyverse)
library(lubridate)
library(scales)
library(viridis)
#set default chunk options
knitr::opts_chunk$set(message=F,warning=F)

Downloading this week’s data

This week, we’re going to use some Alberta government royalty disclosure data. One of the recommendations of the Alberta Royalty Review in 2015-16 was more transparency with respect to oil sands costs, profits, production and royalty payments. The Alberta Government has followed that recommendation and makes project-level data available on their open data site. I’ve built my own scraper to compile those data and provide some basic graphs that you might find useful. For this exercise, I’ve created a data set for you to use based on these data.

The data are already in R format here and so you can download and read those data directly into R. The data contain project names, year, project type, an indicator for large (>30,000 bbl/d) projects, production, revenues, and costs and an indicator for royalty payout status (we’ll get to that!). The naming conventions should be obvious, especially given that I’ll provide you with some extra code in here.

As before, you can speed up your code by including a chunk option to cache the data so it won’t download every time, using something like this: {r read data,cache=T}.

#download the data - remember to use the mode="wb" so that you get the windows binary file
download.file("https://econ366.aleach.ca/files/os_data.rdata",destfile = "os_data.rdata",mode="wb")
load("os_data.rdata")

After you run this chunk, you should see that os_data is an object in your global environment.

Examining the data

As with the other exercises, a good habit to get into is to use a code chunk at this point (you can delete it later) to have a look at your data and make sure you have what you’re expecting. For example, we have multiple years of data:

os_data %>% select(reporting_year) %>% distinct()
# A tibble: 8 × 1
  reporting_year
           <dbl>
1           2016
2           2017
3           2018
4           2019
5           2020
6           2021
7           2022
8           2023

And we have projects sorted by type using TRUE/FALSE values:

os_data %>% select(mine) %>% distinct()
# A tibble: 2 × 1
  mine 
  <lgl>
1 FALSE
2 TRUE

This last one is a new feature for some of you: a logical variable. You’ll see later on how we can use this really easily in filters and other selection commands.

Column / bar plots

For these data, there are many pieces of project-level data, and so it’s best to think about a graph type that works well for these types of data: column or bar plots. With ggplot, we use geom_col to make these sorts of graphs. Let’s start with a basic plot for production (cleaned_crude_bitumen_at_rcp_barrels) from mining projects last year:

ggplot(os_data %>% filter(mine,reporting_year==2023),
       aes(project_name,production/365/1000))+
  geom_col(size=0.25,position = position_dodge(width = .25),color="black")+
  theme_minimal()+
  theme(axis.text.x = element_text(hjust = 0.5,vjust=0.5)
        )+
  labs(x=NULL,y="Bitumen Production (thousands of barrels per day)",
       title="2023 Bitumen Production, Oil Sands Mining Projects",
       #subtitle="Excluding Electricity,by NAICS 4-Digit Code",
       caption="Data via Government of Alberta, graph by @andrew_leach")

So, that’s a basic plot. Now, we can use the skills we learned in the last data assignment to use a faceted plot to show production by year, by project. Here, I’m using a one command you’ll want to note: I flipped the x-axis labels and aligned them with the center of each bar using theme(axis.text.x = element_text(angle=90,hjust = 0.5,vjust=0.5)).

ggplot(os_data %>% filter(mine),
       aes(reporting_year,production/365/1000))+
  geom_col(size=0.25,position = position_dodge(width = .25),color="black")+
  scale_x_continuous(breaks = pretty_breaks(6),expand=c(0,0))+
  facet_wrap(~project_name,nrow = 1)+
  theme_minimal()+
  theme(axis.text.x = element_text(angle=90,hjust = 0.5,vjust=0.5)
        )+
  labs(x=NULL,y="Bitumen Production (thousands of barrels per day)",
       title="Bitumen Production, Oil Sands Mining Projects",
       #subtitle="Excluding Electricity,by NAICS 4-Digit Code",
       caption="Data via Government of Alberta, graph by @andrew_leach")

We can do a similar graph for the larger in-situ projects, which I’ve defined in the data as those with production greater than 30,000 barrels per day. In this graph, you’ll see the power of the logical variables in a filter. I only need to specify the variable name, and it defaults to select based on the value being true, and I can reverse that (e.g. with the filter(!mine)) to select for projects that are not mines:

ggplot(os_data %>% filter(big_project,!mine),
       aes(reporting_year,production/365/1000))+
  geom_col(size=0.25,position = position_dodge(width = .25),color="black")+
  scale_x_continuous(breaks = pretty_breaks(6),expand=c(0,0))+
  facet_wrap(~project_name,nrow = 1)+
  theme_minimal()+
  theme(axis.text.x = element_text(angle=90,hjust = 0.5,vjust=0.5)
        )+
  labs(x=NULL,y="Bitumen Production (thousands of barrels per day)",
       title="Bitumen Production, Larger Oil Sands In Situ Projects",
       #subtitle="Excluding Electricity,by NAICS 4-Digit Code",
       caption="Data via Government of Alberta, graph by @andrew_leach")

Average Project Attributes

One of the more powerful features in R is grouping and summarizing. Imagine I wanted to know the key characteristics of different types (mines and in situ) of projects over time. One way that I could do this is by grouping and either mutatating or summarizing. Unlike mutate, the summarize command creates a new data set. Let’s look at some examples.

The data contain measures of production, revenues, and costs per year by project, but if we’re interested in summaries by type, we can make that happen using groups. I’ll want to group by one or more variable, and then either summarize or mutate, and then it’s generally best to ungroup your data. Let’s suppose I want to know average (production-weighted) royalties paid by project type and year. This is also an opportinity for me to introduce you to pivot_wider, the opposite of pivot_longer.

os_data %>% 
  select(reporting_year,mine,production,royalty_payable)%>%#pick the variables I need
  group_by(mine,reporting_year)%>% #group by project type and year
  summarize(royalties=sum(royalty_payable,na.rm=T)/sum(production,na.rm = T))%>% #royalties per barrel
  ungroup()%>%
  #the na.rm = T means that you don't count any missing values in your summation. REALLY useful.
  pivot_wider(names_from=reporting_year,values_from = royalties)%>%
  #push data to wide format with one column for each year
  #create labels for the mine column
  mutate(mine=ifelse(mine,"Mine","In Situ"))%>%
  #rename the mine column
  rename("Project Type"=mine)%>%
  #make a table
  kbl(escape = FALSE,digits=2,align=c("l",rep('c', 7))) %>%
  kable_styling(fixed_thead = T,bootstrap_options = c("hover", "condensed","responsive"),full_width = T)%>%
  add_header_above(header = c("Royalties payable ($/bbl) by Project Type"=9))%>%
  I()
Royalties payable ($/bbl) by Project Type
Project Type 2016 2017 2018 2019 2020 2021 2022 2023
In Situ 1.40 2.65 2.66 5.15 1.47 7.89 18.2 12.30
Mine 0.35 2.27 2.20 3.61 0.53 5.52 14.4 8.93

Test yourself: see if you can make one for profit per barrel (gross revenue-capital_costs-operating_costs-other_costs+other_net_proceeds-royalty_payable):

Operating Profits net of Royalties ($/bbl) by Project Type
Project Type 2016 2017 2018 2019 2020 2021 2022 2023
In Situ 1.08 12.49 7.49 19.9 4.30 25.9 35.7 25.7
Mine -19.88 -4.67 -1.49 7.4 -8.39 11.8 20.7 12.7

We’ll make a lot more use of summarize and mutate with group_by in the weeks ahead. Test yourself and make ones for operating costs, capital costs, and revenues.

Graphing costs and revenues

In this section, we’re going to make use of some of the techniques we’ve learned so far to build a really neat graph of before-tax profits for these projects. But, to do this and make it look good, you’re going to want to use factors to get the labels in the right order. When we’re done, you’ll produce something that looks like this:

So, how did we get here?

Let’s take a quick look at some of the underlying trends we’re looking at, using a facet_grid plot (note the use of the option scales="free_y to let each row in the grid have different y axis breaks:

os_data %>% 
  group_by(mine,reporting_year)%>% #group by project type and year
  summarize(revenue=sum(gross_revenue,na.rm=T),
            production=sum(production,na.rm=T),
            royalties=sum(royalty_payable,na.rm=T),
            capital_costs=sum(capital_costs,na.rm=T),
            operating_costs=sum(operating_costs,na.rm=T),
            other=sum(other_costs-other_net_proceeds,na.rm=T),
            #profit_or_loss=sum(gross_revenue,na.rm=T)-sum(royalty_payable,na.rm=T)-sum(capital_costs,na.rm=T)-
            #  sum(operating_costs,na.rm=T)-sum(other_costs-other_net_proceeds,na.rm=T)
            )%>%
    ungroup()%>%
  pivot_longer(cols=-c(mine,reporting_year,production),names_to = "item")%>%
  mutate(value=value/production)%>%
  mutate(item=stringr::str_to_title(gsub("_"," ",item)))%>%
  mutate(mine=ifelse(mine,"Mine","In Situ"))%>%
ggplot() +
  facet_grid(rows=vars(mine),cols=vars(item),scales = "free_y")+
  geom_col(aes(reporting_year,value,group=item),size=0.25,position = "stack",color="black",fill="dodgerblue")+
  #geom_col( aes(reporting_year,op_costs_bbl,fill="Operating Costs"),size=0.25,position = "stack",color="black")+
  scale_x_continuous(breaks = pretty_breaks(6),expand=c(0,0))+
  scale_y_continuous(breaks = pretty_breaks(6),expand=c(0,0))+
  theme_minimal()+
  scale_fill_viridis("",discrete = T,option="magma",begin =0.4,direction=-1)+
  theme(axis.text.x = element_text(angle=90,hjust = 0.5,vjust=0.5),
        panel.spacing = unit(2, "lines"),
        legend.position = "none")+
  labs(x=NULL,y="Costs and Revenue (dollars per barrel, before taxes)",
       title="Oil Sands Project Trends",
       caption="Data via Government of Alberta, graph by @andrew_leach")

Now, back to that graph of everything together. First, we need to summarize and clean the data. The first part of my code for this creates sums of production and all costs as well as operating pre-tax profits by type:

  #test<-
  os_data %>% 
  group_by(mine,reporting_year)%>% #group by project type and year
  summarize(production=sum(production,na.rm=T),
            royalties=sum(royalty_payable,na.rm=T),
            capital_costs=sum(capital_costs,na.rm=T),
            operating_costs=sum(operating_costs,na.rm=T),
            other=sum(other_costs-other_net_proceeds,na.rm=T),
            profit_or_loss=sum(gross_revenue,na.rm=T)-sum(royalty_payable,na.rm=T)-sum(capital_costs,na.rm=T)-
              sum(operating_costs,na.rm=T)-sum(other_costs-other_net_proceeds,na.rm=T))%>%
    ungroup()

Having done that, I’m going to pivot to a longer data frame, but note that I’m keeping the project type,reporting year, and production separate. That way, I have a column called value that has all my costs and revenues, and a column called production that has annual bitumen production. I can then just divide value by production and get the per-barrel averages. The fact that I’m summing up all the costs and all the production by type, and then calculating the average means that I’m doing a production-weighted average:

  pivot_longer(cols=-c(mine,reporting_year,production),names_to = "item")%>%
  mutate(value=value/production)

Next, I am going to clean up my labels by formatting my item column, first to remove the underscores and then to convert to title case:

  mutate(item=stringr::str_to_title(gsub("_"," ",item)))%>%
  mutate(mine=ifelse(mine,"Mine","In Situ"))

And, finally, I am going to use factors and levels to order my graph. A ‘factor’ is a category variable (like item or mine in this case) and they allow you to do some pretty powerful things, but they are also frustrating. We’ll have more on factors coming up in the next few assignments, but here’s a quick taste:

mutate(item=as_factor(item),#convert item to a factor. This will be stored as a number with a corresponding label
       #use fct_relevel to order the factor levels into the order I want for my graph
       item=fct_relevel(item,c("Profit Or Loss","Royalties","Capital Costs","Operating Costs","Other")))

Once I do that, I will overcome the ggplot() default to put things in alphabetical order. If I combine all of those steps, I get this graph:

  #test<-
  os_data %>% 
  group_by(mine,reporting_year)%>% #group by project type and year
  summarize(production=sum(production,na.rm=T),
            royalties=sum(royalty_payable,na.rm=T),
            capital_costs=sum(capital_costs,na.rm=T),
            operating_costs=sum(operating_costs,na.rm=T),
            other=sum(other_costs-other_net_proceeds,na.rm=T),
            profit_or_loss=sum(gross_revenue,na.rm=T)-sum(royalty_payable,na.rm=T)-sum(capital_costs,na.rm=T)-
              sum(operating_costs,na.rm=T)-sum(other_costs-other_net_proceeds,na.rm=T))%>%
    ungroup()%>%
  
  pivot_longer(cols=-c(mine,reporting_year,production),names_to = "item")%>%
  mutate(value=value/production)%>%
  mutate(item=stringr::str_to_title(gsub("_"," ",item)))%>%
  mutate(item=as_factor(item),item=fct_relevel(item,c("Profit Or Loss","Royalties","Capital Costs","Operating Costs","Other")))%>%
  mutate(mine=ifelse(mine,"Mine","In Situ"))%>%
ggplot() +
  facet_wrap(~mine,nrow = 1)+
  geom_col(aes(reporting_year,value,fill=item,group=item),size=0.25,position = "stack",color="black")+
  #geom_col( aes(reporting_year,op_costs_bbl,fill="Operating Costs"),size=0.25,position = "stack",color="black")+
  scale_x_continuous(breaks = pretty_breaks(6),expand=c(0,0))+
  scale_y_continuous(breaks = pretty_breaks(6),expand=c(0,0))+
  expand_limits(y=c(0,80))+
  theme_minimal()+
  scale_fill_viridis("",discrete = T,option="magma",begin =0.4,direction=-1)+
  theme(axis.text.x = element_text(angle=90,hjust = 0.5,vjust=0.5),
        panel.spacing = unit(2, "lines"))+
  labs(x=NULL,y="Costs and Operating Net Revenue (dollars per barrel, before taxes)",
       title="Oil Sands Project Profitability",
       caption="Data via Government of Alberta, graph by @andrew_leach")

Want to test your understanding? Try to make this graph:

Hints:

  • use filter(!mine,big_project)
  • you don’t need to group in this case, because you’re reporting project level data
  • you won’t need to use `sum(…,na.rm=T), since you’d be summing up a whole column of data if you did.

I hope you’re noticing just how good a year 2022 was for the oil sands industry: record production, record royalty payments, record profits.