W.Va. urged to convert 2K vehicles to natural gas

February 25, 2013
Shale Play

CHARLESTON, W.Va. (AP) - West Virginia should convert at least one fourth of its roughly 7,800-vehicle fleet to natural gas within four years to seize on the state's ample supply amid volatile gasoline and diesel prices, a governor-commissioned task force said in a report Thursday.

The study also recommends offering tax credits worth up to $400,000 to encourage the building of fueling stations. It identifies the Kanawha Valley, the counties that host the West Virginia Turnpike and the Interstate 79 corridor from Harrison to Monongalia counties as among the best sites for these stations.

"We have the opportunity to reinvest in our own economy, provide drivers with lower costs at the pump as well as support the establishment of more good-paying jobs for West Virginians, all by using a clean burning energy source harvested right here at home," Gov. Earl Ray Tomblin said in a statement heralding the report.

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Tomblin appointed the 21-member task force, which includes a number of executives from natural gas developers and convenience store-fueling station chains, in June. The study follows increased interest in the huge estimated reserve of natural gas trapped deep beneath West Virginia and area states in the Marcellus and Utica shale formations.

The governor has already acted on another task force finding. He's proposed refocusing the tax credit for buying alternative fuel vehicles on natural gas as part of his agenda for the ongoing legislative session. The study said state-operated vehicles alone cannot sustain natural gas fueling stations. Given the absence of such stations in West Virginia - around 1,000 operate nationally - the task force recommends the state begin this switch by purchasing vehicles that run on both natural gas and traditional fuel.

But at least some stations are on the way. IGS Energy announced plans last month to build and operate a $10 million network of compressed natural gas fueling stations along I-79 in Charleston, Bridgeport, Jane Lew, and near the Pennsylvania line. The Dublin, Ohio-based company estimates it will have all four up and running by the end of the year.

Thursday's report also touts propane for fueling school buses. It estimates the state could save $3,100 a year for each bus that runs on this byproduct from natural gas drilling. With 3,000 school buses statewide, the study projects annual savings exceeding $9 million by switching them all. Propane-fueled buses costs about $10,000 more than those that run on diesel, but the state would recover that extra spending within 3 1/2 years, the study said.

Full-sized pickup trucks, meanwhile, offer the greatest savings for converting at least 1,952 of the state fleet vehicles to natural gas, the report found. It would cost $9,000 to switch one over, but its fuel costs would drop by half to $1.80 per gallon under recent prices, the study said. The report estimated the state would recoup its investment and save $5,000 within the truck's five-year lifespan. It offered a potential savings of $2,569 per vehicle during the seven-year lifespan of a converted heavy-duty dump truck.

"The conversion cost of a sedan does not produce a reasonable return on investment," the report said.

The vehicle purchase tax credit covers 35 percent of the cost, up to $7,500 for cars and $25,000 for large trucks. Tomblin has proposed ending the credit for plug-in electric and hybrid vehicles as well as those that run on ethanol, alcohol, hydrogen, solar power and coal-derived liquid fuels. His bill would also phase out the credit in 2017, rather than in 2021 as currently scheduled.

Environmental groups have questioned the governor's approach, as improving air quality has been a goal of the tax credit. With coal still West Virginia's dominant natural resource, mining interests support keeping the credit for vehicles that rely on electricity or coal-based fuels.