Legislature(1993 - 1994)
02/14/1994 05:00 PM House O&G
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
(Tape 94-6 - Side 1)
CHAIRMAN GREEN: I call the Special House
Committee on Oil and Gas Matters together at five minutes
after five. We are on teleconference with Anchorage and
Fairbanks.
Can you hear us in Anchorage?
ANCHORAGE LIO: Anchorage hears you just fine.
Fairbanks has not joined the conference as yet.
CHAIRMAN GREEN: Is there anybody in Anchorage
that will be wanting to testify?
ANCHORAGE LIO: Mr. Ottesen is here to answer
questions. He is from the Department of Transportation.
CHAIRMAN GREEN: Okay. He just wants to answer
questions, rather than testify?
ANCHORAGE LIO: If you have any of them.
CHAIRMAN GREEN: Okay. Thank you.
Well, we are going to take up House Concurrent
Resolution 12, natural gas as a fuel for motor vehicles
first, and then we will be fortunate to actually get an
overview from the Joint Pipeline Coordinator's Office to
discuss the overview, oversight of the Alyeska Pipeline.
So first we are going to have the -- is there
someone here -- okay. If you would like to come up and give
us a run through. Please identify yourself for the record,
David, and we will be off on House Concurrent Resolution 12.
REPRESENTATIVE FINKELSTEIN: Thank you, Mr.
Chairman, members of the committee. My name is David
Finkelstein.
Where we left off last year was, we discussed the
resolution. The department and others had a number of
suggestions. So the CS that is before you, has a couple
added from that hearing that members of the committee showed
an interest in.
One of them was, "Whereas natural gas could
benefit the commercial motor carriage through the
availability of reliable inexpensive fuel, meet the pending
low sulphur requirements of the Clean Air Act, and whereas
natural gas has improved and performed the arctic conditions
of Alaska, having been in use in the North Slope Borough for
more than ten years on a year round basis. And then there
is some other changes made that were comments from committee
members, and exactly who the copies of the resolution were
sent to, which is getting to be quite a list.
Other than that, the situation is basically the
same. I did attend some of the meetings that the state
sponsored during the interim on their cooperative approach
in trying to advance natural gases as a fuel in vehicles. I
think there is a lot of optimism. I just passed out an
article from February 7 in the Anchorage Daily News on the
same subject. And other than that, I would be glad to
answer any questions.
CHAIRMAN GREEN: Are there any questions from any
of the committee members, for Representative Finkelstein?
(No audible response.)
Do -- are there currently places that people can
get natural gas, if they had the conversion, in Alaska.
REPRESENTATIVE FINKELSTEIN: There are some. In
Anchorage there is basically a fast fueling spot and a slow
fuel spot out. The conclusion of the working group to date,
from the meetings I attended, and the minutes I've read, is
that is the bottle neck of the system at this point, that --
of private fleets, especially, are not about to convert
until they have some minimum level which, I think, the
Department, the state views as about four -- four to five in
Anchorage, so that it is reasonably convenient.
There are other communities, though, that can
operate off of just one fueling spot for the town. It's
just the nature of Anchorage, that is relatively inefficient
to travel beyond that to get to the fueling spot.
The view of those who might be in the business of
selling natural gas is -- it's hard for them to make the
commitment without any sense that the Department is going to
follow through, as well as the municipality, private fleets,
and the federal government are going to follow through, that
there really will be a market out there, if they make the
expenditure.
But in all levels that is happening, there is
still strong support within the municipality of Anchorage,
at least for that one city. And on the federal level,
Clinton has recently imposed to a higher level of
expectation for natural gas vehicles in the federal fleet.
And from my understanding, in talking to the Department of
Transportation people, the private fleet managers seem to be
as interested as ever.
So I've got faith that -- and I've been fairly
impressed with the efforts the department has made in trying
to work cooperatively with industry, and sort of move
together, so that by the time these refueling stations might
be put in, there really will be enough demand out there.
CHAIRMAN GREEN: Is there a preferred -- is it,
like, a cryogenic compartment that this gas would go into
and be stored as a compressed gas, or would it be liquified,
or...
REPRESENTATIVE FINKELSTEIN: I think all --
someone from the department could add to this, once I'm
finished. But I don't think they have operated any
liquified stations. There is a bit more technology involved
there. I think, generally, they unloaded, and they have the
transfer station, and from then on out, the distribution
system is just compressed gas. But, they can correct me if
I'm wrong.
CHAIRMAN GREEN: How does it compare economic
wise, if you had the conversion? Say, your vehicle was
ready to run on natural gas?
REPRESENTATIVE FINKELSTEIN: The range of figures
that I've seen, and, again, the department's experience is
much more relevant here -- but the range of figures that
I've seen is anywhere from 40 percent of the cost, up to 80
or 90 percent. That it's always lower per BTU, and lower --
I think BTU is the term used, rather than "thermal unit."
And, usually, 50 to 60 percent of the figures that I hear.
It is very efficient, and it can be argued -- if
you have refueling available, it can be argued it's worth
the investment for even each of us right now. It's just the
refueling station issue, that's, you know, created the
problem.
It has a variety of other benefits on the engine
as well. It's a more clean burning fuel. It doesn't have
the tendency to build up deposits.
CHAIRMAN GREEN: Do you suppose it would ever be
clean enough that you wouldn't have to have a certificate
inspection, if you had a gas car?
REPRESENTATIVE FINKELSTEIN: Well, those are a lot
after carbon monoxide. I don't know how we deal with the
particular exemption program, but I don't think you get the
variation you get in traditional gasoline powered engines,
where it's dependant on a complex technology to reduce the
emissions.
It's, you know, inherent in the engines, so even
the -- a more poorly tuned engine isn't going to be off to
the extreme. But all these things, you should ask, again,
the department, if they have any thoughts beyond mine,
because I would not pretend to be an automotive expert. I
can barely keep my car running.
CHAIRMAN GREEN: Anybody else have any questions
for Representative Finkelstein?
(No audible response.)
Any questions from Anchorage?
JEFF OTTESEN (VIA ANCHORAGE): Mr. Chairman?
CHAIRMAN GREEN: Yes, sir.
JEFF OTTESEN (VIA ANCHORAGE): This is Jeff Ottesen.
I'm with the Department of Transportation, and have been, I
guess, spearheading, more or less, the -- our conversion of
our fleet -- partial conversion to natural gas for the last
few years.
It is interesting that your meeting is today. I
spent the last three days riding one of our first new CNG
vehicles here in Anchorage around. I drove a CNG vehicle to
this meeting in the last 15 minutes. And I could tell you
that they operate every bit as well as a gasoline vehicle;
you can't tell the difference.
To answer a couple of questions that were raised.
The exemption for I & M. If your vehicle is a dedicated CNG
vehicle, that is, it only can burn CNG, yes, it can be
exempt. If it's a dual fuel vehicle, which is probably the
most practical choice, that is a vehicle that can burn
either gasoline or CNG -- it's a switch -- then it has to
maintain the I & M, because of the gasoline that is present
there.
As far as the LNG versus CNG, that's really the
same chemical fuel source, it's only a matter of how it is
stored. Either being delivered to the refueler, or,
ultimately, to the vehicle.
LNG is simply natural gas that has been liquified.
It can (indiscernible) many temperatures.
CNG is simply natural gas that has been compressed
to very high pressures, but it's not being stored at
cryogenic temperatures.
There are advantage to the LNG that we have
available there at Kenai, that's a very economical method of
transporting natural gas. It can be put in a truck like
gasoline. It can be carried to the refueling location,
beyond the range of the current pipelines. To places like
Fairbanks. Stored there at refueler, and then loaded into
automobiles or heavy trucks, for ultimate use by the
vehicle.
So I think Representative Finkelstein is right.
The problem now is the refueling infrastructure. There is a
lot of interest in fleet owners here in Anchorage, from what
I hear, in getting into the business of having CNG. They
have no place to buy the gas right now.
CHAIRMAN GREEN: Would it be a fair assumption,
then, that the -- if you were going to a cryogenic system,
that you would have a greater range than you would under
compression?
JEFF OTTESEN (VIA ANCHORAGE): That is correct.
If you go to cryogenic as your source on board, that is
beginning to show up more and more in the commercial side of
the industry. That is the -- I know the bus system in
Seattle has just opted to go to LNG, because they get
greater range than tanks. Likewise, the long over-the-road
carriers now, around the country, are converting to natural
gas.
But once the gas is being used by the engine
itself, it's the same gas as if it were stored in the
compressed form. The LNG is just a more dense form of
storage.
CHAIRMAN GREEN: And I guess my last questions --
I don't want to monopolize the questions. But how would,
say, either a compressed gas, or a liquified gas, be safety
wise, as compared to conventional gasoline?
JEFF OTTESEN (VIA ANCHORAGE): Well, I'm not an
expert, but I've listened to a lot of experts talk. And my
own skepticism, I think, has come full circle -- or, I
should say, half circle. I have come from being a skeptic
of safety, and now believing that natural gas is probably
safer. And I will give you a few reasons why.
One, the tanks, themselves, are much more durable,
much stronger than a conventional gasoline tank. They are
capable of withstanding a high velocity of rifle rounds.
They are capable of being dropped off a six-story building,
and surviving in tact. So just their durability, as
compared to sheet metal, which is how gasoline is stored, is
much better.
Secondly, the fuel has a lower range of ignition.
The range that it will ignite, the amount of gasoline versus
the atmospheric conditions, has a much narrower band of
accountability than gasoline.
And then, finally, the gas, if it does have a
spill, you do have a break in storage, it's lighter than
air. It quickly dissipates and blows away. Where,
gasoline, being heavier than air, pools and settles down.
But for all those reasons, it's really a safer
fuel.
CHAIRMAN GREEN: Thank you, Jeff.
Any questions from anyone in the audience?
(No audible response.)
What we need to do, I think, is first adopt the
substitute as the bill. I would entertain a motion to that
effect.
REPRESENTATIVE KOTT: Well, Mr. Chairman, I wonder
if I might be able to ask Jeff a question.
CHAIRMAN GREEN: Sure.
REPRESENTATIVE KOTT: It seems to be in order at
this particular point in time.
Jeff, Representative Kott here. I just have a
question for you regarding the number of natural gas
vehicles that are currently in operation in the state of
Alaska. Do you have any estimate as to how many those are?
JEFF OTTESEN (VIA ANCHORAGE): I don't have a hard
estimate. I think, from what I've heard at the various
conferences we've held, I think it's well over 100 now, and
growing. The state fleet here is just in the process of
adding six to its inventory. That will be our first six.
We have a variety of vehicle types, as well as some that are
dedicated natural gas. That is, that is the only fuel. We
also have a Ford Taurus that is a bi-fuel. Some are off the
factory assembly line conversions, and some are being
converted -- after-market conversions. That is, the state
has done it itself.
So we even have these vehicles available for
people that are visiting Anchorage, and need to use a state
car for a day or three. They could be made available. Give
me a call there in Juneau, and I could put you in touch with
people that could schedule that car.
REPRESENTATIVE KOTT: I would be more than happy
to oblige you in using one of those vehicles, as long as I
don't have to report it on my ethics report.
Those numbers that you cited, over 100, are those
state owned vehicles, or is that a combination of public and
private?
JEFF OTTESEN (VIA ANCHORAGE): I believe that's
public and private. There are people that own these
vehicles as individual citizens. There are various
businesses that are using them now. There is a new
coalition of public and private fleet managers here in
Anchorage that are just this week, I believe, going to sign
their resolution as -- basically, their bylaws, and that
includes one of the Anchorage taxi cab fleets, the
municipality and state fleet, and other fleet owners,
basically getting together and trying to work -- get a
teamwork environment to make this happen.
In the three or four days here in town that I've
had a vehicle, driving around, and I have been stopped three
times with people wanting to know what this car is all
about, and how does it drive. Does it work? There's a lot
of difference.
REPRESENTATIVE KOTT: Thank you for your comments.
CHAIRMAN GREEN: Jeff, I have another comment.
This is Representative Green.
How does the maintenance compare on a natural gas
engine to a gasoline engine?
JEFF OTTESEN (VIA ANCHORAGE): We held a
conference a year ago December, where we brought fleet
managers from around the country here to talk about that,
and they all reported the same thing. The engines simply
burn cleaner on natural gas. It doesn't put the
contaminates into the oil. It doesn't foul the spark plugs.
You don't get the (indiscernible) on valves, and that sort
of thing, in the engine, or the rings. they'll last a long
time.
CHAIRMAN GREEN: Thank you.
Any other questions?
(No audible response.)
Okay. I would entertain a motion to adopt the
committee substitute.
REPRESENTATIVE KOTT: So moved.
CHAIRMAN GREEN: It's been so moved by
Representative Kott. Any objections?
(No audible response.)
So ordered.
I would now entertain a motion...
UNIDENTIFIED MALE: Mr. Chairman, do we have
anybody from the oil and gas industry in the audience that
can give us an estimation as to how many natural gas
vehicles are currently in operation on the North Slope
Borough, since they've been up there for about 10 years or
so? Any idea?
CHAIRMAN GREEN: I don't know whether industry --
I see, we have a member, Department of Environmental
Conservation.
Do you happen to know, or have a feel for -- I
guess what you're really after, is just kind of an
approximation.
UNIDENTIFIED SPEAKER: Yes.
MEAD TREADWELL: Mr. Chairman, Mead Treadwell,
Deputy Commission, ADEC.
As I understand it, the firm NORGAS, which is one
of the people you are directing this to, has been operating
its truck fleet on the North Slope. I don't know how many
it is, but it's not a large fleet. My guess is five to 10
vehicles at this point. There has been -- there is also a
source of natural gas, as you know, that's not connected to
Prudhoe Bay, that operates in Barrow. And we had at the
conference last year, a representative of the North Slope
Borough, and I believe they had, with that gas utility,
maybe three to five vehicles, as well.
They actually -- it was kind of an interesting
situation there, because the price of gasoline was far more
expensive than the price of natural gas, and you would think
that many more vehicles would have converted. But the
explanation given at the conference was that the owners --
the people who sold gasoline had a major choice in the
decision of what kind of cars were purchased, and that's why
they stuck with gasoline.
But the utility that controlled its own vehicles,
has been running on natural gas for some time, and that's
the gas utility fleet there. So the two North Slope gas
utilities have it.
Mr. Chairman, I had raised my hand when you were
asking for questions, and if Jeff is still on the line, I --
perhaps a colloquy between the two departments.
Jeff had asked me the other day what additional
incentives DEC might be able to come up with to help on
this. And as you may be aware, our state implementation
plan for clean air is in the Department of Law right now for
review. It's a 3,000 page document. It's probably the
weightiest set of regulations ever contemplated, much less,
had anything to do with developing. But that's what we were
required to do, and that's about one-eighth the size of
Oregon's 20,000 page submission on the Clean Air Act.
But anyway, that is in the Department of Law right
now for review, and as soon as that is adopted, we have the
authority to trigger a mechanism that would allow the
Department of Transportation to use some of its so-called
CMAC funds to help buy a gas refueling station. And if we
do that, I know that -- Jeff, you might want to explain the
public-private partnership that you have in mind that could
help get some greater refueling facilities in the
marketplace.
JEFF OTTESEN (VIA ANCHORAGE): Would that be
appropriate?
CHAIRMAN GREEN: Yes, please go ahead.
CHAIRMAN GREEN: The notion is, we could give some
of our -- some of our highway funds are dedicated to a
purpose called CMAC, or Conjunction Mitigation/Air Quality.
How we use that money is controlled by the state
implementation plan that Mead just talked about. He needs
to adjust this plan to make our spending, in this fashion,
legitimate. What then happens -- what we are hoping to
envision would be, some form of a joint public-private
partnership allowing one or more stations to go in the
Anchorage area, that would be available to both public
fleets and to private fleets.
I think, just in kind of a broad brush thinking
proposal, or strong (indiscernible) proposal, we're
imagining an RFP, which would basically say, we have this
much money available to install the system. We are looking
for a private partner to come in, make that installation,
operate it and maintain it, and to sell the natural gas
automotive fuel back to the state's fleet, on a long term
basis, at a discounted cost. So that we would recoup that
investment.
At the same time, those (indiscernible) system
would be available to any other user that would care to come
in and get refueled.
CHAIRMAN GREEN: Thank you. Thank you, Mead, and
thank you, Jeff.
Representative Kott?
REPRESENTATIVE KOTT: Thank you, Mr. Chairman. I
would just call your attention to page 2, line 8, where it
talks about the number of natural gas vehicles currently in
operation within Alaska. And per the testimony of Jeff, I
think we can probably make this -- tighten it up a little
more, and make it a little more palatable to those who would
not seemingly think it's a good idea, by, perhaps, offering
a friendly amendment, making that number 50 to 100. Since
we do have over 600,000 registered vehicles in the state, I
think it would add a little more thrust to the proposal.
I'm certainly not wanting to hold this up in this
committee, because it does have two additional committees,
plus finance, which it probably ought to be away from, but
-- I think it would give it a little more teeth in the
matter, if we substantiated the number to a higher number.
CHAIRMAN GREEN: Do you feel comfortable with
that, David, that -- is that still a number that you can
live with?
REPRESENTATIVE FINKELSTEIN: Actually, Jeff's view
is more important. If Jeff thinks it is correct, then
that's more correct. I just...
REPRESENTATIVE KOTT: I'd offer that as a friendly
amendment, then.
THE COURT: And the sponsor has no problem with
that?
(No audible response.)
Anybody else have any comment on that?
(No audible response.)
You're offering that as an amendment?
(No audible response.)
Okay. That will then read, over 100 natural gas
vehicles.
REPRESENTATIVE OLBERG: Should we ask for
unanimous consent?
CHAIRMAN GREEN: Beg your pardon?
REPRESENTATIVE KOTT: And I would ask unanimous
consent of this amendment, with no objection. Don't think
about it too long.
CHAIRMAN GREEN: Any objection to that change?
REPRESENTATIVE GARY DAVIS: Good observations.
CHAIRMAN GREEN: If not, so ordered.
REPRESENTATIVE KOTT: And, Mr. Chairman, I make a
motion, I would move this out of committee, with unanimous
consent, as amended, to the next committee referral, which
is Resources. I think this is a good idea. We've ridden
this horse around the corral for a long time, and it's time
to open the corral door and let it loose.
CHAIRMAN GREEN: Any objection?
(No audible response.)
So ordered.
REPRESENTATIVE FINKELSTEIN: Thank you, sir.
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