Special Subcommittee on Energy


Minutes of the<MeetNo1> 6th Meeting

of the 2011 Interim


<MeetMDY1> November 18, 2011


Call to Order and Roll Call

The<MeetNo2> 6th meeting of the Special Subcommittee on Energy was held on<Day> Friday,<MeetMDY2> November 18, 2011, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Representative Keith Hall, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Brandon Smith, Co-Chair; Representative Keith Hall, Co-Chair; Senators Ernie Harris, Ray S. Jones II, Bob Leeper, Dorsey Ridley, Katie Kratz Stine, Johnny Ray Turner, and Robin L. Webb; Representatives Dwight D. Butler, Leslie Combs, Will Coursey, Jim Gooch Jr., Wade Hurt, Thomas Kerr, Fred Nesler, Sannie Overly, Tom Riner, Kevin Sinnette, John Will Stacy, Fitz Steele, and Brent Yonts.


Guests: Daniel Ferreira, President, Renier Pierantoni, Vice President, Natural Gas Solutions, LLC.; Jason Cho, President, Nevico Co., Ltd.; Will Graham and Kenny Graham, Cumberland Valley Resources.


LRC Staff: D. Todd Littlefield, Sarah Kidder, and Susan Spoonamore, Committee Assistant.


The October 21, 2011 minutes were approved, without objection, by voice vote upon motion made by Representative Steele and second by Senator Harris.


Discussion Only - 2012 BR 368

Representative Keith Hall explained 2012 BR 368, which relates to the distribution of coal severance tax revenues. Representative Hall said that $19 million is being taken off the top of coal severance revenues and put into the Benefit Reserve Fund instead of Workers’ Compensation. 2012 BR 368 would stop the purging and withdrawal of coal severance revenues that were being transferred to Workers’ Compensation.


Liquefied or Compressed Natural Gas as a Transportation Fuel

Mr. Renier Pierantoni, Senior Vice President, Natural Gas Solutions, LLC. (NGS) stated that NGS is a minority owned company that focuses on natural gas products and services throughout the United States. Mr. Pierantoni introduced Daniel Ferreira, President of Natural Gas Solutions, LLC. and Jason Cho, President of Nevico Corporation, Ltd. Mr. Pierantoni explained that Nevico Corporation, Ltd. is a Korean applied technologies and natural gas infrastructure company that specialized in converting and re-powering heavy duty diesel powered used vehicles. Nevico Corporation designs and installs filling stations and provides technical assistance and training for local engineers, technicians, mechanics and drivers of natural gas vehicles.


Mr. Pierantoni stated that Kentucky should go to natural gas for transportation fuel because natural gas is cleaner, cheaper and will continue to be so in the future. He explained that piggybacking on the natural gas pipeline infrastructure already in place would be a boom for Kentucky’s economy and people. The 13 million cars in the world that run on natural gas are vehicles either purchased or re-powered by replacing the gasoline engine with a natural gas engine. NGS and Nevico were focused on natural gas conversions for diesel vehicles and explained that retrofitting a diesel vehicle would require a Nevico conversion kit that would modify diesel engines to burn compressed natural gas.


Daniel Ferreira, President of Natural Gas Solutions, LLC. explained that the electrical control unit (ECU) would work with liquid natural gas (LNG) and compressed natural gas (CNG). Through the ECU, drivers are able to adjust the torque for difficult, which is something that other conversion kits are unable to do. Natural gas in the United States is much cheaper than diesel and gasoline. The average cost of a gallon of diesel is $3.89. The price of natural gas ranges from $1.25 to $2.50, but the average price, nationwide, for CNG is $1.50 and $1.75. Natural gas prices are not driven by world markets, meaning that the United States can control the price. Utah’s state law provides an income tax credit, a 50 percent credit on converting a vehicle, a grant or loan program to assist businesses and government entities with the cost of conversions, public access to CNG fueling stations, and certified CNG fuel system inspections. In addition, Utah passed legislation that resulted in a 57 percent drop in installation costs associated with CNG conversion kits.


 Mr. Pierantoni discussed the amount of recoverable shale gas in the United States. Devonian shale in Kentucky contains an estimated 63 to 112 trillion cubic feet(tcf) of natural gas. Recovering shale gas would be a valuable economic impact for Kentucky in terms of employment and revenue.


In response to Representative Hall, Mr. Cho stated that the conversion technology was originally developed by NASA. He said that Nevico’s conversion technology is being used in 22 countries, specializing in diesel conversions to LNG and CNG. Kentucky owns 32 CNG vehicles that are being fueled by private filling stations.


In response to Representative Hall, Mr. Cho said it would cost approximately $14,000 for the CNG conversion kit to convert a diesel truck. It is possible to recover costs in approximately 3 months. There are two different conversion kits available for heavy diesel trucks: repowering, which would be to put in a new engine or taking the old engine and put an ECU kit on it. If an owner wants a new engine, it would cost approximately $32,000, and would take 9 months to recover that cost.


In response to Senator Leeper, Mr. Cho stated that a 100,000 hp engine could be converted. Nevico is not able to convert a 16 cylinder yet. Mr. Ferreira also stated that 200 trucks a day could be filled up with LNG, if the 1.2 million cubic feet of natural gas located in Knox County could be tapped.


Meeting adjourned at 11:05 p.m.