Technology Assessment Division

More on Alternative Motor Vehicle Fuels in Louisiana

by Alan A. Troy, P.E

Natural Gas

On October 25, 1993, a contract was signed by the Governor, the Secretary of the Department of Natural Resources (DNR), and the President of Ecogas of Louisiana, Inc., a wholly-owned subsidiary of Ecogas, Inc. of Austin, Texas, to convert a portion of the State motor vehicle fleet to run on natural gas produced entirely from within the jurisdictional boundaries of the State. This action was in keeping with the Governor's Executive Order of March 29, 1993 (See Louisiana Energy Topics, August 1993), to convert the State's motor vehicle fleet to natural gas to the maximum extent feasible. Under the contract, Ecogas is committed to building a minimum of eight refueling stations across the State and to converting a minimum of 500 vehicles, and at the State's option, up to 1500 vehicles (25% of the State fleet). The converted vehicles will all be dual-fueled; that is, capable of operating on either natural gas or gasoline. Vehicles that require longer cruising ranges and have a high road use time will be converted to use liquefied natural gas (LNG), and the rest will be converted to use compressed natural gas (CNG). A seminar to explain the details of the program to the affected state agencies was held on October 28, 1993.

The project will be proceed in stages. Stage one is the conversion of the first 100 vehicles in the Baton Rouge to New Orleans corridor, where there is a high concentration of State vehicles. Ecogas has subcontracted conversion to Houston-based American Gas Power. Developing the necessary infrastructure and completing the conversions is expected to take up to a year. The site for the first conversion center will be in Baton Rouge on Choctaw Drive near Flannery Road. Plans call for it to be operational in early February. Stage two is the conversion of the next 400 vehicles. So far, out of the State's 6,000 vehicles, 2,500 have been identified as potential candidates for conversion. Of these, 250 have been nominated for conversion. DNR is currently assisting Ecogas in identifying additional vehicles that are appropriate to convert. Additional conversions depend on the whether the State exercises its option to convert up to 1500 vehicles.

The refueling stations will dispense both LNG and CNG. They will all be manned during operating hours, will be on private property, and will be open to the public. Initially, a temporary refueling station is being set up in Baton Rouge in the north parking lot of the Louisiana Department of Transportation and Development building, near the Governor's mansion. This station will serve the capitol complex for the next two months until the first permanent station is completed. The location of the first station will in be in Baton Rouge at Lobdell and Greenwell Springs Road on the site of a closed service station. It should be ready for use by May of 1994.

For the seven-year period of the contract, the price of natural gas delivered into State vehicles on a gasoline equivalent gallon basis will be 99¢/gallon, which includes a 23¢/gallon surcharge to defray the cost of conversion. Once the conversion cost has been recouped, the price to the converted vehicles is reduced to 76¢/gallon. State vehicles outside the Ecogas contract (such as existing vehicles already converted to LNG or CNG, or new vehicles purchased already equipped for natural gas) will refuel at the 76¢/gallon price.

The lead agency to administer the contract is the Department of Natural Resources. Requests for more detailed information should be directed as follows:

Mr. William. J. Delmar
Technology Assessment Division, DNR
P.O. Box 94396
Baton Rouge, Louisiana 70804-9396
Phone: 504/342-5053
Mr. Mark Schultz,
Conversion Manager
Ecogas of Louisiana, Inc.
621 Jamestown Ave.
Baton Rouge, Louisiana 70808
Phone: 504/927-0311

On another front involving State government, DNR's Energy Division is now mailing out information packets on its five year low-interest revolving loan program to assist state and local governmental entities to convert a portion of their fleets to fuels derived from natural gas. The interest rate is 3%. Money for the loans will come from the Exxon Petroleum Violation Escrow Fund and can be used for vehicle conversions, but not for fueling stations. There is presently $3.1 million available for this purpose. Requests for the information packet and application forms should be directed to:

Louisiana Alternative Fuels Conversion Program
Attn: Energy Division, DNR
P.O. Box 44156
Baton Rouge, Louisiana 70804
Phone: 504/342-1399

Ethanol

In late 1993 a new trustee for the Shepherd Oil Inc. ethanol plant near Jennings was appointed by the bankruptcy court. A purchase offer was received in January and is being evaluated. Meanwhile, preparations for auctioning off the plant by sealed bid are proceeding. Final resolution is expected by May, 1994. For additional information contact:

Mr. Paul N. DeBaillon, Trustee
Shepherd Oil Inc.
P.O. Box 2069
Lafayette, Louisiana 70502
Phone: 318/237-0598

In December the EPA proposed that 30% of all oxygenates added to gasoline beginning in 1995 be required to come from renewable resources such as ethanol, or ETBE made from ethanol. At the same time, it reversed the Bush administration provision, issued during his reelection campaign, giving ethanol blends a 1 psi waiver from the reformulated gasoline volatility requirements of the Clean Air Act Amendments of 1990. EPA is taking comments on the proposal through February 15, and it hopes to adopt the rule within 30 days after the comment period closes. If adopted, it would be a boon to the heavily subsidized ethanol industry and corn farmers. On the other hand, the already depressed market for unsubsidized MTBE, presently the most popular oxygenate among refiners, could suffer.

Federal Legislation Encouraging the Use of Alternative Fuels

The main force pushing the states to cleaner-burning vehicular fuels is the alternative fuel provisions of the Federal Clean Air Act Amendments of 1990 (CAAA) and the Energy Policy Act of 1992 (EPACT). Both acts mandate greater use of alternative fuels in certain motor vehicles and prescribe strict schedules for compliance. The intent of the CAAA is to reduce air pollution and the EPACT to lessen dependence on foreign oil. A key provision of EPACT directs each State to submit to the Secretary of Energy a plan designed to assure progress toward greater use of alternative motor vehicle fuels within its jurisdiction. However, the Department of Energy has not finished the regulations establishing guidelines for the states, so Louisiana has not yet designated the agency responsible for the plan.

The Louisiana Department of Environmental Quality (DEQ) is responsible for the implementation of the CAAA on the State level. Information on DEQ's programs, policies, and regulations may be obtained as follows:

Mr. Kevin Sweeney
Office of Air Quality, DEQ
P.O. Box 82135
Baton Rouge, Louisiana 70884-213
Phone: 504/765-0905

Current Fuel Tax Legislation Affecting Alternative Fuels

Act 879 of 1986, effective January 1, 1987, added R.S. 47:807.1, which changed the method of collection of the specials fuels tax. Any person (including state agencies) wishing to operate a vehicle propelled by LNG, LPG, or CNG must make application to the Department of Revenue and Taxation for a permit on or before July 31 of each year. At the time of application, the special fuels tax must be paid. Upon issuance of a permit, a decal will be issued to the taxpayer to be affixed to the vehicle indicating the tax was paid. Application forms and more detailed information may be obtained from:

Louisiana Department of Revenue and Taxation
Excise Taxes Section
P.O. Box 201
Baton Rouge, Louisiana 70821
Phone: 504/925-7656

Act 666 of 1993 amends and reenacts R.S. 47:802.3(A), (B), and (F), relative to the special fuels tax to reduce the rate by paying either an annual flat rate of 80% of $150.00, based on a 16¢/gallon tax rate, or a variable rate of 80% of the current special fuels tax rate. Since the current rate is 20¢/gallon, the present annual flat rate is $150.00 ($150.00 x 20¢/16¢ x 80%); and the variable rate is 16¢/gallon (20¢ x 80%). The variable tax computation shall be based on estimated fuel efficiency of 12 miles/gallon, but not to exceed the annual flat rate. For the purpose of determining the amount of the tax and enforcing this section, the number of gallons of LPG, LNG, or CNG used the previous year shall be determined by using a schedule for calculating the number of miles per gallon for the type of vehicle in question.

The Act became effective for taxable periods beginning on or before July 1, 1993, based on mileage data from periods beginning on or after July 1, 1992. The special fuels tax rate previously in effect before passage of Act 666 was established by Act 516 of 1991.

The Omnibus Budget Reconciliation Act of 1993, signed into law by President Clinton on August 10, 1993, increased the federal excise tax on gasoline, diesel fuel, gasohol, and other transportation fuels by 4.3¢/gallon, effective October 1, 1993. Alternative motor vehicle fuels are also taxed at the same rate per gallon. For the first time CNG is also subject to the tax at an energy equivalent rate of about 5.9¢/gallon of gasoline, making it higher than the 4.3¢/gallon increase on gasoline. However, even with this new federal tax, natural gas is still taxed at a lower rate than both gasoline and diesel. The new federal rates on gasoline, diesel, and gasohol are now 18.30, 24.40, and 13.00¢/gallon, respectively. The state tax remains at 20.00¢/gallon for all three fuels. The federal excise tax on the two new ethanol blends of 7.7% and 5.7% (by volume) that qualify for the federal ethanol production subsidy is 14.24 and 15.32¢/gallon, respectively.