May 8, 2013

Okla. House clears natural gas fuel tax credit

OKLAHOMA CITY — Extending a $2 million tax credit for converting gas-powered vehicles to cleaner fuels, such as hydrogen and compressed natural gas, awaits Gov. Mary Fallin's approval after the Oklahoma House passed the bill Monday.

The incentive covers 50 percent of the costs of converting the vehicles — typically an $8,000 procedure — and 75 percent of the costs of setting up alternative fueling stations. The bill, approved 63-29, extends the cut until 2020.

Rep. Skye McNiel, R-Bristow, who carried the bill, said helping the state's economy ride the recent natural gas boom would be worth the credit's annual price tag of between $1.5 million and $2 million.

"We've had a 940 percent growth in natural gas consumption," she told her colleagues before the vote. "We do create new jobs, whether you want to agree or not. We have new needs for outfitters, equipment installers, technicians."

Hydraulic fracturing, or fracking, and other technologies have unlocked huge, previously inaccessible deposits of natural gas across the country, pushing national production up 20 percent and roughly doubling monthly exports since 2008, according to the U.S. Energy Information Administration. Oklahoma has the nation's 4th highest natural gas production, though production has tapered off since 2009.

Business is booming in Oklahoma, said Ted Massad, director of CNG Oklahoma, a Tulsa-based company that converts vehicles to run on compressed and liquefied natural gas.

"With the legislation that we have on the books right now, we are anticipating an additional 5,000 (vehicles) in calendar year 2013," Massad said, bringing the statewide total to 20,000 — a figure that could include 750 vehicles in the state fleet, according to the state finance office. "It's grown, I'd say, probably fivefold over last year."

It was the same story at Oklahoma City-based conversion company CNG of OKC, where owner Josh Chapman said companies across the country had placed orders for hundreds of CNG-enabled vehicles.

"Before we even opened up our doors, we were booked up three weeks in advance," said Chapman, whose business has been open for about a year.

Democratic Rep. Richard Morrisette and Republican Rep. Mike Reynolds — both of Oklahoma City — questioned whether Oklahoma taxpayers should be footing part of the bill for conversions.

Morrissette noted federal tax incentives already apply to natural gas fuel and infrastructure projects.

"I am personally tired of hearing the whining about we don't have any money and then members of this body give it away," Reynolds said. "Members, go ahead and vote for your tax credit. Make some other constituency wealthy to the detriment of your taxpayers."

But Massad of CNG Oklahoma said the assistance was crucial as the industry starts to mature.

"It's private industry, private businesses that are putting in the infrastructure," he said, referring to Oklahoma's roughly 100 fueling stations. "Things are finally growing to where we're not going to lose, to where we're not going to go out of business."

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