Compressed natural gas station to open; legislators study tax breaks

February 13, 2014 at 12:10a.m.

YOUNGSTOWN

The Mahoning Valley will soon see its first fuel station capable of dispensing compressed natural gas as Ohio looks to embrace a growing abundance of natural gas by converting vehicle fleets to run on the less expensive gasoline alternative.

Construction is set to begin next month on two pumps that would provide compressed natural gas at the Mr Fuel station on Salt Springs Road in Girard.

Though the project was slowed slightly by harsh winter conditions, the CNG pumps should be operating by the end of May or June.

The project has been in the works since IGS Energy approached Mr Fuel last year with the idea to make a roughly $2 million investment at the site, valued for its size and its location near Interstate 80.

Short- and long-haul trucking outfits that travel the interstate are increasingly modifying their fleets to run on CNG, which costs between $1.99 and $2.19 a gallon, said Dave Mrowzinski, project manager for IGS Energy CNG services. That’s significantly cheaper than Ohio’s average price for traditional grade gasoline, recorded this week at $3.40 per gallon by AAA.

IGS is looking to capitalize on the demand.

“Right now, there are vehicles ... that are traveling through Youngstown or would like to travel through Youngstown, but because there’s no [CNG] station on [Interstate] 80, they can’t complete that route,” Mrowzinski said.

If the new project attracts the targeted clientele, Mrowzinski said the pumps would be capable of producing “millions of gallons a year.”

Mrowzinski said the company has been in talks with businesses, such as Giant Eagle and AT&T, that are looking to fuel large fleets with CNG. “There are a lot of companies in the area that are looking at CNG in a very positive light,” he said.

Only about a dozen fueling stations in the state offer CNG for vehicles, but state lawmakers hope to drive up demand with bills aimed at encouraging public and private fleets to switch to the alternative energy.

State Rep. Sean J. O’Brien of Brookfield, D-63rd, in November introduced House Bill 336. Modeled on successful efforts in other states, it offers tax incentives for five years to companies to help them cover the cost of switching to natural-gas vehicles. The bill also includes $16 million in grants for local governments and nonprofits, which are not eligible to receive tax credits.

The idea, he said, is to “kick-start the process” of CNG conversion and then let the market take over.

O’Brien’s bill, which has 63 bipartisan cosponsors in the Ohio House of Representatives, would immediately impose a tax of 7 cents per gallon of CNG for the first three years. That rate would then rise to 14 cents per gallon over the next two years, before leveling out at Ohio’s 28-cent-a-gallon motor fuel tax rate thereafter.

The Ohio Oil and Gas Association supports O’Brien’s bill.

A competing bill, sponsored by state Rep. Jim Butler of Oakwood, R-41st, would create a 10-year guaranteed loan program to help fund CNG conversion by local governments and private businesses. Loan recipients would track the difference in the price of filling vehicles with CNG versus traditional fuel, and that would be put toward paying down the cost of the loan. If there is still a balance at the end of the loan period, the government would cover the outstanding debt.

Butler’s approach presents “zero risk” to governments and businesses and would encourage proliferation of CNG filling stations, he said.

HB 335, the competing bill, includes a three-year tax holiday, followed by a rising tax that would equal the motor-fuel tax after five years, he said.

The bills are assigned to separate house committees, which are hearing testimony on the legislation.

But it’s not just large fleets looking to use CNG. New car models, such as the 2015 Chevrolet Impala, will feature fuel tanks made for CNG in addition to tanks designed to hold traditional gasoline.

The combination of government incentives and the auto market’s response to the rising importance of CNG make Ohio an attractive place for CNG companies, said Kevin Krober, senior vice president at American National.

American National is nearing completion of a handful of CNG fueling stations in Columbus and Canton and plans to announce another project south of Canton in the near future, Krober said.

“I view Ohio as a really great opportunity to develop infrastructure, and we are seeing great demand in Ohio,” he said.