Special Subcommittee on Energy


Minutes of the<MeetNo1> 5th Meeting

of the 2009 Interim


<MeetMDY1> October 7, 2009


The<MeetNo2> 5th meeting of the Special Subcommittee on Energy was held on<Day> Wednesday,<MeetMDY2> October 7, 2009, at<MeetTime> 10:00 AM, at the Eastern Kentucky Expo Center, Pikeville, Kentucky.<Room> Representative Keith Hall, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Representative Keith Hall, Chair; Senators David E. Boswell, Ray S. Jones II, Bob Leeper, Dorsey Ridley, John Schickel, Gary Tapp, and Johnny Ray Turner; Representatives Rocky Adkins, Leslie Combs, Tim Couch, Jim Gooch Jr., Thomas Kerr, Lonnie Napier, Fred Nesler, Tom Riner, and Fitz Steele.


Guests:  Wayne Rutherford, Pike County Judge Executive; Donavan Blackburn, Pikeville City Manager; Speaker Greg Stumbo; Governor Paul Patton, President, Pikeville College; Charles Baird, Action Now; Zbigniew Resiak, Program Director, and Mike Pahud, CFO, Agresti Biofuels, LLC; Kevin West, Managing Director, External Affairs, and Lloyd Hall, Vice President, Pipeline Operations, EQT Corporation; Phelps Academic Team.


LRC Staff:  D. Todd Littlefield, CSA, Taylor Moore, and Susan Spoonamore, Committee Assistant.


Minutes of the September 18, 2009 meeting were approved, without objection, by voice vote, upon motion made by Sen. Boswell and seconded by Rep. Adkins.


Chairman Hall introduced Speaker Greg Stumbo; Governor Paul Patton; Donavan Blackburn, Pikeville City Manager; and Wayne Rutherford, Pike County Judge Executive for welcoming comments.


Chairman Hall introduced Charles Baird, Action Now, for a presentation.  Mr. Baird explained Amendment No. 2542 to the United States House Resolution 2996.   The purpose of the amendment was to prohibit the expenditure of funds for the approval of permits associated with certain mining operations.   It states that no funds may be used by the Administrator of the Environmental Protection Agency to approve any permit associated with any surface mining activity that involves the removal of an entire coal seam from outcrop to outcrop, or of seams running through the upper fraction of a mountain, ridge, or hill, by removing substantially all of the overburden off the mine bench.  Mr. Baird stated that the amendment failed to pass. 


Mr. Baird also stated that there is a federal proposal to eliminate nation-wide permits in only the Appalachian states. If that happens, then Kentucky operators will have to obtain individual permits. The process for individual permits could take years, and some are already applying for individual permits because the use of nation-wide permits has been suspended.


Rep. Hall asked how many permits had been pulled. Mr. Baird stated there are 49 permits in Eastern Kentucky, 79 total permits.  Permitting is one of the top two problems facing the mining industry. He said that altogether there are 98,000 people with mining relating jobs; 6,000 people work on surface mines, and the wages for surface miners is $354 million.  He stated that 42% of the coal produced in Kentucky comes from surface mining. If permits are not granted in a timely manner, Eastern Kentucky will be in serious trouble.


Mr. Baird said the other issue that could cause economic hardship is the proposed federal greenhouse gas cap and trade program.  If implemented, Mr. Baird said that this program could cost the average American family an additional $1,700 per year in utility bills causing an even more significant financial impact on the people of Kentucky.


Several legislators expressed their concern about the cap and trade program and what it would do to industries that depend upon cheap electricity. Industries may decide to move their operation to other countries. The people of the coal industry need to organize and become more united in their cause.


Rep. Adkins stated that if Congress would adopt the energy policies that have been passed here in Kentucky, we would be able to accomplish the goals that we need in this country.


Chairman Hall stated that Ben Chandler and John Yarmuth should not support cap and trade. 


Rep. Steele said that there is not a coal company in east or west Kentucky that the landowner has not agreed to let them step foot on their land, mine their land, and reap the benefits.  Washington should not tell our people what to do with their land.


Chairman Hall introduced Zbigniew Resiak, Program Director, and Mike Pahud, CFO, Agresti Biofuels, LLC for a presentation on the Central Appalachian Ethanol Plant.  Mr. Resiak stated that EPA is coming out with a new rule regarding air emissions. They will be seeking to reduce emissions of CO2 , methane, and two other gases.  They will have to be accounted for, managed, and put on the bottom line.  Cap and trade is not coming, it is here.


Mr. Resiak explained that Agresti Biofuels, LLC seeks to build a facility in Pike County that will convert municipal solid waste into ethanol by using a weak acid hydrolysis process. (The waste that is processed will be a means for providing carbon credits).  Every ton of garbage that is processed generates a partial carbon credit. Mr. Resiak said that the processing of waste into saleable products eliminates the need for maintaining a landfill.


Mr. Resiak said that the Governor supports the Agresti Biofuels’ proposal and is may provide $8 million toward the project.  Agresti will provide $5 million of its own funds. Mr. Resiak stated that Agresti needs the support of legislators and would appreciate any help to push the project through.


Sen. Boswell stated that it is important to have consistency in our National Energy Policy.  A long-term national energy policy that is not political is necessary.


Rep. Adkins asked how much it would cost to build the full plant, and how many tons of garbage would the plant be able to handle. Mr. Resiak stated that the total project cost per site is $200 million.  He said that the facility could handle 1,500 tons per day.


Rep. Adkins asked how much garbage the demonstration plant could handle, and how many tons a day now go into the landfill. Re. Resiak said that the demonstration plant could handle 100 tons per day.  The landfill receives 345 tons a day.


Mr. Pahud, CFO of Agresti Biofuels, states that the plant would process municipal waste at a price point that is much lower than what is available right now. That alone would fund and ensure the viability of the plant.


Chairman Hall introduced Kevin West, Managing Director, External Affairs, and Lloyd Hall, Vice President, Pipeline Operations, EQT Corporation.  Mr. West stated that EQT is the largest producer of natural gas in the Appalachia basin, operating in Pennsylvania, West Virginia, Virginia and Kentucky.   He stated that EQT has over 5,000 wells, many of them located in Pike, Knott, Floyd and Letcher counties with 1.4 million gross acres along 3,700 gathering lines.


Mr. West said that in 2008, EQT’s financial impact on Kentucky was $762 million in capital investment, with a $1.7 billion annual economic impact. In 2008, EQT paid approximately $31 million in taxes.  He said they were proud to have been able to distribute approximately $650,000 in charitable contributions to Kentucky charities.


Mr. West said that EQT recently completed construction of the Big Sandy Pipeline consisting of 70 miles -- 20 inch pipeline. During the project, EQT was certified by the Wildlife Management Council.

Mr. West stated that the low cost of natural makes it a viable fuel alternative. Natural gas that is produced in eastern Kentucky can be used to fuel vehicles. Transportation costs for the coal industry could be reduced to make it more competitive by using trucks fueled by CNG. Mr. West said that the United States sends $350 billion a year overseas for petroleum.  If all of the 244 million vehicles in the U.S. were converted to natural gas, there would be a 68% reduction in the import of foreign energy.


Mr. West stated that EQT has been a part of innovative technical breakthroughs such as horizontal air drilling which allows EQT to bring up more gas while minimizing surface disturbance.   


            Meeting adjourned at 12:35 p.m.