Word: exxon
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Dates: during 1980-1989
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...grand dreams of Colony were done in by the high costs of the new technology and the prospect of flat, or perhaps even declining, world oil prices. When Exxon joined Tosco in the Colony project in 1980, it estimated that $2 billion to $3 billion would be spent. The latest estimates, which were presented to Exxon's directors in April, ran to a budget-bursting $6 billion...
...Exxon's long-term forecasts still anticipate an increase in oil prices, but not as rapid as previously expected. R.P. Larkins, the manager of Exxon U.S.A.'s synthetic-fuels department, said that shale oil is simply too expensive now and that "nothing over the long term would offset our costs." Adds John Lichtblau, president of the Petroleum Industry Research Foundation: "The fact is that from a market point of view, most synfuel projects are not economically viable...
Randall Meyer, president of the U.S. subsidiary of Exxon, met two weeks ago with Tosco President Morton M. Winston in Los Angeles and told him that Exxon was withdrawing its funding of the project. Tosco exercised its option to sell Exxon its 40% share in Colony. Tosco, with various partners, has been trying to develop shale oil in Colorado for almost 30 years. Along the way, it has become the second largest refiner of gasoline in the U.S., behind Ashland...
Tosco, though, was not big enough to carry the Colony project by itself. Its net worth is only $259 million, and it was hoping that revenues from oil shale would be large enough to make its investment in time, money and faith pay off. Winston, of course, thinks that Exxon acted too hastily. Says he: "Tosco believes that the project would be found satisfactory if full engineering and other assessment work were completed...
...Exxon's departure left Union Oil with the largest stake in shale oil in the U.S. That company has a project not far from Colony's retort, where 1,700 workers are now employed. Union President Fred Hartley vowed to press ahead, calling Exxon's decision "irrelevant" to Union's plans. Says he: "We've always felt ours was the only project really going on. The others were simply going through the motions." The company plans to have up to 700 more workers at the shale works by June. In 15 months, its plant should...