Word: synfuels
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...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...
Even before the Exxon decision, the Federal Government was already getting out of the synfuel business. The Synthetic Fuels Corporation, the agency proposed by the Carter Administration to make federally guaranteed loans for synfuel projects, is off to a slow start. The Reagan Administration's market-oriented philosophy does not foresee a major Government role in synthetic energy production. A large part of the $17.5 billion allotted by Congress for shale under Carter has not been spent. Another $68 billion, envisioned in the original program as being spent on synfuels in a second phase in 1985, probably will...
Nevertheless, synfuel projects often cost $1 billion or more, and some developers are deciding that they are too expensive. Conoco's proposed coal gasification project in Noble County, Ohio, has been stopped because the Reagan Administration refused to subsidize...
Energy companies are also looking particularly closely at the high costs of all synfuel projects because of the declining price of oil. A shale oil or coal liquefaction proposal that might have been economically viable a year ago, when oil seemed to be heading toward $50 per bbl., might not make sense now, when the price is dropping toward...
Moreover, oil industry skeptics point out that the proponents of synthetic fuels have been arguing since the days when oil was only $2 per bbl. that synfuels would be profitable if the price of petroleum went up another dollar or two. Yet every time the price of oil goes up, the estimated price for synfuel development also seems to increase. Those doubters predict that the cost of crude will have to go much higher before synthetic fuels are truly competitive with petroleum. Thus many of the ambitious plans for turning coal into oil and gas may stay on the drawing...