Synthetic Fuels Corporation

Last updated
The logo of the now defunct Synthetic Fuels Corporation United States Synthetic Fuels Corporation.svg
The logo of the now defunct Synthetic Fuels Corporation

The Synthetic Fuels Corporation (SFC or Synfuels Corporation) was a U.S. federal government-funded corporation established in 1980 by the Energy Security Act (ESA) to create a financial bridge for the development and construction of commercial synthetic fuel manufacturing plants, such as coal gasification, that would produce alternatives to imported fossil fuels. With a seven-member board of directors, the corporation received $20 billion in initial funding to be used in joint ventures with private firms, primarily oil and gas companies, to construct plants and help finance coal mines or transportation facilities. [1] It was one of six acts in the ESA legislation. [2]

Contents

SFC also researched and promoted the use of alcohol fuels, solar energy, and the production of fuel from urban waste. [1] Over its 6-year existence, the SFC only spent approximately $960 million (barely five percent of its initial 1980 budget) to fund four synthetic fuels projects, none of which survive today. The corporation was abolished in April 1986. [3]

History

Creation

Initially proposed as the "Energy Security Corporation" in President Jimmy Carter's malaise speech of July 15, 1979, the corporation's funding was allocated from income from the windfall-profits tax set up in April 1980 under the Crude Oil Windfall Profit Tax Act. [4] After long congressional conference sessions, due to heavy opposition from candidate Ronald Reagan and congressional Republicans, the ESA was finally passed in June 1980. [4]

Congress authorized over 12 years funding of $88 billion plus $35 million in annual administrative expenses (adjusted for inflation) for the SFC, with a maximum of three hundred full-time professional employees. The SFC's mandated goal was the production of at least 500,000 barrels (79,000 m3) of crude oil equivalent per day in synthetic fuels from domestic sources by 1987 and at least 2 million barrels (320,000 m3) per day by 1992. The SFC was kept out of the Department of Energy and legislatively chartered to be free of normal government rules, regulations, and procedures.

In September 1980, Carter nominated John C. Sawhill to be the SFC chair, but the Senate Republicans refused to confirm Sawhill or any other board nominee. [5] Signing Executive Order 12242, Carter assigned SFC responsibilities to the Department of Energy and Department of Defense until the SFC could be declared operational. The DoD used this brief window to fund the Union Oil Parachute Creek and Colony/Tosco oil shale projects. In October, Carter was forced to make recess appointments of Sawhill and four others. [6] Pursuant to the ESA, the corporation had to issue its first solicitation for synthetic fuel projects by the end of December 1980; the proposal deadline was set for March 31, 1981. Sixty-one firms in 24 states submitted proposals, and of these, 19 were for coal liquefaction, 17 coal gasification, 14 oil shale, 8 tar sands oil production, and 3 for other fuels. [7]

Industry response

Wall Street was eager to begin investing in the synfuels industry. In July 1979, a report called Helping Insure Our Energy Future: A Program for Developing Synthetic Fuel Plants Now was published by the Committee for Economic Development (CED), an independent research and educational organization of 200 business executives and educators, made the case for the urgent need for synfuel industry development. [8] Industry lobbyists in Washington formed the National Council on Synthetic Fuels Production headed by Walter Flowers, a former Alabama congressman. [9] No less than three trade magazines were launched — The Synfuels Report, Synfuels Weekly, and Synfuels. Two industry-insider books were quickly published, The U.S. Synthetic Fuels Program and Synfuels Handbook: Including the YELLOW PAGES of Synfuels. [10] In the run up to the ESA's passage, the executive committee of the Ad Hoc Coalition on Synthetic Fuels hosted a reception in honor of congressmen and conference committee staff on June 19, 1980, funded by four American natural resources companies: Ashland Oil, C.-E. Lummus, Tosco, and Tenneco. These firms had significant investments in synthetic fuels projects.

Reagan years

After Ronald Reagan was elected president and Republicans took the Senate in the 1980 election, Reagan severely cut the SFC's funding, scaled it down, and finally phased it out. Constant reshuffling of members and congressional meddling succeeded in stifling the SFCs functioning. In January 1981, the board members submitted undated resignations to Reagan, and Reagan accepted them at the end of the month. Jack McAtee assumed the acting chair position. In April, Reagan nominated Edward Noble as chair in April. Edward Noble, a real-estate developer from Atlanta with roots in the Oklahoma oil business, was a large financial backer of The Heritage Foundation, which was very supportive of Reagan and paid the salaries of several SFC transition team members. [11]

In May, Reagan nominated four transition members, Robert Monks, Victor Schroeder, Victor Thompson, and Howard Wilkins, to the SFC board. After Noble was confirmed and sworn into office, McAtee resigned. In October, the other four board nominees were sworn in as members of the board. Finally, in February 1982, Reagan issued Executive Order 12346 proclaiming the SFC operational and officially open for business. In May, Reagan appointed two additional SFC board members, John Carter and Milton Masson, who were not sworn in until August.

In August 1983, the SFC president and CEO, Schroeder, resigned his position but remained a board member. Over the course of several months, starting in January 1984, five members, Monks, Wilkins, Schroeder, Thompson, and Carter, resigned. Not until November were three replacements, Corcoran, MacAvoy, and Reichl, appointed and in December sworn in as board members. They were not confirmed by the Senate until June 1985.

Hollowed out and neutered, the SFC instead became a place to repay political donors and friends with do-nothing job appointments.[ citation needed ] This was then used as a pretext to abolish the SFC. In December, Congress passed P.L. 99-190 which terminated SFC authority to award new financial assistance and set a 120-day time limit left to transfer projects to the Treasury department and to shut down. In April 1986, Congress passed P.L. 99-272 formally abolishing the SFC.

Assessment

The Great Plains coal gasification plant in Beulah, North Dakota, still producing natural gas and sequestering carbon in 2009, [12] was built with the support of the Department of Energy and applied for further support by this corporation, partly as a result of efforts by Reagan's Energy Secretary James B. Edwards. [13] [14]

See also

Related Research Articles

The Fischer–Tropsch process (FT) is a collection of chemical reactions that converts a mixture of carbon monoxide and hydrogen, known as syngas, into liquid hydrocarbons. These reactions occur in the presence of metal catalysts, typically at temperatures of 150–300 °C (302–572 °F) and pressures of one to several tens of atmospheres. The Fischer–Tropsch process is an important reaction in both coal liquefaction and gas to liquids technology for producing liquid hydrocarbons.

In industrial chemistry, coal gasification is the process of producing syngas—a mixture consisting primarily of carbon monoxide (CO), hydrogen, carbon dioxide, methane, and water vapour —from coal and water, air and/or oxygen.

Substitute natural gas (SNG), or synthetic natural gas, is a fuel gas (predominantly methane, CH4) that can be produced from fossil fuels such as lignite coal, oil shale, or from biofuels (when it is named bio-SNG) or using electricity with power-to-gas systems.

<span class="mw-page-title-main">Sasol</span> South African integrated energy and chemical company

Sasol Limited is an integrated energy and chemical company based in Sandton, South Africa. The company was formed in 1950 in Sasolburg, South Africa, and built on processes that German chemists and engineers first developed in the early 1900s. Today, Sasol develops and commercializes technologies, including synthetic fuel technologies, and produces different liquid fuels, chemicals, coal tar, and electricity.

Coal liquefaction is a process of converting coal into liquid hydrocarbons: liquid fuels and petrochemicals. This process is often known as "Coal to X" or "Carbon to X", where X can be many different hydrocarbon-based products. However, the most common process chain is "Coal to Liquid Fuels" (CTL).

<span class="mw-page-title-main">Synthetic fuel</span> Fuel from carbon monoxide and hydrogen

Synthetic fuel or synfuel is a liquid fuel, or sometimes gaseous fuel, obtained from syngas, a mixture of carbon monoxide and hydrogen, in which the syngas was derived from gasification of solid feedstocks such as coal or biomass or by reforming of natural gas.

<span class="mw-page-title-main">Biomass to liquid</span>

Biomass to liquid is a multi-step process of producing synthetic hydrocarbon fuels made from biomass via a thermochemical route.

The Synthetic Liquid Fuels Program was a program run by the United States Bureau of Mines to create the technology to produce synthetic fuel from coal and oil shale. It was initiated in 1944 during World War II. The Synthetic Liquid Fuels Act approved on April 5, 1944 authorized the use of US$30 million over a five-year period for

the construction and operation of demonstration plants to produce synthetic liquid fuels from coal, oil shales, agricultural and forestry products, and other substances, in order to aid the prosecution of the war, to conserve and increase the oil resources of the Nation, and for other purposes.

<span class="mw-page-title-main">Dakota Gasification Company</span>

The Dakota Gasification Company is a synthetic natural gas producing company founded in 1984 in Beulah, North Dakota, United States. It is an operator of the Great Plains Synfuels Plant. The plant is located at 47°21′27.75″N101°50′28.72″W.

<span class="mw-page-title-main">History of the oil shale industry</span> Timeline of the production of oil shale

The history of the oil shale industry started in ancient times. The modern industrial use of oil shale for oil extraction dates to the mid-19th century and started growing just before World War I because of the mass production of automobiles and trucks and the supposed shortage of gasoline for transportation needs. Between the World Wars oil shale projects were begun in several countries.

<span class="mw-page-title-main">Colony Shale Oil Project</span> Oil shale development project in Colorado, US

Colony Shale Oil Project was an oil shale development project at the Piceance Basin near Parachute Creek, Colorado. The project consisted of an oil shale mine and pilot-scale shale oil plant, which used the TOSCO II retorting technology, developed by Tosco Corporation. Over time the project was developed by a consortium of different companies until it was terminated by Exxon on 2 May 1982 a day which is known amongst locals as "Black Sunday".

The Paraho process is an above ground retorting technology for shale oil extraction. The name "Paraho" is delivered from the words "para homem", which means in Portuguese "for mankind".

The Lurgi–Ruhrgas process is an above-ground coal liquefaction and shale oil extraction technology. It is classified as a hot recycled solids technology.

In the United States, synthetic fuels are of increasing importance due to the price of crude oil, and geopolitical and economic considerations.

The Nevada–Texas–Utah retort process was an above-ground shale oil extraction technology to produce shale oil, a type of synthetic crude oil. It heated oil shale in a sealed vessel (retort) causing its decomposition into shale oil, oil shale gas and spent residue. The process was developed in the 1920s and used for shale oil production in the United States and in Australia. The process was simple to operate; however, it was ceased from the operation because of a small capacity and labor extensiveness.

<span class="mw-page-title-main">Linc Energy</span>

Linc Energy was an Australian energy company that specialised in coal-based synthetic fuel production, as well as conventional oil and gas production. It was engaged in development and commercialisation of proprietary underground coal gasification technology. Produced gas was used for production of synthetic fuel through gas-to-liquid technology, and was also used for power generation. The company had its headquarters in Brisbane, Queensland.

KENTORT II is an above-ground shale oil extraction process developed by the Center for Applied Energy Research of the University of Kentucky. It is a hot recycled solids fluidized bed retorting process developed since 1982 for processing the eastern United States Devonian oil shales. The concept of this process was initiated in 1986 in the test unit.

Omnishale process is an in situ shale oil extraction technology to convert kerogen in oil shale to shale oil. This process is classified as an externally generated hot gas technology. The technology is developed by General Synfuels International, a subsidiary of Earth Search Sciences.

Coal gasification is a process whereby a hydrocarbon feedstock (coal) is converted into gaseous components by applying heat under pressure in the presence of steam. Rather than burning, most of the carbon-containing feedstock is broken apart by chemical reactions that produce "syngas." Syngas is primarily hydrogen and carbon monoxide, but the exact composition can vary. In Integrated Gasification Combined Cycle (IGCC) systems, the syngas is cleaned and burned as fuel in a combustion turbine which then drives an electric generator. Exhaust heat from the combustion turbine is recovered and used to create steam for a steam turbine-generator. The use of these two types of turbines in combination is one reason why gasification-based power systems can achieve high power generation efficiencies. Currently, commercially available gasification-based systems can operate at around 40% efficiencies. Syngas, however, emits more greenhouse gases than natural gas, and almost twice as much carbon as a coal plant. Coal gasification is also water-intensive.

The history of the oil shale industry in the United States goes back to the 1850s; it dates back farther as a major enterprise than the petroleum industry. But although the United States contains the world's largest known resource of oil shale, the US has not been a significant producer of shale oil since 1861. There were three major past attempts to establish an American oil shale industry: the 1850s; in the years during and after World War I; and in the 1970s and early 1980s. Each time, the oil shale industry failed because of competition from cheaper petroleum.

References

  1. 1 2 Anthony S. Campagna, Economic Policy in the Carter Administration (Greenwood Press, 1995), 143.
  2. ↑ Energy Security Act (1980; 96th Congress S. 932) - GovTrack.us
  3. ↑ Federal Register: Synthetic Fuels Corporation
  4. 1 2 Victor Bondi, ed. American Decades: 1980-1989 (Detroit, Mi: Gale Research, 1996), 282.
  5. ↑ Robert Hershey, “G.O.P. Senators Plan Fuel Board Fight,” New York Times (September 26, 1980), D1.
  6. ↑ Rich Jaroslovsky, “Sawhill Is Named Synthetic-Fuels Chief by Carter,” Wall Street Journal, Sept. 11, 1980, 2
  7. ↑ Martin Crutsinger, “61 Firms Seek Subsidies for Synfuel Development,” Washington Post (April 2, 1981), D3.
  8. ↑ Committee for Economic Development, Helping Insure Our Energy Future: A Program for Developing Synthetic Fuel Plants Now (Washington, DC: Committee for Economic Development, July 1979), ix.
  9. ↑ David Ignatius, “Washington Glasses Raised High in Toast to Newest Industry at Government Trough,” Wall Street Journal (June 25, 1980), 25.
  10. ↑ Robert Hershey, “Synthetic Fuel Spawns a Trade Group,” New York Times, September 22, 1980, D1.
  11. ↑ Hervey Amsler Priddy, United States Synthetic Fuels Corporation: Its Rise and Demise, dissertation (Austin, Tex.: The University of Texas at Austin, 2013), 222.
  12. ↑ dakotagas.com, DOE receives $57 million payment from clean coal plant
  13. ↑ Time Magazine, Some Setbacks for Synfuels, Sep. 14, 1981.
  14. ↑ NYTimes, North Dakota Utility to Buy U.S. Synthetic-Fuels Plant. August 6, 1988
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.