Sunfuels' 500,000-barrel goal: industry says it's impossible

The United States will not meet Congress's goal of producing 500,000 barrels of synthetic oil a day by 1987. Already bottlenecks are cropping up. Industry experts gathered here this week for the Conference Board's annual energy meeting forecst shortfalls of engineers as well as of critical parts. These will make it difficult if not impossible for Congress's dream to come true. Furthermore, some experts at the conference noted that "industry is holding back" because of its uncertainty about the technologies, costs, and environmental constraints surrounding the plants.

Some of the problems include:

* A tight supply of some critical equipment needed for synfuels projects.

Thomas L. Dineen, president and chief executive officer of Allis-Chalmers-Coal Gas Corporation, notes that the tightest restraint is a shortage of oxygen furnaces, which will be used to burn coal to make gas. "This is probably the largest bottleneck," he says.

* Shortages of skilled workers expected.

William S. Moorhead, former chairman of the House-Senate conference committee for the Energy Security Act, notes, "There is almost unamimous agreement that a real crunch is going to develop in regard to an adequate supply of engineers and skilled labor." Over the next five years, there will be a need for more than 20, 000 skilled machinists.

"The engineering schools are not turning out enough graduates," Howard C. Kauffmann, president of the Exxon Corporation, says, but he adds, "I would hope that the law of supply and demand would operate and the shortfall will be perceived and the engineering schools will fill up again."

* Failure to find a balance between environmental constraints and energy requirements.

Mr. Dineen notes: "Perhaps the most ominous obstacle to the development of a shale oil industry in the United States today is the need for some rather difficult political decisions related to possible environmental problems around the major shale deposits. While favorable decisions will probably be reached, the question of when is very difficult to answer."

The industry is also unhappy that Congress never agreed to set up an energy mobilization board, as President Carter requested, to help expedite large projects.

* Business's lingering skepticism, about the synfuels projects and its failure to invest a great deal of its own money in them.

Robert W. Shaw, Jr., senior vice-president of Booz, Allen & Hamilton Inc., a consulting firm, says management is asking "some tough questions" about the projects. These include: "Can we afford the plant? Will there be a market for the product -- given the cost uncertainty? Is the time window for development of the synfuels industry too short to make it an attractive investment opportunity?"

Despite all these concerns, the synthetic- fuel industry will be developed, Robert W. Fri, president of the Energy Transition corporation, says, "even though there is no good way to do it." He points to the vulnerable position of the US and its allies to oil embargoes, and the says that "it will be our challenge to replace oil with alternatives." Mr. Fri adds that the Japanese, Australians, French, and Chinese have all begun programs to replace their oil imports with synthetically produced materials.

"If other nations move swiftly and we are slow, we run the risk of being outrum by their technologies," he says.

As an example, Mr. Fri points to the Volvo Corporation's claim that it has developed an automobile engine that will run on methanol and meets clean-air standards.

"If our EPA looks at their engine and decides that this is the best technology available, our industry could be caught short if it hasn't made the same strides," he says.

Industry experts believe, however, that the industry's timetable will be delayed. Mr. Kauffmann of Exxon comments: "It stretches credibility that we can meet Congress's goal of 500,000 barrels of oil per day by 1987." He notes that "it's difficult to move up to cruising speed" from a small pilot plant to a full-size commercial operation.

The first commercial-size synthetic-fuel plant, says L. M. Burgess, a vice-president of Flour Corporation, should be a shale oil plant. Such a plant, operated either by Occidental Petroleum or Tosco Corporation, is expected to be operation by 1986, producing at least 25,000 barrels of oil a day.

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