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I.£nvi'z'-mime1: .-:11 32.12111 Na.‘w1';»2l }?.c—rs;ao1:1’vcr«3.9: The (‘cmgrcssicmzal Research Servivc xx-=nr‘};s exch:xwc!}.' for the Cm\gf:x'c~;»~';;. conclucting rmcznflch. zma|y2.ing lcgislzatinn. zunih T p!'0\'iding'. infornwtion at the rcquex:1_0f ('o1nn1Ittccss‘ fk-$c':1i;j§”§%T" hers and lixch‘ sI;1l‘tK. ._ 'I'l1v.‘.Sc1‘\'i;5c znakcs si1ch_ rczsmmrh amihable. with'(‘mt ri:u’tis:n1 hizxss. in m;m§‘ l‘orm.~; including .mulie;~:. rop.ort.x.%«:o1m3iL1;sA!ié)ns-;. digzcsts. zmd lmaskgrmmd brict‘h1g.§». Upon rcqucw the (‘RS axsists ("()mmi1te:3s% in '2n1.'1|y"/_—in§I.; lcrgislulivc Dl‘();‘:0'\;-tlx‘ and i\'xuL‘.\‘. and in a:.~.pn.~.':1_l.~;_ and tlnrir ::|tm‘n;u.i\-cs. The Sam-'icc’s sacni-m” spcci:1!§xt_x‘:ami aub- jccl ;m;1}_\'.~.I< are ul.~;0 z1\';.sil;m1e for pcrs0xul~-scmsuhzztinm in their 1‘c~;pvcti'\'c fit-this of L‘\;pcrti ‘C’. . >? ‘I h ‘. Io ooaooooo‘oo-ounces:ovo-cooboooc-qoooooocooyooqoooqooo-c II. TABLE 012‘ CONTENTS4 IN'1‘RC)DUCTION . . . . . . L.’.‘; .‘ . . . . . .. 11:. T1’;3CHNOI_.OG~ Y FOR 'SYZ\‘17‘%UELS Dmrxa I..OPMEN’1‘. . ‘. . ..L . w. VI. VII. . Outlook for the (‘cal Gasi1'.ic:ation Industry. . 5; C>"T}t=1tjOt:33> . Technc>10gic:.a1 Opportunities to Acixuance Coal . History of the l)evc1.opment of Coa1GasiTfiT<:at:ion. . . Current State-_—0f—’f[‘eChnol0gy of Coa1Gasificat.i0n. . His.t0rV of the Dcve1opm‘ent of Cc.>alj Liqucfz-‘u'.:t.i;);1: . Cu1‘r<2nt State-of-Technology of Coal I»..iquefa(:ti()n.V . Outlook for the Coal Liqucfacti-on Industry;..... V I..iquef;”ac.tion and Gasificawtior1 'I‘echnQ1ogy. . . . WATIS R A:\'-D MAN POVVIER VCONSTRAINTS ON TI"II‘3’(J}R.()W'}I”1LI OF A COA_L-BASE1) SYNIFUAIS LS INIDUSTRY. . .. . . . . . . . . . Af. Water }"%equirc2ments for Coal. Gasificzxtion and " Liquefaction . . . E<1:oN('.>3\~x1cts O.lf~‘ SYN1-~‘U}‘~.‘3l_..S ASS1S’1D’XNCI:“,. . . . . . ; . . A. 13. C. D. ..J g Synfuels in Current }:3nergy 1\-’Iar1<<:-ts. . . . . . . . . . Sy'm:}1etic Fuel C()&}1.£.5‘. . . . . . l;~"1o0I‘ Cont;ra<:t. Pricc.<.3 . . . . . . . I...oan Guararxtees. . . . . . . . F. . . . . . . . Tax T1*c2at;1*r’x<::r_1t...;.......................... The Cflhoice of Tl"’0’Jicy Tools. . ., . . . . . . . . . . . . . . . IOOOCCOCOO.UOOCC3I'O ooocoaaooolooolooocaoo ouooacooooooo '( -0 Iv C‘ .1. EN\"IR(§‘)?\3E\H3N'I_‘/X L AND R.li3CULA'I‘()R.Y ASI.7‘ECT'S 0]" A‘ . - O O C CV0 O»O C O I I. 0 1'0 0 O O I I O O O A. C;<+nera1.§::ed Envir'on17‘1em:a‘ Impacts. . . . . . . . . . . . B. I5i<>;:u1ator§,r Aspects. . . . . . . ‘. . . . . . I'DOO0OOIOlOO.ICO0.000CIOOI0&0 _B. 1\Ia.np0wc-:r‘ Constmzints for S-yrxfuels I:‘1:‘ToduCti(>n.. 0‘ 0000000000094! IOU’ I O\?I:3R_VIEW O17‘ l'SSUI3S Affiil‘) OPPOR'l‘UNIT!ES %P]:"3R'1‘A}FN INC- TO A VCOAL—-BASED S§"I\“1‘"I_?E LS INVILJUSTR Y. 4. . . . . . . . . . .% . ... . A. Se:-1€;:cted Pros and (‘ions ¢C3f%{a‘Co11‘a;j7(3r<:ia1Syni;h<:vtic Ijtleis1n.dx<1St'ryOO‘O'OvOOOOIOQOOOOIOOOOOIOC0 B . C. u o o 0 o ,; NE1tiC)I1al, Synthetic: ’I*‘ue1s P01i<:y. . .. . . . . . . . . .. . . . . . .. . Cfcurugxressional O}ntio:'2s to Stimulate: the G.r‘<>wth of a ’ (;‘on3petiti\rcé ‘ Synthr;2ti.c:: ]'*‘u<'-:13 Indusfry. . . . . . . . ‘noon:-ooo9~__Oooo¢'oo¢o DJ CDC7)C.I|CJ1 64 -~ 65 .75 ._ 8.1. 84 85} . U1 This Study is an interdivisiunal effort coordinated and partially au—- thored by Paul F. Rothberg of the Science Policy Research.» Division. IIow‘ardnA. iI3rown’, John W. Jirni-son, and4Gary J. Pagliano r.>1f.the~:I=;‘«1.1'-" \7iI‘Ol’1I'}1CI1i'. and Natural Resour-(.:es 4Po1ic:y Division contributed sections ‘on synfueln water 1~ec1L1ire1nents: environmental £1S}')(:‘{C?tS, and regulatory czonsidcrrations, respe ctive1y.T Henry Canaday of the Ii3con0n1ic:sA Division pr'epa1*-ed the financial analysis of the study. 17‘ina.*1ly, Claire R; A Geicr of the Sc:i%c:~nc.e Po1.icy 'Resc->z:u‘<:h I.)ivi.si0n discu'sse.d nthe manpcm'er' (2011- ‘ stra-ints i‘.'1c5n,1ic,yeoxiditi<)ns, decision makers may be reluctant toconsider coal—~based syrithe_ti<: liquids or syn- thetic gas as major energy fuels for at least the next ten years, and pos-' sibly longer. ‘jconomit: incentives, congressional £1C.li(.,nS,' and/or executive poliv cie :3 can reduce or reniove particular }')‘i:"()i)l(I‘ITlS new confrcmting progress in the development of ?§)ml‘uels_ (Syntlieltict fuels). A mix of actions, (10- pending on the state-of-gteclmol:ogy of the fuel processs, relative economics andbproducts invol.\{ed,;a1'1<1unccrtaintiess facing tlie_vitidL1s1:ry niay be re- quired to stimula.te coiiimcrcialization. ltecogxiiziing costs aiid focus- ing on the l)enefits of alternative strat<;:;_»;im:; requires an 1md<;2rst.ancii1ig of the exivir-onmental impacts of <~;yn.fue1s prr:>cluc:ti.on, the financial ;.10g§ic of Corporate investment, and the relationmtip of:'.synft1el.s5: to t';lie S. en-» eirélb’ suPl31.V. . i u L The establishment. of a (:()n'1pI‘el‘1el’1:~3it/(3. .I\’a.tional. Sy‘ntti<:tic .}§‘.ue1S€ Pole could promote the iorderly devetlopmt-mt of’ a coal» based synfuelts in- dustry. Such a policy may: i V -—-weigh the need for syrifuels against. ptissilfyleetitrir‘onm<::ntal and so-— eial costs; ' t ‘ --—cori.e:ic.1er klilukri financial costs to ’l"‘<:>N \ Synthetic fuels, chemically produced gasaind liquid fuels from coal, could supplement the Nation's dwindlirug reserves of natural. gas and oii. Synthetic fuels (synfuels) could be used on site for electrical ge1'ieie~ati.0r1. for industrial heating purposes, as :3. feedstock for petiro-chuiehiicals, and as :1 boileii fuel. .A1thoughthc'1;‘e €i1’C e.va,i1ab1c itec:h,nol.{)gies for the‘pro~%- duction of synfuels, none has yet been able to produce iuels that compete fa\.'oir:;ib1y with the <:ur;r'ent costs of producing conve.ntion;>.l_oi1__ and gas. L/ The Congress and the Adminis,tfation are immersed in an: array of e[c,onomic, en\*ir*onmenta1, and regulatory issues pertaioningto7thcde- 've1op:mem: of domestic synfucls. Umimr‘ consideration are sex.'era‘i"'iniea.— sures to expedite coni1merci.ali'/it.ation ofu synfuels iiiciustifly, includingloan g‘uarariiee_s, gomraczti prices, aid to impacted corénrnunities, and iaccele erated rescarc.'h end cl-.c:!c>i<>pri'x(-211.1 programs.» The purpose of this study is to summa.r‘i_7.<,- ini'(‘)1‘n‘iz1t:ioi1 a;hd to tify'1najox‘ policy issues which beam on legigisiationin the 94i:h.Cfong§r_essd 1*e1cvent a synthetic fuels indust:ryf.~ First, the state——of-techno1ogy v and extent of.indu'str‘iaiinie1*est in synfucls is reviewed. The outloola for acoa1' gasification and liquefacticm industry is prov Jed. '1‘ec1mo- lo rical advanceirients, wa.t<=:1~ 1imitatioris»,‘ and isnariiowor‘ issues which E» o > 1 / Recommendations for 2: Syi1t,hct*ic i“u<::]s Coi**m'-.ericrializzition Prog:;'ram. Report ‘submitted. by 'Syni‘ueis Iiiuc:r'zi;i§umi:y ;;i7‘za..s:‘1~:}}‘orce_to the P1"esii— dC3I1i.‘S.En€§I‘§?;_§7 Resources Ciouncil. \'*o. @;vN()\Iv(%I‘I:iif3€I‘ I.¥)7:'3.‘ p.,_ ‘ TheSy1'ifue1s l'ri.t:(21“é:gein(jy i_Tz.isi~:"i%‘0,rce' was formed by the Oi‘:- fice of EX}a.na;§emen.t;p and I311d;;§et. umi:‘,~1" the aicrgis of” the i;.‘.nei"_;_.§y Pie- sources Coui’1ci.l to exarnih<',- ccrtairi ;:.it;c1"1'iati\rcs to e:~:pcdii.e t‘h<“: com- - f:m<':1"cia1ization of sgmtiietict fuel i;cc1m«;»i,og.ics. cRs~4 exertdirect influences on the expected contribution of synfuels to the U.S. energy supply are discu-ssed. Next, the study nresents projec.ted costs for coal gasificaticin and liq- quefaction plants and factoifs which determine and effect tlieir financial position. The availability of capigsil i‘rom the private market in relation- ship to the total investment costs"‘nccessar§,' to establish a C()mpGtiti~\~’€i. industry is also reviewed. In vie\\I‘“of some con‘gi:‘ession'a1 interest in \ ist;imu1alting the C()1Tl'I1]0r“Ci8.17~ ‘production of synfuels, the advantages and CiiSZ3.dV£{il’lt£lgOS.()f instituting price floors, tax treatments, contract prices, and loan guarantees z:re'anzil.y7.erig1"<:~ssic>;gal options providedfi CBS-5 111. Tl’3CHl\"OLOGY :EoR'syN1:*UELs DEVELOPMENT The historyof the development of synthetic fue‘1sltechnolo'gy is rath- er lengthy. Accordingly, only selectedthiajorvevents and processes are ore\riee\=s:ed in this section. An introducxtion to the current state~of~—tec:h—- xiology of synthetic fuel processes is’ presented. The current outlook- aiid‘ constraints facing an emerging coal liquefaction and gasification in?- dustry are discussed. Teclinological opportunities to acivancecozil liq- uefaction and gasification technology are listed. A. llistory of the Development of Coal Ga.sifica,tion Coal gasificait.ion is a cheniictal technology in which pu1verizedAcoa1t' ‘is .converted into combustible gas which may be of low-, .medium¥~,o.d or 11ig.§h-—If:‘»tu (heat) content perdcubic foot. 2/ In its simplest form, the gzisifictatioii of coal requires, first, the heating of the coal and then, the reaction of its." ca1‘bon conterit and other prr.;»ducts obtained during the heating prcimgss witli <.l,iff'orent combix;m.tion.€~; of air, oxygen, ~1iydrogc:n, ‘ xi ‘ ‘ » or steam to produce Usable fuel gases, pref‘erabl.y 1'1’l€’C}."l&ll‘1€3. Coal gasification proceesses have been used for several hundred years. During the 19th and 20th century, gas; from coal was produced in the UnitedSta1:es end Eizrope to serve def variety 1*‘ needs. Coal gas was used fox" lighting, cooking, and industrial plR:1)O.E‘€S. Nearly every city in theeasterniUnitcd States once had its house and accompzinying cyl.i~n.dri<“%:3.]. storogiiri ta~fm_l-:.s that stood nedr These gradually ‘u ,.. , 2 / Btu»-}L3r,itish t.hr.:m‘m.ilunit--— q1iz2inti1.‘,y of liemt. Gases czzm he char»- z~1cte.rized by the;+:¥.2:’~ heat content; xixezisiw-«,eroad.. In l:‘.ui*ope,e the I..urgi process, ifi\'\Ft1ic}1 coal is gasi'(;'ioerI,, with oxygen arid :=;tea.mo., was developed in the 19305 and used to produce .a city gas for dis%t1‘i13uti=en;e_ Also, the Lurgi process was used to make 2.1 synthesis gas for the mam:-— fac1;ure'of ammonia, methanol, and a variety of liquid fue3s and petro- chemical products- I.£os:;i.<_1es the Ljargi process, other processes eI'1Mex~'<2o%bee11 §dx?ar1C’é*ad, including the Koppe1"s—-Totzek proLoess%a:1d the In :- l;a:~3ijf~i(.tati<)r1 p1"o<:céssc~os"Vf»r>produce gas xwitl1$ a. heat:- L of thejgndustry would use :11;;;1‘v;.-we raxngeing efrc>_me1*o11g}1‘1y 100 Bins to 400‘}3tu'S per cubic foot; '1‘ho % 3/ F’orz¢_\j, I~o{z:.zr1"j;e. _ "The Gasifiecz;1ti.onof.C_‘oa-1",eSo1entific; A1*nm*icz.m;;, ""‘ eI\e}az;~<-:1a19'z4.k \’o—1. 230, p. 19. Lifib -c '1 potential applications where low- or medium- Btu gas might’ replace oil and natural gas include: 0 Electric power‘ gcnerat’on as - Boiler fuel. for existing eoiltor natural gas Iirecl utility boilers. ' -‘ -- Boiler fuel for new base lc5’ad service electric generating station l:>‘oi}.-era. V l l i - Gas turbine fuel for combined cycle power plants in base load and intermediate service... o Industi-ial fuel applications as - Boiler fuel for e:>;istixig;' oil or natural gas fired boilers to generate process steam. i l - Furnace kiln and oven. fuel for process heat. o lndustrial non-fuel applications as -l~5:i“Reducing gas 'forproccss metallurgy and ore rechiction. —~ Synthesis; gas fornclaemical feed stock and 11uethar1olipro- duction. 1/ it Existing technology used in the production or low- or medium~ Btu gasis well developed and is curr~:~:rxtl_y usfz.-ed in many commercialplants outside the United States. Thus, because of its riot‘ coi'7r'in'1e\:fical ‘ stration, the pz*od'uction of low- or medium- Bt gas inxtolxfes a technical risk and can be injplcmented, in a relatively short pteriorl’ of” time. __§’_>_/ . The production of low- or mecliunw Btu fuel gases irom coal offers many economic opportunities. A.ccording to a report by the l\Iati'onal Academy of Er1gi.neering,. the processes for producing l.ow~ and medium-— 4 / Recommendations ‘for a .Synt.1':cti.c "l-‘uels C_Ol’hl'I‘."e1?IT(‘:laliZ2fii;l0I1.bI;’I‘Ogl"€i.Ill.v op. cit. , ‘Vol. Ill,“ pg plfll-Al-i. ' _.§__/ Ibid., p. 1I1~A1.i~2.’t‘i.. \..pI‘h?).d“" 0 Btu gases are “less complex and costlythan those for producing} hig1h- iBtu gas of pipeline quality. V __(_3__/ in addition, the use of log. or medie um:-Btu gas in a combined gas turbine-steam ‘turbine power cycle» of- fers the-‘ipossihility of asignificant’ increase infithermal e£ficienc5r for electrical po‘t~x'er generation over the conventional stearr cycle alone. pThe other-sector of the developinfi‘ [U.S.4 coal gasification iiidxistry it seeks to commercialize technology for the: producticm of high~Btu gas‘, 7 which has a‘ heating value of rouglily 1.000 Btus peircubic foot. (‘has of this qualit§r is also referred to as substitute‘ natural {gas (S1\§Gl;i‘ii-ltli has essentially the same prop rties as and is generalely interchangeable with rxatural I"Iig1i—~Bt11 from coateitnulcl he use’! .aL;cida replace-— merit for fuel oilahd natural.‘igais in industrial, residential, ‘and com-V m'erical uses. Commerical technologies are a\~‘£ll1E3.b1(:‘ to produce l‘iirgh-Btu gash froiii coal. 'I...urgi, Koppers-'IZ‘otzek, and W;'ui1a:l:er are low-- arid medium-p-Btul ’ga.siI_‘icatior1 processes that have been clcmonstrated commercially and i could be used as the» initial step in the production of pipeline quality gas. '1"he gas produced from these process is would have to be lichen" --s as [Because these ‘processes... ' a ically upgradedito the quality of pipeline gas. ‘ A have been prover: in lov.-‘-p-Btu cqalr gasification treactio-ns and in other RD?‘ plicatioiis, the 'Syni‘uels tlnt«;vrag_.§ency Task Force judged that the teché nical risks involved in higlu-Btus gzsrsifieatiori plaxit appear to be mini-— iiial and surmountable through sour:-:3 rogx:.am. i‘ op. cit., -p." ll.l-l’:l-1. i c ‘ so-tutu v V ’ ‘ o high-Btu eoa1%ga:5ific:atio1 1 p1»ar:ts%, in \-qhieh the type of process to ‘h..;‘ e used has been identified, have selected the Lur'gipx*oc:es:s as the initial. step iollowedtttéy up’gr'a.ciing to produce%a‘hitg11-Btu gas end’ produatt. '-The tecllnenulogytto gasify coal is being "(e1»'2ii‘f'€.i'e'£1 by’ béfh I<‘edeIta1‘ agnd private ef.'i‘ort.<3.. Sc:?vera1 experimental. (foal gzie1sii‘icati.<>x1‘plzzmtssg of small‘ scale compared to the size of commercial p1ants,_;.,teti.?51‘c: ii; operigtimiotr uncier eollstruction. Among these are the IIYGAS pt'n't'e,ss in (-fhicag<.>, Illirrois, which was developed by the Institute. Qf Gas T€."hC}'lI;1V(r.)1(.){.fk‘,'; "anti! the.(‘.arbon AI'i)i.(:)’Xi(}.£;r Acrcepter pxrocess int Rapid (‘it'y; Seu'tit}te1I)atkr31.:;, dc- veloped by thc Coneso1idtation C'oa1;Com;‘>a1t1y. ; =B0th _o£ %tl1ese_p1ants.¥—ha’ve 1 been in ope,-ration for approximately three years, The Syntt1ane plant in Bruceton, Pennsy1van¢ia-1,. which uses‘ :1 process dex*e'1<>p_cdVb\,' ct?!’ "L3.f.e S. Bureau Of ]\Iim?:s:, vfaxs e0mp1ete‘d in late }*'isc‘;al Yeuar l9‘75;.*}e;.tThe' Agglom-.*-ratixzg Ash px~o¢e:=3s demmmstrationi unit in Columbus, (>‘.1i<;:,t will be _C01"np}.e.‘.e(l in }"i.sc;‘al \'e:.1x‘ 1.976, as well as the P;i-(j§as'p1a.1xt itnVH_onie15 City,“ Pe11n:»3ylvzmia. _«'i/ C. Uutlctfik Tm‘ t;hb (’?<,'>a.>.V1V. '.(.iaSifiCz§{i0n I'nduSt1‘3( As shoxwx.i_r;jy'J‘atbl<: 1 "Announced C)ommerc\Lial:1. et I:*iC:a1.f.‘j_ng_g‘ or: i*\' 1977 A.1.1tl‘1eo1%eei.ztaxtionst for the }';2nex‘;.{y "{esear*ch amt} ].t)<:v«.-*:lofjimrgsa. .'3.clm;inits;t1‘z;,ti.on. [Statement of.‘ Dr‘. Philip XX-'he_it%e of 1?3}i’.I)_.A..]t 1-‘«:;hr\.iary 10, }€?76'..~ (unpublished) t t ,.. CC... ~w,./..A.......w »:w..,.—.»_f» (3 par. rm... 1w1:.»..u....~uu.t» ,. . . .. 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T. .. ..:c.... 3} . . 1 .. ...... . , .\ ll ulu. ..._ m .\ ck . . . .\ 5 I .1 .4. «C V. .1 D n . .c ~...aa.d .. a. UN; amuul. . .. ..ro. . .7 . .. . .... . ... .. ... (. . . r. .:... c- . . .A. moov H 2 u .qm< _ '. . . u... _ . . CRS- 12 Interest by several companies in coal gasificatiori technology should not be equated with tlm-‘actual corporate decision to invest the $800 mil- llion -- $1 billion required for a comxnercial plant. Efforts to advance and ctonmiercialize coal gasification technologies ‘ , I! in the Unite.d::States have confronted an array of obstacles. Due to huge capital‘requirements, uncertai—nties of regulatory pricing policy, lack of a supportive d_!'l-Cl comprehensive synthetic: fuels policy, and anurnber; . s of other constraints, ‘interest in rapid cormnercializatlion has waned. to the Synfuels lnteragency Tesk l*‘or<:e, the outlook for both high- and low-/niedium-Btu gasification plants is rather limited un- ‘derloxisting policy and economic conditions. % The most significant over- riding constraint for low-/medium-—l%tu gasification plants was considered . g V ‘ _..s _ ‘ . v""" 1" --A. to be the short supply of venture capital. Until. there is a positive growth»- oriented iridustrial and financial environn1ent§\ will be only extremely limited funds spent on future olamnixtg by indust1*y. tit" "[;§eet.ed that there Thus, under prescm. policy and economics conditions, it is unlikely that there will be any §i.Qjt‘lifl(taXlt commercial production of low» or meclium~ Btugas from coal in the 1975-1985 time lperiodr Vvith respect to high Btu-gasification, the Synfuels lntera;§encyLTasik Force maintained that "given the current regulatory clix- ltetogetller with the enormous in<::rcases in required investment and the refsultingprices . . . c [that]. . . in the absence of new l*‘edcral initiatives, no commercial development will take place izitime for siggnificant; production by 1985. " lO/ 9/ Recommendstions for {.1 Synt,hc-tic: Fuels Commercialization’ l"rc>;;ra1fx'1. -391 llbid., p. ,ux-_1::-3. CBS - 14 process wasutilized to produce up to 90 percent or the peak war-time ' aviation and motor fuel demand in Germany.- l\'Iu‘ch of the German pro- duction of oil, over Skpmillion tons per year, weis obtained by this pro- cess in which hydrogen is added to coal.. 11/ According” to av report by the NationalAeadeIny of I:3ngi11e.<31"i11g',’ for the last 30 years the di-i rect hydrogeiiation (Bergius) p.I‘(;)(:(2SS. has notbeen used. It is question-' able whether the technical knowlxowl still exists to utilize this process without reinventing many of its det:3.il.s of operation. 13/ However, some of the plants in ('3erman’y produced liquid fuels from coal by means of gas synthesis. In this apyaroach, coal is first gasified sh ‘ ' ~ to produce a synthcssis g.§:a:s (syzigus) whicli .18H}lléf;f'%(.Ial:i£11§"£iCal1)’ converted g\- » -to liquid products. This te<.:l.1r1c)lo;;"\‘r was abandoned cl11rii *.§2; tl)eil9~10s. A m<)de.rn syntliesis gazes plant <.:aIlcx1:1, gas s_\,'nl,l1esis p1floces's”‘l;’;c:i';1t<2d commereiéillfg for ab y<.:-airs; II 11/ Sl1epir1.1’3§ C3otal‘s 1-"utu re tln~<>u;:l~’1 'l:‘nc><:l’:nolc);g_v. ()fl‘ice_ of (Mal Rcisearch. (7.8. Dep:£i:‘1.1'ms:x“'lt ol‘.tl—1e Interim‘. \\*’;1sl‘1iz1';{i(n1, l.).(_5.,c l£l';’;'3. p, S), - ".~.-H 12/‘ U. S. * Ez1e1*;.{},fl l3’r(_isip"ea;i;.;*uarant‘ces, favorable pricihgt-, c31\9iI‘<>nn1c:ntal%, and. reg_,fu1atory 1‘,)O1i<‘,‘:iC:5,_a_I1d availability of.’ water .211 d c:onst1*mff;Hm1%ma1e1*'i§1lss,. a slow but gr'a<1ua 1 gzrowth of z1‘éoi51. §,§a.si{'.i%catio% i:idusst»1*y%n1:iy% bi-.$"p‘_r)s”-° ' \ sible. I). H.§:'-§':'.(.>1jy of the lmvclopment of (."foz‘*:_.1 I_.iq1.ic: 3‘ac1.i.on Coai 1i u(:f'.';1<:ti.z1_,fc>r(:ign scm-ms of pe1Lr'c)1Te-— um. A coal li%quc.-t'ac:1im'1% ixldusstry could i'urni'sh tlwj 1,?'nitml Stat_és \-.‘ith% a 1012;; term and r<:Ji%.:11:)1':o source 01‘_]() \\'-S1.1l‘i'u1‘, Io.w~aSh.ffq(:l% oil for gmwcx" Ch(émifCa}.% inciL1S*..1'V§{.% ~ }- V % _? hiLstc>ry.__.: In Cm rhmzmy Ai4)c:{—t\§.*‘e.€2%.r1% _...~-—v'\, generation 5-m(:l'<.::cm‘ld Si1[',)})}j' :1 1‘ee<:iSL<.><:‘;: for use in ting} cl<>nm.~'3tic§ pc.~tx.‘c5- ‘A T‘h<:p1f0ductia_l h:.u.~s hue} :1 Icing 1&9:-3()' £;+.—t,1£L%.l$9~'¥':'i Ia1‘L‘f0 sfi1 coal’. » The ”‘%t\<:Cl3:1;;>icSgg_y krxo»-.>zf) ;T.z.§-;;Vih—e :f'»(.?X_‘ giUS'_' CR5» 15 _ E. Current State-of-Tcclmology of Coal Liqucfarbtion The I¥‘i.s5cher-Tropscll synthesis is an important tecluxology today, be- cause it is :m‘ immediately. accessible avenue for the production df liquid fuels. An 3'.-ndustryh based on this _t¢chnol.o_gy would not relquife the ser- quenl:ia,l I‘(3S(dI11‘Ch and clcrve-l<;>;:n.‘:-<311t dacztixities m::c:essa‘t“y to p1*0vedc>ut.ahcl~ vamzecl ;)r<)Cesses. Ifa commercial syncrudc-2 plant weI*e built in the United Statcrs in the 1976-19ROApe1‘iod, it would most likely be based on1?‘iéschcrd-’l‘ropscl1 te1c:l1x’1ol«d>gb),t, because. it is a clcmonstrattecl co_t‘11n“ier- cial t.e<:l1n()lugy. _1__:3_/ V . L llc)wever, the Fische.~r-Tropslclu process istcmly one of the. processes axailaliale to a Coal liql1c2i‘actio11 industry in U'1t’;}. {”11ite(.lSfi7t-ates. A gr_‘o_}1p of ad\»’anc:ed pI‘(,)CeSS£;t£5 may tr‘ avai.1able for con1m<3rcial’use in the 1.9805. These pxmcesses called "Direct Idiquefactiorffijam: i):ils~cc.l on the Bergius prcucess. '.I‘he_y requirfie the u<;c of large amou its of hydrogen to be added u u o u ‘\ 3 . I to coal m méclet‘ to syntlwcrsxzccz energy l.1qu1ds.\ I‘l1(2s<.: processes have not berzn. tu2st.c2d on :1 scale c:mm)a:‘al)lte. to that used tq. testthe l"i;~‘.cl*1er— 'J.‘1"(._»p£‘-schpI?()C(3SS. d'lZ‘l1<:é1~e are no c:ommer«:ial plants in operation \~:l1i<.:h use thersz.» pl-‘(,.u'I€?VSS(.‘:55. liowover, numexious modern-day direct 1i‘quefa;'c'ti:::r. processes a3:‘<-;e in various s.t21ges of reseaI*ch éuul developmetzat. Ankimporlsalntl par‘am(:t<>r that di_sti.nguis3hes th<2L l~‘ischer-'1‘ropsVch syn- l:l1c:si:'=::l'r<;>m z-1dv.:>.nc:ec.l direct liquefaction p1’.‘()(2C?SS(3S-_i£:: its; re1a1.i"c:: ccmw-A x'ersi<_m callicriency. The l7‘iscl'1er-Tropsch process; is eibout 40 pf;}1".(,‘€3l‘lt efficient. whereas the direct liquétaction —pr‘()CC.‘S—S(3$5 ;;u*‘e about 60 to 70 ~ f)C:'1f'C.‘C°.ntj <1-ffi cicrnl. . l 4 / l.':)/ Rc,-clomnu:3nc.l:1tions M1“ :1 Synthetic‘. l-‘uels C‘0m;nv1'ciuliéaticm Pr<>grfam. '(>p.t cit. , p. ill-lt.’.-:3, ~ ~ o-mu.” ‘Ml l-ht:commegzndationss l‘m‘ £1 Synthe-tic }“11(.‘lS_C‘(51:"ll1l(fI‘(;.l€:.l.izal5.011 Proz:1‘am.l ‘)9 _ ".13 ""369 CBS -- 16 The teclxxmologjy ‘to liquefyv coal is being furtheregl by both_Federal and private efforts. The ERDA coal liouefacttion program has two ob- jectiveszs~§s,(hl) the ‘short term 0bjC.Cl‘.iV'€' is to develop to industrial scale the eomrersion of coal into low-sulfur, low-ash fuel oil soitable 125:4 firing eloeetrnic power g'eherato:L‘.s urithout ai1:'rpollut.ic)x1, and (2) the long term objecfiwe is to develop, t«:'.>‘ir1dustrial scale the convergsion of coal ir1tV;o higher _:-:{I‘a.d€3 fuejs like gasoline, Inethanol, Hdiesel oil, and heating oil? The current Federal effort lia.s been ltlo soelocte-d process op- tions through large bench and pilot pl:-mt _o1~dor to develop a l;>road tc:c:l1nolog;;i<::a1 base.’ It is liopecllby ERDAFthat. mt,» mos’: efficient A process or combination of p‘i'o‘<:esses to produce clean liquid fuels can . be deVe].()pC?(i by pursuing this strateg;‘y. There are a number of private conwpaniles yvhieh have sxxpported R&.D on coal 1iquC:1.‘a(:1rcm technology. Gulf Research and D<.;yelopment, Te.§:laco,e T(,)SC(”), Union (Tarbicle, Ex:;on., and .‘3hel.l a;c;_s:omc of the companies which haw: be-C11 imvolved. AF. C)i1i.'lo<:>k for l;.l”lA«’;.' (Toal I_,irgm:f;.;L<:tior). lfrlcl11s1.I':y' lPrimarily, teclxnical, economic, and env'1%ronn1e7.y1talo constraifntsh will A 3: lirhit Hit} eontrihutiozl of synerude to the U.S. energy supply. The p1~<>s;:lec1ts: for; growth of the irldustrye wovulhcll lm aioled .1112!‘/lO1"‘ technological advances. An aggrcéssixre ’-l.i.q11el*;z:1:flf.i<')x1,d<:’velol3menlA pro- grarn has beel1’lir.ien1:i.f[i%ed by the National Acodc:11a5* £1 nmjor COlT‘n€‘iT’SlOI"1(§.t1O promote a. lc>11g .r'a%11g(-2 sup’pl§~' c)l‘_l.i'q.uic1 fuels. 31/ A .s~i.milz;11" tlleme was en‘1pl”1as3i.'z.e2e.d in 21 stucly by the N‘{:lti()nE{1. Petroleuml P I r ' 15/ 15.53.. ’l;3x'xc11'g.;‘_'e»,' l’-’1*<3spec:t::; An l:311g;inee3:‘:in;j; \’iewpoim;. " op. acii. L} p. * "‘” .45, C RS - 17 Council which advised that production of synthetic liquids from cvoal wilal depend primarilyl upon further technological developments, especially in V the hydrogenation of coal or coal-derived intermediates and in the pro.- duction of hydrogen. The C.‘ount<..-il identified’ the development of’ efficient catalysts as the key steptin the improVve:ments- requi1.‘ed to bring coal liquefaction within econoiiiie feasibility inflthe United States. lg] Other important technological opportunities to advance coal conversion pro- cesses are discussed in Section Ill:-G. ‘ A In an a.ialysis3don.eby the E5yr1fuel.slnteragency Taslt-‘ili:‘o,:i§ fpce, the single neiost ixnpoilant conqstraint facting an emerging coal litiuleflaction industry is the availahility of venture capital. Identified ast.t}ie second major corr- straint was the shortage of mzmufacturing C" ability in the United States to produce tl‘1ic}«:~v.*al1ed pressure reactors nee edfor eoajl;liquefacti0n.' .« I K \. ‘V . ' , Additionalconstraints cited in the Task I_:‘orce1repeoI‘t' iricludeglz air quality standards, water availability, water quality, and communityiimpact;1‘? / The combination of a nurnhezr‘ of constraints and uxiansweirecl poliey questions mak.e it di.l:‘f:i‘j:*:.thetic: Zl*‘uels" Co2'menerc:ialization l3rc>g;rahi. t £,)}7:. Cit.,, 15. III-l‘3~—2. ' i or to assist in reclucing reliance on foreign oil supplies. cRsg18 in the current imarketite and would produce synthetic fuels only at price levels well above those expected to represent future world: price lei-iels for oil. 19 . It is easy to understa'ncl private industry's reluctance to begin construction of a commercial. syncrudc plant whens the fact that recent syncrude price estimates have nnnged from the low end of roughly 0' $19 ,0 asmuch as $52 per barrel isconsidered. 20/ Thus, under present policy conditions, i.ei, with no goirernrnent in- centives such as loan; guarantees and contract prizes, synthetic crrncife oil from coal is not likely to be a SiQ‘nifiC€tIll‘ source of dOI.“1l(3Sti£2@llOI'g‘3’. t I 4 l u G. Te<:hnological Opportunities to Aggy 3 i \ There is an arrayiof potentiaa. prolxlems ‘(anti i31':pro\~'ernents in both the processingsicherne; and the equiprnent used for the gasii“ication and liquefa.ct:ion of coal. According to the l.“(f¥L’1()1”€11 lrlnergy pACln1inistratijon, the Iinergy RCéS.t;E'£l1‘(.‘11 and Developnicnt Acl.minist.r'a1;ion, anclthet .\'at_ionnl. Acztqemy of Exiggnrtéering, there are ‘oppo1*tunittiote.:~; for aclvancing synthetic_ ‘fuels tcclinol.ogy _by pursuing a; concerted research and development ei‘- fort. 21/ Technological advancements may re.°;ul.t in iinajdr improveinepts 19/ 8. Energy Prospects: An l3n;;ineeri'i3g‘Viewpoint.A op. cit., p. "'- I 42. I . V " I V y- 20/ i Recommendations for a Synthetic I-“uels Commercialization Pripgram. op. cit., \="ol. l, p. 3.3. . _ ' i 21/ .Thc l7’ro_}‘e_c:t Independence Report by the Fecleral linergyotAdministra~ tion, the il33R.DA-s 48 plan, "A National Plan for Iilnerigy RcS€a.rc:h, I)cvcloprnen*; 6;: l)emon,stration: Creating .l‘3ncrg_y Choices fO'I;’:__til€ l*1.zt.x.1i"e'.’ by 1:1Rl’)A, and reports by thejld Hoc Panel on pI:I'\ralnriti,oz‘x V of ‘(Toat-p(3asi,fica:.ltion p?Fecl1lx1ol.ogy of the 'Nesti<.>n:zl Aceiclemy of l:ingi- neering have stressed thc=: important r<2lntio;2s;l'xip hetxiceen resezlrcli ~ and development and adxieancing, synfueils t:ecl1nol.o;.;‘_y. i CRS -— 20 and development mayresult in advances which could decrease the Costs of hydrogen produc.~t:ion. 5., Ixmnrovmi Feed Equipment for Injecting Pu1ver_ize_d* Goal Jnto ‘.'~.1__‘. "’ Pressurized system. I'1ijectin;;; coal into liigh pressure reactors ‘pr'31)“-( ounds yer s uare inch rauie). Techni ues for feedinlf L‘()."li' -in the forni of a slurry % have not been ciernonstrated:.on a -eornniereial :':::C:.:.1lo.~ .v~ ,<:asi1‘ication rate [otherwise completie conibusstion of the coal ,c:ou1(les"'rm-:r2 production, may irnprove pro<:es}=s econozmics. V‘! r. ‘Devi:-topment of S~Z.:ztis1'£zct.1idh.~3‘ or gases at t€11}1?f€?I”att.1I7(35‘lift in i 2100° IF‘ and pI"e.ssur«:'-3s as high as 1500 psig iIf1*{)i]Z)(:ii1'l"JS_ of 1ar'g<3 c3.iz1i‘z:ee.~I.«+i.‘s§. ‘ CRS - 21 if havelto be developed because conlpletely satisfactory valves for these con-o— l ditions of service are not knoxxrn to exist. For coal liquefaction" plants, ‘there is the added problend of handling coal-—oil slurry which causes exa- treme erosion of pump casings and impellers, pipebendrs, and _valves. Again, sa1;is"actory equipment to handle the combination of slurry ser- '. 'a ‘ P s ,;'- ' "".. l- 1 I v1ce temperatures between 600? and 87:» pl-~ 'aI1('l:‘f}If‘CSSul‘OS oi I00 to 3500 péig (the existing conditions in coal liquefaction plants) £lI‘€.‘lV-'ll()t4CtTI'T“"""' renllv available. For coal li<*ucfa_ction Jlantri-3 to eye-rate rellablv, im- sr- — V ~ x , v provements are required in heat exchanp;ersel'or slurries, pump design, valve design, metallurgy, “ and solids sepa.ratlo:fj.E,;f 8. l*3m=1'r(wnn1entally Relatecl R<;:sea1*cl1 and Developmenh For mos.t. coal gasification and liquefaction processes, there is lack of pinformav tier: on the amount of pollutants present e_in_,,tph waste st1‘ea1;;')S~. _ ti-2.4el1 data are mrccssery for the dessign and evaluation df waste»lltreatment sys- tems. A concerted and COlTll‘.l.IlUll’l{.{ c.\;amination of the total enxxironmental impacfs of 21 syI1l‘uelS industry would l'I;>e useful. Qf Refirli-119; of 'Vari_ous:1 .5,$.*’r1<‘:m,1ci11 units 3.1‘, the combustionlinl.<+ri‘ace are e~speci;1lly lc:r1't.idc::al. Major xnzlterlalsz d(.?Slg'l‘l failures l.n111sf; be accounted >ers~ ‘for, and p‘oS‘sibl.y ‘resol.'vec.l.. ~‘. '.l7ll€?1‘. l-zrzmvleclge for promoting: equipmen.tr_ life is needcad. Major anlvdneeI<.3 V in "c"1‘né1te:1éialS. te c:l1nol.ovrV could ml.-;i;~¢»vei V . # H A ., tin. i V the pr<)Spects for 21 Si.;’:{r‘1'il'i(t.z,u1t‘.£;y11f‘u‘_els indu;~‘;t1“y.# F cRs%- 22% 11. Improved Methods ljpr ‘Conservation of Water. Coal gasific'a-A tion and liquefaction plants are large consumers of water; the féasibility M’ treating“ process waste water for reuse with‘in the plant could be e_x'- piored. ‘ §J'1bu 0"’ iv. \VA'i‘1§RA;\‘D i~m.NPoivEiiCONSTRAINTS om 'I‘IIE‘. 0 ‘GROWTH OF‘ A COAL-BASED SYNFUELS INDUSTRY Mvch of the re_st of this study concentrates. orithose polioy afeas bear on the e:;~:p.e‘otéd contribution of synfuels to the U.S. 0 eneeirgysiizppiy. In this section special :2.:ttonti_on is given toiiie wate“1~ I1(3CdSi3:i1d its .~i-Wail-— ability for syniiue1S_productiox91 anci to the manpower {?Oi‘lSt1"aiI1iS on ‘eme rgirig syirifueilis indu stry. In ‘t}'1e"i‘o1,1owinig section a detailed analysis of theoeconomicsiiof syn- fuels production and economic: incentives to stimiilate conimoi Lalizzzation I is provided{ En‘vi1*onmen.ta1 and regulatory limitations are set forth in section VI, A. - W ate 1‘ Requireniemts 1’*‘or (ffcml Giasificatiozii at 1 I...ioq%i,1“of21(.:tioh 1.. ()ve1:'view. A 350 miillion cubic: feet ;>.e1?\da‘* C();E1iV'>'é1Sifi..‘{iti()'!1v Y _ . £3 0 filant 1L1ti].iZi.l‘1g dry ooolingg; towers should require little 9S'i0, OOVO-aC1.’.'€*— feet per year of water‘. Utiliz/.ing;;' wet, cooling t(.)\\'€I"S, \xrato1’Vreqyii‘-e—i monts xvoi_1ld.be* 20,000 to 40,000 aic%15o-feet ‘f)€:AI",y(3VaI‘-.» rel per day icoal liqiwxfaction plant might % require‘ on the. (;1*cfeif'*‘of 20, 000 acre~ifoet;i of _weLter annueilly. These requfienwents are relativr-.~.1'y7mod~ era1.cicoi*hpared to .3 thernia1~e1ecitrinai (:onst;r2ii11ts 1h’a1s.i11s ix'hiic:h ‘K h_L'1'\'€:3 progressed fu1:'th<:asi. iz»1r'r~:.i:n one of the mo:-31’ (‘1‘iififf£ll__"\’V8.:.€1" €3up;;,’l.3-*’ \.«.I.ItJ °" C-I"! areas in the Udnitedt States, the New Mexico portion ofthe Upper Colorado River Basin. Other proposals seem to be concentrated in the Upper Missouri River Basin, also a r<-'g:_:_§on’ with an irrigation agricul_ture b:.-zsed economy faced with heavy,‘ demancls on a limpitedtwater supply. 2. Physical. Re<‘p;'ui1‘e1ne11ts. The proposed El Paso Natural. Gas coal l - u » . gasifiscation complex near l~"a.rmingt0n%, New 1\lexiCo would require 10, 350 acre~%feet of water per year to procluec 288 million cubic feet per day of gas from 9.238 million tons of 203.,‘ per year. 22/ tThis likely represents however, the most frugal end of the speCt.ru_x71 of water re- quirements for coal gasification. Because oftthe premium on water sup- ' ply in the area, the plant was designed specifically to moirnikmize \\*ate.r requirements, relying la1rgel_yc>n non-—evapo atix-“e eoolmg. t In <:ontr::..st, a J\'licl1i.gza'n-"Wisconsin Pipeline f‘,on1pa.n;,' ication plant pl.anru+df"fo'r \ North Dakota xvould 1"equire 17,000 acre-1‘eet; of; waterdzmmxally for each 250 million cubic feet per day {Z250 l\1l\'l(_3l?‘/l)AY]A gas I)I.‘\(.‘).dL!C1-i-C)Ii unit. ‘J3as<:d on E~Iynthetic‘Gas-Coal '1. ask Force Report to the l“eder.=.l P0w‘e‘1f‘ Commission for its Natgonzzl. Gas Su'rvoy_,l j)avi.s and Wood 1.1.‘ the 15.53. Geological b’urvey produced the following estimates of W;-1tm*‘ requirernentts , for a 250 million Btus per day {approximatel._y equal to 250 3\1l\5ICl~‘/DAY] §§35if5~¢3ti0n plant. The ndatin body of 1]. asstxmestzdpfull use of ev£LI‘3~ orative (wet) cooling; the final. line is with use of nonevaporative (dry) . Z2] I)raft I:‘.n\r1'r’onment.n‘l Statementdt "l,*31dPaso G~;.si,fi<:;1tion }.’ro,ieet, Juan §;Zou1':ty, New Mexico. " s l)epax'1:17soni.:Aof the Interior, r1974.‘ I "Cornments of the lo’-3%nvi3.jQp:me11tal I}lcefo1"1sc2 tl:‘unds - of-3L:I'()I‘€3 the North Dal<.ota State Water Co1“nm:ission in the §_\lo.tter of the !\pplieatior1t by the l\»Tic:l1i;_g;1n—\’Viseonsin Pipeliine (lToi”npz111y for 375,000 Ac;1:‘epl~‘<:«.s:tpA11« nually to be Used on Coal G‘€lE}ilf‘l(?£tT._lCu)l’l,V" by lirrnest It. H2—1bic“l“lt, ._[r. ,. ~A.ugust‘7t. 1975. . ~ - ' * W 3 {C i LC "N. $9 .4 3 CR8 — 25 oooling such as planned for the El Paso plant.‘ The table gives three values each for bituminous anal sulibituminousicoal andfor lignite. The tliree different values are l)€1SC:(l on lJl’lI“?(3 different cooling watt:-r"mal«:e~ up rates; the make-up rate being the amount of aclditional water whichi must be added to the coolirig system to replace: evaporative losses anicl to prevent the cooling‘ \\'at'<:~.r' from becoming so saline that it corrodes the pipes. The tlwee pe:r‘c:ont cooling water 1'11ak'e_-—upi rate would be pos-V . 5% siblo ¢‘ml_y .\\’ll;ll watler supplies of\'e1’9y liigh quality; b1"a(:lm:"rols exficlav, but other estimates are ca'mls1cl- erably highe 1‘. r1 gallons of water (‘>r1S‘l1I‘m'.r(l }")(_‘lj‘ million lrlt-u outpu.'of<)t5vaI‘ious x*e:i“111lilxig and <:I‘(‘;(”‘.C’ESSt;,>:;. (o;'zlsil‘ic2ltion and lliquefmztion (assuzmirig that thesynfuczl, is not in txzmi l'mt‘I”1(:(,l for Ql(?(‘.ll"_-it") ggonciarationl conmmféa quite fz1Vorab,l§,' to t.l1«:é1i‘m:_1l el<~<:t.:r*i<: ;;e§1e1‘atio1'1 for 1’}‘l‘iIll'.‘ll‘lll.l‘1l_€3SllI’Ilat(?S and are I! o. (.Ton:l‘>:;iriscm to (,)t}mr (“mil l">ro<::esses. Vlmvis and Wood comparcéei .con*s2paio*ablc: fol“ x'uaximium (;:3§l;il7‘l:lltlS. if‘; gfasificatioti plant us.ingliug, »n1igl‘1t”r<3quiro sis little as 25 pg~‘1ic:exii.sanLl a‘g‘osifiCatit;'11 pl,:1nt:it—’;sii1};'f X CBS -’ 26 TAB LE II WAN-.213 R}33QL'§I{.E n1riN'rs FOR, 250 BIIJLION Btu/DAY COAL c;.As1I~*1cAT1oN PLAN'1‘ Bituminous and .~3ubbi.tun1in<')us N Ligndite 1\1ake -up rate. in percentage of cooling water circulation 3% ’ 3% _ ’ '7C7c Process watex‘, g§p17's., . . 1, 742 1», 742 1, 742 T. 1, 705 1, 705 1, 705 Boiler malic:-—up, gggpm. . . . 396 396 306 3:39 % 350 359 COOUTIQ IT1ak§x‘UI). .?§1311'x. . . 12, 107 20,178 233, 249 10, 096 ’16,828 23, 558 Total, gpm . . . . . . . . . . . . . 14, 245 22, 316 R0, 387 12, 160 18, 892 621% Total, :;%c:r'cr—ft per yeazr at . \ ‘ ' L % 4 V % L .'» :_ 901301-Vcent load. factor . . 20, 714 32,, -451 4-?1,‘~.\187 1'7, 682 27, 472 . 37, 25‘) Minimal demand assuming pa.x‘tia.l air‘ (I(’.)()l.iI"1.5-Ea‘: e.1c1"e- ft: per‘ your at £190 pe1:‘c«~;>nL A_ V load fac:i.<>1" . . . . . . . . . . . .10,358 16, 2.3) 22, 094 8, 845 13, 682 16, 630 £ Snyiumcz Watcrr D(:m;;11'":d.<.-‘> f'o::* Ii?iA><;;>a.1~.Ac1i1’2.;};%%1:1nc3r';;§y I)mre:lr*;;e' A 1);: vi:+a1'1;j§i(;k:1}V 53u1“vC};‘. C*fi3,"€.‘113:31" CR8 -‘-A 27 wet Cooling 530 percent as much water as a thernaale plant for the same Btu 0u't'put, Since gasification is on the order of 70: percent c>fi‘icientT,:md fessniel fuel therma1e1.ec»t"r’ic generation roughly 3Q‘percem., tlicse minimum‘. num- hers could ‘then be halved to provide comparise<;;n‘1“'i*'n*"t.e1*ms ofwater re-v W V quirfienwents per ton of coal input." In contr, ast shipment of coal by rail. 21nd/o3*‘1):11';.e§<.> would have neg-b ligible water rrequirementes for the mining region but \\*:1~ter‘ recmireenients A ' for refining or COn\'c.1+z“SiOr1 would be tr*ansfe1*red to a:n<)t.h_er region. ¢ Coal slurry pi.pel.ines wotild require z—1}:>pr<>>;imete1y a ‘t<:>n’:<>i‘ \\et<:1" per ton of Coal or roughly 10--E15 }3er'c:ent bf water 1* 7§qi1iremer1tS ‘fo1"_n thermzfl. plant. _:_3__§_/ Any f;or'm of raw material tram qorte xxwmld lm\\u\5EVLc»1'e t.hc" .1nining.§ region. 'Adehq11a(':y‘()fW_'\V.z1teI‘S11ppl.y. Water requirerm‘2m.s for coal gas:i[fica- tion or ‘..iq11.0faCtionthen, \\'hi1_e quite substantial a1:'(;~ ;.{:e211o.rally less t}1an ,iV“’>)," cc:.'we111.i,c,»x'1al coa1~fi3red thermal electric 'gez1e'1"at'i:}g‘ pIzmt;:’:.,e In west .e . }";11I‘tE‘» of the Eastern I_7r1itedStat.eS. Sursh ‘amounts of w;i1t<'e23' could be pro- vided without excessive difficulty. In portions of the.We%st, Jxovxever, the water supp1jy'-demand balang-.0 is much more (:l"il.i(.‘::11 and the priof‘ right.s appfoprvi-ation sy:r supply prmsuI‘c:ment rmdre dif- ficult. Several. coal. Eiéxsification Dlant Dlrcmosals now umlcare cVons’id‘eratiOu ar.<_~. in an-vzass with particuIa1~1y criticai. x-ua1;3; 1")<.*\.§<‘:l<.»pm<.:nt," 133' (,;‘c<.>1*;3;e H. I-)avis and l..cron_ar<.! A. \V’og>d (I3. (§<:ol0gi<:a.l Su1°\‘<.:y (’fir‘c11L,:2“' 703}, 1974). e e ' V ’ nA%e {G 5/ "(foal S1m;'xj‘3,a __13’ipe1iI1(3_£;," Hearings bm”c>1‘e tnhc,-;{i%x’\i1.z;:n.<-5 on pp, “lO,:~md 623. ~ e 7 ’ ‘ 3 cnsl -g 28 A % Both the Uliptir‘ Colorado River ‘Basin and the Ilpoelr“ 1\’l1i.ssour-i. River Basin are aricl regions with traditional.lyirrigation ag1*i<:ul,ture‘ based " economies; The vast coal resources (‘if the regions had prcaviotxsly been lconsidered uncornpetitire for development because of their low ;:_:z‘ade, distance from rnarl‘:‘n~tn- ington, New Ai\’lexic:o.‘ Both the ‘E1 Past: and the Wl?3S()‘.%({) plant;_s on ' N water supply {rows the Navajo ll‘§c2se1*\roi1*A on the San‘ Juan River. The autltorii/,ing‘ l<;zg;islzu.ti<;11 for the .\'a\'aj() Reservoir st1'pul:::ut(>.-cl that z1<:>%—l<)z1g,§~ term oonttmcttis for \K‘Z¥ltC_1‘_S1.11)pl.§' from the res<.,-r'voir° could be made unless ..'.: '11“ ..' C1ppI‘()V"€3Cl by Corttgxmrss on the basis of det.eI‘onti11atio'n~>'fi§;~:"«-tl1Te S0(“I.‘CfaI‘.§4 of the lnter,i<>r that sufficient \x.-:~_‘er- would l:>oe:w:3.iltab‘lc: for used:-1 the Statcztof l\3ev.' l.\le:~:i%ac:t. I {Net-;. .l\lex'i<::otls the .(>:’1c::é.l‘7l)y><;2L? A‘(V:(3lL)I’€lCl(:3 l3;~1sin St2?_1‘t(‘:l\\‘lhi<‘rlx ' CRS~29 has already committed all or (nearly a11‘of itsentitled water under the Upper -Basin Compaetp; In 1967 the Secretary of the Interior recommended and in 1968 ("on-t L gress approved {P.L. 90-272} three wat‘er supply c:ontré1o<:ts from Navajo Reservoir. One of those contracts xxuas with Utah Cifonstruction and Mining for the consumptive use of 35,300 acre-feet of \\'aterannua1i.y. "Phat contfact was recently renevwcl and amended to make the .\\;ater‘u.sa1)1e, ‘ . fo-i‘ the planned \K’ES(I?O gasifieation plant. The K [C1 I7—’é1s'o piant is planned M on the basis. of 21 rtew contiraet. A The Department of the Interior hasin- dicated atw’i1"Iingness to recommend such anpadditionul c;ontr'ac:t, shut 131 P2180 has asked that its license Vyapplictati '1 {a the ]"ede1"al Power Com-— v .« L mission held in abeyanee, partially beca Kse ofdiffim1H;ies in ‘obtz.1i~n-V ing Nate I‘ Supply. Detc21*n*.i1'1at1un of ‘water availability by ‘ the I)ep:1rtment of the dmteriotr % in 1967 {and pres1.21m:b1y its intended dei.errninat'ion o.f.p,,avz2..ila})Hit}? for 131 P:.1so] was based on Artic:1e~' It] b of the Ifpper hC‘.o1o‘radr,> Con:p::».<:t .211-— lowiongs State to use more than itsva11.<;>cati<.;.x'1 so long‘ as~jt.m;a1o 1“'pper- Basin usage does not reach its ).i1ni.t. With the push for developnwc-nt of Western exjergy resour,Ces{,T.the ‘Pp- per Colorado Basin may a.pp1‘*oac:h its total water‘ lp}i7fhit"thtn1uc;:l1 sooner ' av \ than expected._ In that event or in the event of :1 severe dr-ous.:iu,,, un- der Article I\' 1': of the I’1§pe.3:' (i‘.o}ora'do"%%(Io1mf§ee"t,% pI\’e\x' Mexiec; {«fou'1d . 1‘1€.x\;e to absorb the Sho.r‘tugest to the ‘full. extent 0!‘. its <":1it3'(.é1“%‘11“;<1df.‘t,i_:1‘ the pre'cedin;_g 10 years before the other staxtes use v<.+oulci.be c:ur'cz:1ilcd.. ’I‘he‘r*«_e o are also questions as to just how much \\'ater thtjre is to be used, "fhcz I;)'c:rpad.rtx'nentd of the Int<:r*ior< bzzses its expected runoff oz-11or‘x‘\'d’id not be sin o-on-rationxmtil. , f t... \ y . .. I‘-7 K4 .. _ . v CRS - 30* . 1922 and there has been a consistent pattern of‘ lesser runoff since that time. Also Indian water rights under the Winters Do_c:trine could be quite Substantial in the i"Ll’piperColorado Basin and have never been adjudieated‘_..a There is strong; concern that if watell" is eontracted to the gasification plants or other capital in-tensive energy developments, it could never be regained for irrigation interests or the Indians even if it were provetl rightfully tlieirs. 6. Upper Miissotirie River Basin. The water supip.1j,~fsituati(m in the Upper i\lissouril‘{iiver Basin is not nearly so critical as in the Southvvest, but it is an arid region with agjriculture l l l , - . it is faeeclwith pofssib1‘y massive scale develop ‘gent of the ;’\‘orthern Great. ‘ » . Plains coal l‘C’S501lI‘(‘,€S:. Several institutional constraints are pertinent. The Yellowstone l—1ive.r: compact prohibits diversion iron} the Basin u'itliou't unpinimous ccinsent. of ;the narty states;_n1any otthe prop;">sals to-piroxfide water for <:1ie1‘;_,{v clevelopment involvecliversion l‘1“03‘I"I‘U1V(;‘ Yellowstone I..ititg:‘ation,is pending}; whiten alleges that Bureau of Reclamation resemioirs vgorci authorized for irrigation supply and cannotfbe used 1'01“ industrial marlti~ lern for galtsifictatiiou or liqu,_efia<:ti0n of \\'estern coalancl (‘orereclaniration of Western Strip mines. " Westerln Coal tlegposits have prm'i<;msl‘\' been considcg-red marginal at best. Highest ;i)riorit_\7 clemands for gas are ependent upon irrigation and" for chemical uses and for residential and small <:omi‘:ier<:ial space v kieatiexig, which is somelxxr-hat less critical in the climate of the Soutlixxgest. \’v'l1y then are the c:oal gasificsation proposals being; n“.arl_e for \\'estern_ CR8 - 31 rather than‘ ‘Easter-n‘ coal deposits?’ One énower'tvou1d Az71%ppear4 to be not that Western coal is" lt>‘€:tt'.r1,*r for gasification. «but perhaps t'l1.aito%Wi:;oste1‘.n; ‘ coal is not? as good for. other uses}. Because of the lesser Vdernand for- v.'estern coal and because much of it Ban be srip mined,‘ it his genoral_1yt <_.. less exgieznsivo. -"Also, gasification may be seen as atpotential Wmoans of marketing otlteriviso xwxarginal deposits.t An American Gas Association study found that the" majority of po- tential coal gz1si.fi<‘z1tion sites were in the West. ‘This, however, was based on1y%o%nwth.e a\.v,gti1.abi1ityof sufficient urxcomtmittedttcoal and Suf-; V I4‘ ficient waterjnot nocesszzrily readily a\r:x$Jfi\h§e}. H. does not imply that western coal has an__\;'econon‘~.ic advantage ovorwgflastern Coal for syxltgiaetic fue1‘,;j;rnanufaCtur'e. 8‘; Trants-B'a.si.n I)i\'ersi(.>ns of V\’ater. Since water is relatively more difficult to proCu1*c in the L7ppe1:' (‘.ol.orado and Uppot‘ 1\~1,issouri.BasinS and since one of (boa! ;§;.wtsiiTitcatic)n‘s principal 'att1~a<:t.ions is the lower ‘Cost of] $s}1i;3nix1g; gas t.h:_~m of sltipping <‘:oa1;«h_otv about ixnporting xvater into the basins? '].‘rans—-basin diversions of water are I.'requent_1y- p1'o- ‘ posed ancthighly <;:ont1*o»*ersia1 in tho West. For oxren a ”c:‘o‘m.-.~t plex of g‘asiIr‘ic§ation plants, however, the costs would be prohibitive and % le gal restraints overxvlwolming; int1"z;t~ba.,\-'(‘3A1", Tor i1*rigz«1ti,<);1,and' .‘n1.uni%c:ij>a}’h uses as wgll as the full range of onczrgy developments of a wltolo ro- tgion, i1'11;€ftI"'b€l&Si!1‘.'{‘I"{l!’_}Sf(T.}1"‘E5V mig;hg.gvgc:11_beeoonomically fe;-xsiblo. I’<;>1i_-’__ ti.<:’o.1 oox1straints"A v:c>11l.d still‘ l)ef"ox"1<>r*1no12s; water er'i.ch :u"3as such as the }T"a(:.ific Northxxxzst are higzhly rt:-sis of coal-7 gasi1‘icat*ion';_t_piAny major trans~l.>asin diversions xxrtinld inevitalily require coiigressional action.l With specific regard to water eforcoal ggasifieation, if Cloiiggress en-i acts lep5isl.at‘ion' to S}Jl')SidlZC~COJl‘lDl(21‘Cla1 plants or 2-mthorize a_didit'ional clemonsstratipon plants, it could specify that those plants he in areas <.\'here water is not a ippf‘ol3.l.e1ii. Or con_\'er'sely (.Tor1;;§m:ss <:oulcl v_)ro\'icle" '2l('3(1I1.‘3 to i‘aeilitate ‘ztlieilpr'oeurement of water supplies \a*her‘_e necessary. ll’.l"-.‘..l' vi 2(;/ 7.'\’\a':%2‘:.cmcrs,ta'.cen1ent x\jork e1:?s,t iron workerst, la» borers, pipefitters,‘ painters; me. In man years of work the biggest production needs are for pipcfitters, electricians, carpenters, spur-5 tveyors, boilermakers, laborers, Z‘1{”ld ironworkers. Apparently any man- L V power shortages that might occult‘ would be morn likely in the labor seg- ‘ Jnent than in the professionznni Itczilm. ‘ e ‘ a p I There are noestimates for ixxdoirect labor reqeuirements which is .par- tially due to Limitations Of"I‘m‘!t|l()(l0t<')&{§' and forecatsting. Altlmngh the [)1‘ccic>n3i1'1£xr1t: m;1n.pr)x{3(éI‘ ‘1:‘equir'cmcnts will be inthc labor sector, they will be for nmr~(:estkil1ed%types oi'.Iabor‘crs. The Iitlucprint. 13.8. I-‘ederatlt;IE3r1er,;";&ytAi1mmistrationt. V I’rr>je¢t lndg{pcIx1'x't<.-1: I?cpoI‘t. Labor R(_3p<>rt; \V’as’hi.ng1..<..\:1, (iovt; Print. Off. , 1974. o o o t F‘ * Cris 54 report estimates that approximately 70‘§"c of the manpower on oiland gas company payrolls is in occupations requiring significant leadtime for ed--‘ ucation and training. ' Q- Betxfxeen 1980 and 1985 there will be an increased 11e<:wi' for drafts;-Md‘ men, engineers, meclianics, geologists; and a decrease in the need for mine operators and motormen, and mining cngi Jeers. The National Planning Association (NPA) study, "The Demand for Scientific and Technical 1\‘1anpower5'f in Selected Endergy Related Industries, ‘f «R 1970-4985“. __;f._f.Y (althg,-,,1l%li liiiqitecl to a selected scenario) has found that the need for scientific, engineering and technical n;xan1_3o\\‘er will increase hy l98Q~l985. (iompared to other sectors involving scientific and tech- nical l"Il£1IlpO\\.,/3”!‘ the demand in the penergy sectors is proportionately‘ A higher for scientists and engineers. i ‘ By 1985 "'.. . a much larger number of physicists and chemists will be required in the production of enengy because of the increase in nuclear power plants; the deumancl for geologists and geop1;.ysicist;s tvill continue at the present higher levels because -of rapidly increasing‘ exploration ac-— tivities and attempts to increase isecondaryJ7recovery of crude oil. "- 30 /d ' According to the NPA stddyd the coal industry will require 23O0ejn-5 to gineers and 500% scientists by 1980 and 3500 enginc:2crs,iancl 700wpsc;icn~ tists 19.85 cornparcdto llO0 engineers and stcricntipstisfin the coal industry in the year 1970. Hi '29/l National Pl.an'ning‘ Association. ,, The‘I)e1‘1').z'.1n(l for $$cientifi,c and 'lf_‘cchd—- c nical l\lanpo\*.'»e»r in"Sel.e<:t’etl l-_‘:Ilt_?:-I‘g"y llclatettl Industries, l¥)??0+lcEl85. V«’asl‘1ington, l').C.- 2000{l,% l9'i~*l. * c . :30 / mm. L'n:5~ - an Therequirernents for’ scientiets and engineers; engaged in research and development in the coal indnstry by 1980 will be for 700, engineers and 200.s<:ientists compared to 100 engineers and no scientists in 1970.‘ i i Anave’rag§¢.r annual increase’ of only .‘2."~;il/2: ?\1‘ 1973 Coal enipl.oi,z1ne"nt would b be needed to reach produetiion goalsp11nd‘er%tliev Businepes as Usual: (BAH) scenario of the Project lndepexidencie ‘iRepo1‘t_,: but ‘as much as 5% i of 19713 employment under the Accelerated Scenario (ACC) tlirough 1977, V and l0°f:ioftl1el97i7:eniploynient per year after that, One possible area of manpower demand would be professional mining p engineers, where there is already a shortage. Anypserious Shoxxtages, however, will probably be in sl«:il..led laborers and technicians rather than itilhe professional category. V }3etty Vetterg lzlxeeutive Director, pSeie dn~ _tific Manpciwer Coniirnissioin niainlained in personal eomiriunieation ithatp there will be no appreciable .Inanpo\\-or shortage of ‘pr ofes‘s"ionial‘ Scien- tists and engineers for the syntlietiofuels industry by l985- There is a possibility thatwthe industry will be ahort in eome areas but this short~.."' age will‘ be filled by'niovi11g people frond area to another. a Unless . present iundirig levels and projected levels; increase, the eupply-demand l manpower ratiopwillbalance out. A p p 1 ' -~ -l n it ‘~1- _‘ Findings o.f'the Syniuels lntieragenreyd Task‘ Force as reporledfto the Energy ;Re:s.oureessCounieilagfipear to coneurwith the findings ofithe Federal, Energy Administration and National Planning Ais.So'e,ir- ation. The renport‘, Reeoninienclat:ions 'l‘ora}Syntlietfie lfuele ‘Co.1ninmercia.l ix- zation Prog;r:im, indicate that nia_r:po~.ver may constitute" a production Con-4 péétraint in that _thereW,uill probably be a slioirtage of <:onSt1"cetion mane power in ktlie near future. o This:: shortage \xril1.be more acute in areas of high target levels. engineering fyirifns as well as sub contractors. V-uLlO-l "UV Specifically, construction inanpnwer will be a constrlaint in the short ~ term in the producfionlof utility fuels and methanol- l Insyncrude and refinecl coal, as well as shale oil products», lioweverlthere may be a problem in attracting men and«_ manufactured equipment fornthei ‘coal. mining and shale oil regions. The 0l'll._‘)"‘8.I‘C%<'9."";~\’l‘l(?I‘() professional man- power (especially as welltas const uction irnanp«:;»wer poses a constraint is in the prodnction of high lltu gas The report reconmlends that unions be ire-ncouraged to enlarge yap-~ prentice programs for iconstrnction manpower; altlnoughthere is no coin- t parable suggestion forincreasing engineering manpower for the produc- tion of high Btu gas. Other remedial measures for short tcrrnproblemsr y ” \ \ . _ include utilizati m of engineering—-constructionzgt.firms and architec_t_ui*a1 In conclusion, basic manpower requirements for tnefsynthetic fnels industry are of two kinds; skilled and semi-skilled laborers, and 'sci- entific, engineering and 'll.€Chl'll.C8.1 manpower. Any serious shortages that might occnr would be in the first category among the Skilled and» scrni—- i skilled 1aborers.~ The supply-—dcmancl balance‘ for. scientists and enggie neers will probably be met if funding levels for synthetic’ fuels devel- it opment don't alter raclicallv. Overall, the danger of a ‘shortage in pro- fessional manpower for this industryfappears minimal‘; whilethe short-t age in construction manpower will pose a_probl,ern for atleast thenear va future . " Llftb -4 :51 V. tscvoivomcs OF SYNFUE Ls ASSIS'I‘ANCE The commercial production‘of‘s§}nthetie fuels is more thania“ tech--- nical challenge. its success demands an nnde}rst.axidi7ng»of the méirket (9. forces that operate most po\m:>ri‘u11y on investifnent in the energy industry. A / '1*nis~;i section reviews some of the cost _eoxiside,‘ati.ons that surround syn-p fuel development and describes the \=arious tiolsby which the Federal Government might aceelerzaite, its ‘expansionji It does not atterxipt firm quantification of costs, orprecise judgements on the benefits of par... ticular policies. Rather a franiexxrork is presented for assessing data" and iarguments onthese questions likely to ‘oe submitted by both Executive agencies and private interests; A. S}nfucé].s in Current Energy Markets Synfuelsz -offercleanfueis from abundant coal and shale resources; -wgu1d"require minimal. ehanges infuel. dist;rib1.1tion and Lise \ patterns; V t ‘ e . -would eliminate many anti-4vpolA1u.tion dif'I'icu.11.ies in "eIid:use:s" now dependent on coal and high-sulfur crude oil; A other investments ;- and ‘ -would require s‘“.bst:antia1 capital CO1‘)1II1it;l;i”1C‘nTi'S, .disp1acingri‘i' i—-would impose burdens_, .rtoj.1g}11y proport:ionea1,e to their «capitzdifli outlays, on a host of manui'a(:tt1r‘ing an(_l__ ervice sectors.” The era of hi hi- riccd C1“Ud€ oil andincré:atsin~’lo_r e>:.e,nsive iiiattirial ._: _ " . -~...- 7%,. gas and coal has hardly registered itsffull impz.1ct on either c:onsurre¢rs rket fossil‘ i‘ue_1s, I’z.1im‘111 auiju.%3trn_<ézist," I or the firms which prQ'duCe'ank.f»iJ3?iat ’:priocess’es still lie ahead of botilii g";r’oupVs%as ctonsumers seek means of *eicon'(.)mizingt in fuel; and» m2i_j_or "é1ier;3:y fi.rmé=s z1t:t;e:rnpt to turn a sudden windfalls into‘ the ‘basis for {profitable 1ong~t1er:m- oper:.:tion‘s. With Mideast crude oil selling atabout $12/bbl. without considers.» tionof tariffs, the inurediate price picture would warrant expanded de- velopment of trayiitional fossil reserves and accelerated research: into ' alternative fuels with Vhorwithout government assistance. Available data \\ on post-‘embargo energy investment, oil drilling activity, as well aspire- newed interest in a variety of exotic fuels su port this conclusion and point toward its eventual. impact on domestic gnergy supplies, Rut the "signal" given by high oil prices--enhanced profit prospects in alterna- tivc fiuel.s-“differs from the cartel's message to U.S. policy-m'aker*s-- our continuing vulnerability to foreign political pressures unless we can quickly and sharply cut petroleum imports, In both irnmediacy and im- portance, the Nation has a stake in expanding domestic energysupplies that can beadequately reflected in a manipulated world oil. price. To the degreethis stake is taken seriously, it arg1ie1s'*:t:lifiafi}?ederal pol--' icy ought to formulate its own approach to the shortage and be willing to pay the costsgof pursuing it. The case for encouraginglU.S. energy‘ . production particularly strong for synthetic gas and oilfrom coal and shale. - These processes involve techxiologies whose ultimate costs are. not yet fully measured and formidablepractical difficulties must be eased ‘before _large-dscalelproduction takes place. Uncertainty about costs; and a chronic g anxiety over expectable prices and revenues. thus hamper in? ivestrnent in productive process that mus’. operateup to two decadé"s to economically justify tlieir imassive~i§1i.tial;'fu;1;g§ing. For theiNation to expect eq't1it'alent l mil.lion barrelsp<~.:r dayli pcf synthetic gas and syncrude by 1985 would 1“equi1?c’i.1ivestn1ent on the "order of billion or H$2‘bi1lion per ‘year from through 19853 aboutfzai billion per 50, 000 barrels as day p1ant). The fungdanientall CRS~39 proportions of this effort are not enormous when compared to eCoz1on1y— wide i.nVGS'tiTlG3Ilt capabilities. Gnjoss private domestic fixed investment will total approximately $185 billion in 1975 and, 'accord:lng~tt»o tho long an . ' . ‘ xx. '. . V, . term modol by l.):1t:.1 Resources, lnc.,l will Trlsso. to morp than .‘:~o3.-)l>1l-— lion in cu1"*ront 1la1"s in 1.985. The 1.976-85‘ ctumiulative investment, lay this sanienl'o1"c¢;lst', would sum to aboixt $3.8 l riliion. This figure, \~.'hiCl1 includés exponaliturtrs on all types of "invcst1jnent." goods, incluciixig pri- vat.el1c>usintg, zinc} WlliCh is fiI1aI1C8.d.by both traded Securities and in- ternally ;§£=:11(:X“:,1t(:d cash ileivrs, . .ldeir«sc’:ore:s' the vast ‘fil’l£1_I1.(.“"i‘:€1l resources on ix-ghiclx any new capital commitment may h;»,';o:>otl1etiCa_ll‘y draw. Even‘ with substantial inflation in its original co:-‘st estimates, synfuel (;i(1?Vcl-~ op1m‘»nt(2it?t,h«:+ l millionbarrel per day lj£}8f. target) would requiro only about one tic-1~<:<:ént of the fnnclts tzhata glowing economy routi.nol}' makes {:1\’£ii1£~Ilbl.(2 for ls(;~m u lTl6tI’1£lg'€.}‘E»‘1lIl}.(?‘idi’V'(;?I'Si('.)Fl ol‘ 1‘<2sou1‘c(3s flexible, lioaltlny financial marlzrttss. V %hn;iltnow?fmng lion looms 5-;1*m*.all,. s..',,<é:¢ific burdens it will pl;1_ce on pa1"l'ic§ul:.u‘ cépita} markets cannot lao so cassilty measured. . The growing reliance of Ame‘ri-- lan’:ental" burden imposed by synfuel c:omme'r<:ialiozz1-— i can iniiustry on rlel.:>t~l‘i11anr‘:(-2d expansion anal-thaw i '-sky nature of many ,-3ynl"uel p1“(’)COEiS¢.‘.“~S may pz’:1rtiall.y I"<3I'l’10'\’(L‘ law.‘ into rest ltérntiixig n‘m’ri<{“t:3 l31‘om ‘V. s\'nl'zl~;:l financnotc utilgiso gzov-erxmi~.c‘:nt policy atl.east. dilutes tl"u~3e“'1*is;ks.l lntorxi:,ill_y_ _m>not';ltl.c:d cash is 1*c:lz1ti\'ol_x' abundzint in tho rs-ln.€:ry.;y im}lu:~.:,tr3* at p;t#{s‘.s;<:~x'x1Q{ inn ‘is; <..:(:nt.r.;{'toci amon;;{ tlmso Lm=vnr:":x*.'~:; of tVI“{;1(ii”£i;(.lI“l(ii ‘ l‘c>s:sil r‘g:e.e:<:1~w~:=:;- ..*..lmt c2;m possso:=;sl"stironu; int<2lx.~<:3:>3ts in ctontinuorl pr{2~<:imw~.io~ rizzmro of txfatl-‘£._i$srml fizzrl ’ ta:(;:l1z:olo;§ic:s. . i'l‘ho. f:.U:;rt thzxt i'n;te.n_\,-' oi‘ tlu2;<<;- ‘::o- ' \ -.E§'C)LlIf:C,t;*.~l§CIl§.§t3l’fiS,L }i;;r;::c>,‘ ixitoggratocl p~c2l.r<_.)l<:urn <:o:‘por'at.ion.~s;i t‘m:‘ (?\‘{»E1I}‘\}'.)1(?, CBS - 40' have explored several synfuel processes indicates t‘he;».t*their .tradit'iQr§ai“ interests can be overcome by the right blend ‘of p_ract.ica1ityAand profi‘t- \ vabmtyk; The "right-2b1end" or practicality and pro£itabAi1it~’yAs.n thevir.mse% may have to provequite attractijve if their funds; cxpértiseg minofr‘z*i“1L rights are to be 1"€C1"Ul‘t(€!d toward .z.§a.p1cl progress m synfuels. ‘ . , 7 1”’ Q 7 : . V . Funds “from the retained earnings éind amorization ac<:ounts of exéj ismxg corporations‘ form one source Qt‘ Aequity %orAveniiire capital for s yn- fuel devc~21.Bpm}'e11t.% g%.nothcr,T and presently dinuxiger prospect lies in-new ventqre financing thI‘ou,g:11 sale of equity stock--indep?,er1Clem‘equity that would be free 1‘r'c.‘mthC handicaps cited above. New c:0rp0r_ate cdnmmn stock brought gross procéeds. of s1ightlTyovc:* $4 bi1liio;1L.;’4;; j1ff§;?<4%,-V1»ess -¢ than half its xrolume in 1971 or 1972. Though s.Qme récOA\?e'r§a».‘.'iéVanticti-% pateti, existxng tax policies and prospective p_,r°icevand%%.in4tereSt ra{_e be.%.% hav»iQ’~r sevé14el3' h£1’1‘npé31“ the xuew equity msiket Ta fn'ajor force i‘1f1fL1n<:If+ ing%s3}?n’f‘11e1 plant e§\:penditure'; SE)n1'e"%"_in'v01x'en1ent%Vofnew risk" c:,apitu'1_ pég14ticu4]‘ar~ .ssynfu<:1 projec‘ts% :might»? be legitimatelysoughtg‘ <:m1 y a_b%aroniete‘1-<%>f- independent invest[o:.~_$! ‘assessnicnt of the Tprojects" .\:i.%' Vab‘i1i¢ty._jj But the hm}; of syif_1t‘L1é1'sf é:ap%iVm'1. co$tSi%wi11.'V%§_a};1vc to be borné ._, .3 _ ~a. _. by the consortia dfiongoing enterprises “plus xighateverjfifcnaneki fund_s the .government is~ab1v;3 to push toward acfixrity. _ _'I‘h‘c2' restraints \'vit}1in oxxrfgzxistinggj « crapifizilfmt‘,mati;m _ stru;c$tum,~é~in~ in .~. - ‘>3 .' - »,s..- .. -' ":'.,:&‘yu'fl . .»a“" ‘ .' . ' ‘. ..:~%;:w::«—-.~- , _> » . _ V . clu d‘m.§.::j -mygz: stor: '§\'£:_i.IZ‘1_I1(;‘.‘SAS. fI}i6x*é1‘ c;l1 x3c>l:<)}g%iiE:s% and se‘lfF~¢iLn.f01*éS1;_é~0-1’ ’ fir9n1s- that iaawc: i%1wn,re~sted hsfeavily _ir1 g:<)V;r1'§.zc{:1ti0na1_’%rescfxté \<::%f »theé<2A;.%‘L£ir::.i‘1§*iS%“%x1i;;§,>*M A p<¢>1i,~cy'»t:{:VQ1V&.<$ ix'i;iie§1 %;1;;fe (1ViS~Cl1S§é‘d 1a.tiz3r in tI'i~ijsL ‘$:;}::=‘{:.t:i'(5z*x..> cats 4- 41 Though no._ve1t in their methods, synfuela wouldfivt‘treadi1y into ex- isting patterns of encrgy distributioriand‘ u's'e. 1,-¢:~' {Hey would c'on§«ert A -v our moat abundant forms of raw. energx into the licxuid and g;a1§éot1a*9fue1cS to which indixstry andconsumers‘havccgrown accustomed. Synfuels would thus supplant unreliable foroign crude} and Bscarce domestic gasc'incfi11in'g a portion of our energy néfieds without sub ‘tantial changes in the way we V W , ‘ 4 X’ .- “ 1., V ' transport and use foals. c And, bc:ccause~s§m"ucI.» are rc1ative1vyrc1ea'n,- low.-sulfur‘“fuels, thcenvironmental problems posed are ccancfientbrated 5 A in the extraction and‘ production phase--where they can ‘S‘1;t.1"C‘l.1'f&,‘_t_‘,_(‘i»‘t, and . % hopefully resot1v‘é;d“\i{ithout wrenching changes ‘in”"'t§’ovm3tream" ccxnsump-i‘ 1 3 t I cation ‘(in contrastt to Ethe difficult, economic choices often forced by» pol-—c 3 lotion abatement in coal burning utility and industrial:;p1ants)a -If prac- ticallyc possible azidctxvironmcntally acce‘ptabie,'synfue1S'7pronf1ise- at aééastt a partial answer to the sluortage. of a domestic fuels, and caexmch is particu1ar1y attractive in 1fig;ht‘.wof adaptability to thertbroader anaérg- cantecoxnontiyt %Syn"fute1t oroduct-ion crude oi1equivalent4of 1 n)>17i1+"_" ‘lion barrels per day need not dictaté a bu9inV355t Usual s;.creng;~§aQ%‘!o,7g§;;5 evcr~burgconing energy de1"na:id;' it twoulvd endow .po1icyr:1akcré xxfith at*’oit or much maed £1ex‘ibi1ity inrireconcitling ccnf1icts' betc;5«‘een r,e'du¢ing energy im1)ort.e3 vanVd protecting‘ job;5tan'C1 output» in an already‘ s%hai'~:.m‘1 goons-, ' c "omy. Fox‘ 1*nanty, sucsh i."1exibi1ity adecioatctjusti.i‘icati'oo Vpu-tr lic agc;1cie‘s toincur the ‘_cdstAs=xof encéitaragitngc synfuol c:e»:<:1¢’pn:ent.§i%‘ * T ‘ V A B. Sgm‘tl}ctic*’I“uoc%1 Costsfaa: % "’ --A Most Wpz:.e#c1j97.:'S cost '.oi'I‘ oaltqglteaxscls;éggifigpgttitixve awithtprgisentcpctxiolfizumprimésgg ” < . §>;...._ ‘,_,. 12*‘ ,1 ~ S3*r¥%iietiéaac‘a+a fr0n“= coa:ar-«mw -t T {Sell A atrigpricescf ‘agt or s.o:me1w11'at below :1 a«dcc,ogntro11~§{:*d ctnaxtural pri ce CRS - 42 - All synfuel price estimates are sensitive to both thecost of feed coal and shale and the financing methods asstznwd; l -- Recent inflation and the lack of experience with coznmcrcial syn- fuel processes render sync:-ode and synthetic gasks eventual price difficult to predict; most recent\\ forecasts put. synfuel prices ap—- preciably higher than ‘current oil and gas levels; and ‘ ~ Estimatescited below are not comp ehensive, but intendcdto re» flect these considerations and the res ltant dispersion in estimates. Some of the argurnetlts in behalf of syxxfttels might have been xnadca decade ago. And thesi;;‘nifican~t use of first generation synfueltech- niques in early 20th century America and World War ll G,erman)? ar- gues that these, or similar arguments, havebeen made cclnvincingly when ‘ the availability and price of other fuels permitted. Synthetic productioong to serve a decisive fraction ofour prospective energy needs, must either be strictly competitive with Valternativeftuepls, or close e11ou,gh to that standard as to be sulwsidized at acceptable expense. .The Nationtpmay not need synfuels ‘fat .any’cost"; wee}-ésholuld seek them to -the e;f~;ltez1tlt‘l1ey offer short and long term benefits reasonably c0n*Vm1cnsur.at[c wzitlx pri- vatc and public outlays their developnwentd would require.‘ The most broadly comparable form in which these outlays canbe ines- , ' ‘ suredis the ' be sold to both recover operating expenses and provide a return on ori-- ginal investment consistent with industry-wide st‘aiidards.‘ Available estimates of the prices necessary for various syatlxcetic fuels V differ vc:idel_\_r alccording to the technology being casted, the n1el.h<>o1.* and material rec uirenwents were nriced- _ l . W I (1) !{.C. Vyas and \V.W; Bodle, have offered cost estimates \\ V ““"I 1} in mic!-lflmj dollars .for a \»'a1‘i_lety of synthetic} p1‘(__>(‘(.‘$.$SC:S under bothtzx 11?. percent discounted cash l'lo\x¢'_an and 20/million mu (Utility). For the more ‘u.lvanced but less tested lly;tf;1stprc><:<;~ss the cost was e:stimat‘ed at $ll.-~lO/ lmi.lliQ11 Btu (1Q)(..‘I-’) and >31. O7/mvillion Btu (I't‘ilit§.'). Lioth these est.imateS «,2 G‘ are basecl‘-Win relatively ine.\'pensi.ve (Stilt)/Iuxillion Btu) \Vestern coal as the raw fuel feed. (‘magi vliquel‘ac.ti<'m, uncler :3 process ,d(}‘v‘€‘},(')}3€’§(i' by (Tc;):31s<)lidatecl (foal. Company, could produce lmv-sull‘urf fuel oil at .‘§%8.I%4/bl')l‘.' (1')V(‘l-f) ore €,~‘:3.8I%/bl)l. (Ftility) z-1ccc)r*<.lin;_{ to \'3=a:=.s and l5odl<3. Synthetic: C1*u<.ie nil % _Slflalem\\'oul(l <:'<:>st,‘~ in the aut.hors7' pr'<>_§e<:tir>nl,"."$’8. G7/bbt_l.F‘ (l)‘(“I«‘) of .‘>T6.“58/l3l.il.“"” (I_'ti1ity*l. All of these estimates are pr‘emi‘sed on :1 sspl-;Vcil‘i(:_ cu. ............~...——ca,.—.~..-....—.»....- .. 31/ In the pvxéitcrelestimates (?l,l(?(.l, twobesic p1“ol‘it:.«1l)il’it_s,: st.;;n<.la1‘*ds are used. "" A l..l)is3c_:ount<»~.d (lash 'l-‘low (I)L'l~‘) retttrfxa, set bet‘wc~.enl 1:2 percexut anti 1:’) percent, citau be appliecl to the .:mmunt hf c>r*i;.{inal in‘vestment:; this D1“(~‘.Sull‘lpl ion in<.l1cate.j~; the \=<';~r'=1tu1*<:_is tclbe at lezxtst ;ih7Lét"ljc :‘um_le(l nut of venture capit,al,‘j '§l‘l1e.pl11"ase "utility l‘inan<+ced'%‘, cm the» other lzancl, prestzmeg; thatltlw bulk 61" inil,i:.1l' c:‘apit;:lA is p.r‘m\~'ided lay ‘l:m:"1'nl}' 7.3 per‘<><>nt (lob! to 12.3 ]>ci:I*c<,:n,te (:<11'xitt_y) :1t'prixm_§lxmggl-A ingz ratess of 8 pL~’f]."(’G3I'l[ to $1 Hemzent.“ Sud: l(:"mlm;§_ rates arettge:1e::“érl4 ly a.va‘ilMal>le ‘only for r'<:l;eiliv<.,~ly so-<:ur.<~. jlrlx-'eStrnet1v_4:::~~;;r>\'<.%1"x*11m2m s;_uz11*- anteL:.s~;_(:i' ‘repayf1'z1eI1t C..(.>ul(l, of (:n\'e1‘l .9;_§,'11t..l:et.i<‘t‘p1~<:)je<~ts into su‘<:h Sntmci f»i'naVm:i;1le <;.:m:“n11‘:-iltxmrntrs.. ¢ ‘ “ ’ «i .0 (‘~33 g,‘ "(ball and Oil Slxa-let l.(»_k l%<‘~tte1‘*" by l\'.(‘. \"j;-:.z:":'; am! \\-’.\1’. llndle of Gas."J7‘<'u;lt1m;>l<>2,1_\” lz1.sj%til.ut‘e‘, (ff)i_l-~. and (flats .!mzr‘nal, ;\l;:.:*r"(‘;#ll1 .241, l?!T.'§._ All syntlmtw ;'3;;,1:¥; £?$:i'.i:l‘]~)(v1‘t(’}$- la’1‘c-:"LI"g;:r' l*:i,<,:l~.-—l%ltu gas of ta§)’p+z*<>xi1_:tat::,l‘v lO(l0 l31.us: p«:2:f‘ <~ubi.c_: l'z>£>t; IoI*ijtcecl per mi-lligan Btu, tliem4>'l'c>:‘mponei*lt cost I . .4 .. , , , V ._ fix. it K ~._‘» . .33}/» l"l\':.u:1'oz1al~ (‘Eds Surrely, '\-'o1umo<;> ll, p.u. 466, lTasl: l~‘orce Report of tlur: Supp*l§*—'l‘ecl'mical Advisory 'l‘asl<. l-'orce:_ - S§*nthr~.t.i<* (";as~("‘oal’," April 1973. 34/ "Rec.ommcndations’ for a Syntlncticils ~.l"uel.s Comma:rcial.i2ation §l"ro‘~— rrzmx“, Volume ‘I, (wervicw lie aort, submitted 1) who S\'nt‘uc2l's Inter-t 5-, o l. . , a§_f<‘;m<:)"e Taslfi Force. a " ; ' ~ O CRSh- 45 levels; Citing’ both continued labor‘ cost} in<;;rea.ses and the extraordinary surge in n1aterial»le:; of the selling price to the $4,75- lF$5.'OO range. The price lexels shown for synctrude depict, in additionl . to the iI1flaT.i.()I"l£1;l‘.‘\' Consideration cited bel'<>1‘e, the impact. of post-emb_arglo V developmems on eastern cc;>a,lhmz11*kets, where snycrude devel<>pers”'\\'il’l l1a\’<1toe c:oml_30te for their. feed coal. with utilitieskleand industrie:¥; that seekfa\~;>1*ably located coal smxrces for more triaclilional power‘ pro- cesses. The wide ran§;‘o c~haracteris;t.*ie.ssA of syrntluetig-¥1;x~i~g;<: estimates este».-h~—~ lishes at 1easte<*ane Cl.‘_itlC.£1l. .poin1.: the future 0_fAtl‘l£?V ir1<’lusltr'y~is. a‘ff'l;iC:te(3 V by substantial uncertainty concterningz botlal experlsse"i’:.§.,p1r<)duction as‘w'e1l H '..': , _ “ _ I ' ' " ' ‘. I ‘ ‘ V‘ ‘\{‘ I ’ asexpectable r*e\'enue4s. 5:€,‘V’(-.‘,1f‘al()‘l' the caleculatncms place synthetxc: <31land. \ gas at pricesthat xxrnuld be vigorously c0_mpe_Liti\'e iri today's; crnergv price steructure; <;>th<-:rrs look tubc: Vv1‘able in the wake .01” pro‘specti\.'e ]~‘edr2raf1 oil, price. deccgntrcal amt) the <:artel’s' petro'lc*um pI"i€:t:2‘ raises. Still rth-I er estimateg set.» synthcrtic lpr'oc.luCti<>n at costly l»e\iels=.: that \x'ulrices. De~_ etaliled 1°cvi<:2lV\v of a1tsc1*nati\.'e Cost. o:stima‘t<:-S and cs;.tal:zlishment of c7cm‘sie£§-. tent bases for th<:ir <,fa.lc:ulaticm (s«;:ttin;_>; coal l‘r?§:-kl <"USts5 equalein z§sses--A sing clifferent {)1*r>je<:ts, fort exaxmdle) c,::m r£>n~.mfe s<>me.:>!‘ lhe \ ~ar\;iateim*_:sle ESTII\‘l‘A7FF£ 1:) ._iL'.\'1~ CR8 9 46 TAISLEI 111' 1%)()%rJi*I“;;é11i1s3 1975 s\:v1-'1‘;:1s:1..,s:_.. Pmclfis \v1'ru<;3L:1‘. 1N(:y:;N'r1\*Es,~ l{equired t(;\Yi<»21d RatéA6fv“R%etui511LfE3f: 3f}__/ 12% 1, “ 207; mgh Btu Gas, .$/;\Ii1lir,m }3tu 37/¢ i Regul%at.0d ("ease ‘3. :35-—2. 9.3 U11regu1atc:d(“ase 3.30-3,75 1%~}.85-4.23 Sx ~¥.7:3~3.2O Fuels Derived 1-‘rem Biomass, $4/.~’\!i1'li(m Btu ‘ I7nregula1.e:.i (.‘:.1se :3. 353 4. 230* 5. 73 Ftility/l1‘1dus3trial, S:/I\h1lion Btu 3:38,’ ~__ I{egu1atc‘ed (77239 ' If;-'11-e gulatcw-~ d Case S_vn<:1"ud<;$. 5*’/B:>.rrolV 3333/ I.,"nr€:gL11ated Case ‘:3. 00-3.. 50* 18.*0—22;0o_ _, .. -v. 3%.4%0-13330 % 4.2:3-5.‘10 21.50-23.95 2rg00~31.9o Shale Oil, $2 cifically‘ treated: floor prices, 5cmtrac_t prices, loan gua.rantees,i aml_ special; tax treatment. l'"C. I*‘loor Prices i ,‘ V A i rmoorgndcgs: e- shift to the’go\«?ernrne.nt_t'he risks of -dcc:lcining’\‘w;)rtlcl energy prices; p -i could be applied to 'é1ll energy'or just to specific‘ types of fuel; - if applied to only one type of fuel, should‘ re.q11id’re_re2sa-le "prc:-«ye Vfailirig pr‘ice"to avoid inl"lating other energy costs; \..no '' "10 V -A can retain private incentives to restrain costs and judge likely ef- ficiency of various proc:essr~‘s;and t ~ ‘I l t ~ - would render the government vulnerable to large future ‘ficnancial obligations. i ‘ The cartel's obvious power to ixianipulate world petroleum prices has led many to recommend jsomc form of Federl guarantee of domestic price levels as a necessary inctentive to U.S. ‘nergy investment. The necessityis, however, far from demonstrated. and little in industry bef- . 3” havior indiicatesi any real fear that prices might soon plumment to their ; preembargo level. l\IIo1'e importantly, none have seriously t1rged~'setti%1g this overall price »f~l.oor at what looks to be needed for successful syn- i. tlc1eticc'opera_tio;L1».l (Compare the usually cited to $8 per barrel floor for crude withforecast synthetic costs. ); , - V t i But the principle behind the floor price argument provides a useful tool for implementing, or at least understanding other optionsin syn- t fuels policy- For, essentially, it attempts to provide private ‘de\‘eloper:‘s‘, with some firmer notions of their products” revenue prospects wi.thout~ 1*eltievi.n_~g them. of the ‘financial zrislts that_attendthe actual planning‘ and operation of synthetic fuel ter:hnolo;3;'ie~s. A "floor price" which applied uonlytocya particular class of 1"uels--low sulfurga-sconverted fromecoal,‘ for example-c-e-is a practical’ possib,ility~. i'l‘he government, ,under tlfxis scheme, would stand prepared to buy the gfasat £1‘ “predetper1nine‘d‘ipg-‘ifijir i from any setllerlltvhoseproduct smut technical: specificiations and_then‘Asell'f itat prevailipng energy price levels '(<>.I"} alter_native.l;\x," pay the'se‘flller the diflerexice between the floor and pp1*”‘e‘vai.lin;3; price). The; p1~mrie:ion for Sel.ling_:; at the prevailting price v,voul’dc ensure that an especially high priced other energy prices necessarily drifted. :_19/ designed to spur synfuel investnient did not become a "peg"% to whicl1 The advantage of such a specialized floor price for synthetics that it does not oblige the gove.rnn1ent to mal:Pensi\re commitInent..' "'I‘i-"li‘S"»":V'A‘ drawback could be remed1ed 1f 'vel1g1b1l1ty for the pr1ce guarantee was’ conditioned onthe prior submissionsancl acceptance of project designs e by a l?‘edera1agenCy,tl1us providing the gQx_{e.rn_3,jnc2nt with at least a reason- “. able idea of the ultimate volume of gua'ra¥rL7eer<: closely to the contract price approacln" .'.~. —l€ll/ Provi»si<)n. for _Sale n at the ."prevailing price" would cancel any i_nfla- t ’ tionary impact de‘rilvi.r‘1;_gf:‘om the normal. \.xr§;;1*Ielic:;y~~tax, land use, etc.r~*=—- ~ . "' -' -=. o ‘ '9 ’ u 9 ' »~‘.q._‘.~1.‘i'- u ' o ' a by C1‘e’~atu1g a1:ec.1er‘a1 f1.nanclal_ lntCl»‘I%‘Sf7_‘-5-3'1‘lfl._Other fuel pr1ces»staAy111g W close to or alznovc-the contrac:tHpri‘<’§e‘ level". ' s H s ‘ c ’ -a.a.u.g,u..‘v‘_ saw I). Contract Prices * Contract prices: - can be "seen as Flor Prices forjpindividually reviewed and negoti-—l ate d pr oje cts; - would tend.to limit the government's eventual coiinmtments; V . ~ V _ , \\ p _ - would probably contain "escalator cl uses" that would further re- move inflationary risks from private“ . evelopers; -4 the precise form, the e'scalatorclaup*e takes will do much to de- termine how much risk and decisionlpmaking responsibility passes to the public contracting authority; and - should include pre—specified terms for cancellation on terms ac» ceptable to both industry and goverrunent. i s l ‘ A V’ J.’ Extensively s<;,rutini‘z.ed and negotiated floor price agreiernentsiiconfer upon tlmgovernment the rights and responsibilities of a contracting party} ‘The governnimlt wouldgbe able to shape as well as encourage the syn?- 3 fuel industry, grantingisubstantial incentives to plansjwhich fitted its en- ergy scenario while unfavored processes struggled against technical dif- ficulties andeconomic uncertainties outside the shelter of the public trea- d sury. The scenario used by the government should reflect, its own pri- orities3-~envir-cunmental. and regional developimentt urging optimal sitingv . for synfuel plants--while its own judgements on trends in world penergy markets would govern both the price to which itwas wining to comgnit itself dandt_he:adrnounti of production to be supp‘orted;r’d‘Tl‘1:The ability ‘to con'- trol the volumeof tsynufucl activity may be particularly important in light of unresolved environrnental and resource mianagtement questions. ‘i The logic of insuring‘ synfuel idefvelopment against chaotic price be- havior leads inevitablyto some form of escalator clause writtenv into con- A tract price agrecrnents’. \ Indeed, for projects that will operate foritwo‘ l decades or more, it may be argueid that the greatest source of price J-‘Kw.’ uncertainty stems from overall inflationary“.p1*ospepct"sr“ratherf tl)‘a'n the supply and demand factors specilic to energy’ jmarkets. I)ecelorlzfatinVg; price behavior, and the slow "economic growth that may be requilrod to acliiéve _it',‘ would undercut demand for all enekrgyproducxs and poss.ibly” tighten. the finéalncial markets upon which ‘synfuel investolrl“S' W\s+oog1ld-rely _, - forworlcing capital. Accelerating‘ inflatiooonxswoulocloxpectably‘inoreaso sym- fuelpricos and costs, but not mlzcossarily in Anything like the s::m1efpro- ll portion {vhilo the failure of the 1~‘eaderal tax 11 echanism to ro<:ogni'./,os tho impz2ct—of‘iz1flat5.on -on equipment rep1acemom.‘~ costs ooultl steadily trim the real profitabilityl-of‘ szynfuol entcrprfiscfs, «If the appropriateness of an escalator clause: is clear, the; precise form it should take is far less certain. At one extronwe, tlj1o‘;gov'(arn7-‘."o~’ 1*‘nent;n'iogl1t stand crxznxnittéd to pay the COi1.t.raC’~€‘_d level; in "l§)7$3dol- lars" this arice to be ad 'ust.ed a(,‘.CO4I‘di11“ to mox.re:r_ne:mtsina oronorallizodl' V l T l 3 l B s . . index tho ('.‘.onm1er<:<3 l_)oepar‘tmont's implicrit Price Uclflatcur.‘ (“on-~‘ versely, the adjustment could be made accloriding to the ox/erifiod cost experioxme of tlfe individual pI‘Oj€3C‘.t. The cliszlcjyzxntagoe of the latter ap-. proach is apparent in its simi.1aI‘:ity to other "cost-plus" zxgreenwnts oftc-211 » cl1arsa<:t<-219131 is of defense‘ contralctwilrxg‘ (where it Ifiay p~rovo the only pos- sible approaclw. for ,a pr'oject- "o\r€;lI'*'*ivhicl'1 the goxrordmeht \«'ishos’ to 'r'o- liain extcmsive design contrnil). The need to retain ordinary ctoxfiporatos ihoentioxrosf for efJ‘*?i';:;'g;c15t. operas- .~ .'v~ ‘ ‘ “.~ ~ (4.; 3 . . y ‘ ~ _ ‘ .. .., tions zmrl miziimization_of Wcosts argues Strongly?l>¥;a*t~*theosloalzitorrlauseo 41/ Tho, sp<:<:i_fic prob1.ems ‘posed byflovor-2111’ :lni'l:1ti<>nl I'm‘ izzw-f:st<,)1~s mm-+ rV1ot“b‘c‘2l di‘scusS<;~dtiu»<.lot'ail h<'2rc.l‘ 'I‘ll1e.i.r c.-i'fe cts z1rc2s:mos1. d<:<:i,é;iv<;.- \xrl;mr.1 l moasttred lay tIh<~>: ‘..'r«<:z:l "r'otu1:*n"-.-2oompar:;1bl.’o* to ‘ st:u1"clar<;l’ I‘-.n:'m<:i;‘xl profi’; indi<:es but ac3'jm;tecl to slaoyy n1onej,z‘s r.i<:r:lining_§ ‘pm;fc:h:1ss%in;.> p<;;w<.§ 1* -+that cl;_2L<:x‘:*1'1sinos };;»ut§'1 the z1tt'raotiv.en<:ss of the en¢tc::t‘;l;z~i;~:;(: mu} its z:_l3ility to int<;rna.l1y _{,;jc’r1«::1.:1te fur1%c1ls_for oonlir:-uod opcslrzztlon. V J be bt1ilt_ around published cost or price indices not subject to the in‘! .dividualientrepreneurls control. A composite index, like Commerce's deflatori would be the simplest and,’ ‘for thelilgcwernment. m0S’€ t€35i1§’ V predicted escalator. V More detailed series, like the Labor Departé \\ , 1nent’s data on nationwide xvage” rates ant wholesale material prices, . would afford the project’s backers more ornprehensive "inflation inSu—r- ance" but require greater sophisticationlon the part of the government in assessing their prospective impact onits price connnitrnent. l<‘e~r these latter series can move at isharpivariance with overall price trends; tyingthe contract pkice to them would not only protect the entr-eprenetllrii against general econornicinstability but against cost trends that he may be more competent to judge than the contracting publicagency, And the wt long-term tendency of wage increases toexceed econotmy-\\ride"pric»e boosts indicates that any commitment tied in large part to labor costs should initially be set substantially lower than a deflator-ilinlszed coin- tract price. Prospective developers may wish or insist that at least some part _ of the escalator clause’ be tied to actual projeet outlays. 'l‘he5:‘require~ l ments for conformity“ with changing environmentali and reclamation stan‘-e dards, for example, are as yet so little predictable that theirpotential cost burdens cannot bee adequately raffle cted by simple in- diees. Allowance for this type of cost hike will probably have to be i made forat least some projects but its terms should be carefully drawn.“ Allowing-recovery of unanticipatned piroje et costs--;wi»th.out profit on their "’-vi iexpenditurei-«is one :net«a'nis‘;.t:jioI«t .fI'l.l’s'11‘n.il’l the incentive to ‘O‘.’(~3I,‘Sp€3\nd~fi on development. Alternatitvely,.tl3e goveimment might retain the rfiglit to deny Tcornpensationi for [cost hikes iniposed by public. policy " sifeli as CBS’-— 53 ‘-s en.virov1men’ial regula,ti_ons by stipulating that it could.L itself arrange, by separate contract, to fulfill the ilmgmsed oblligatlbll. L hi a11§rA”c.§se,« _I?'ed0ra1 policymakers oughtto be axvéire both ii1'ccml.r,a<:t na-gotliation and . ' . “ . ‘ l 1 A . 1n subsequent performanc~e 1*e\*11 - <:<,mr>s3<:-, lim l'l(";,‘{.<‘)l’ :lz;1.<3<.l;‘ but 1: xx-mzlcl t.2‘.i«.:c2 could well c‘;l:2p<2nd on ilt-%-but. it ouglxt to be \xa=u‘jy' uf piy~ms,,foroutlays -at d.lo\‘el0perl.rs would \:oluntaril.y incur ang,-'way. ll<;,w<‘2\/‘<:1‘ judgecl ofAClra\~vi1»;-‘_.{§(>Vnl1:‘;i’C:t~‘ pr‘i<;:u ag;7er.,~131cnts will lre“m1ei~ t.h<> ;;{ove:rnnl1'ent liable to p4'\*enti.é1ll.y \"alst e:~:p(—mdi1ur‘c:s whose v.'isd~om Jjifld 4 nec<—3<.3$s__ii:y'ACfilillot be fully assessml until f‘..ttu1‘«:é ye'a'1*". 'l.‘he practical im- poéssilglility or §3I)\'i1‘OI1h_1(:nt11l/(_IC.0l’l(‘J1l1iC lmaclxrisalnilily of a specifizf %s‘ynf- l fuel prjoccss might; t.uzi*n,‘even a \'er,f,* c<§:r1'_‘é._*_<2§§‘\'atVi'>‘\-g’c: public Cmilmitme.nt_,intc; an e:min;3; decades, u1:*ges t.lm1:. Gaol: §:on.e tract c.>ug;;l2lt to A%i%r1C:lfi,idc> p1‘ec.i:s;<2 ;:;r<)\'isiox1s for cz1m:C»lllulio:1‘0n»1l“u:pur1 of the ;_;m7?c1*nzAncntl,wccitli full s:l§s i;*.x::u1"1€c>Lll aml "‘i‘air';' pr'ol‘its%on th»::-ii“ ill\'(3S‘c'!I‘l‘..c‘f:l’lll; %;\l1)&5[C'I}ll us‘ $3}-l.tZll_ :3 p;‘§>vi5§'il<.§:‘z;'L<.;21—§i-Q --8 I. galatgic in :1 cm’:-l % l<":*x1: llmt v:<.>1.;l~.<4l gt<)I*—2;3<:>l ,1,“Vx,',‘(,§§:.‘I“£.‘£ll n:f;;{($li:1l.t.1:%::; tcrmalic i‘!.~.3% luv?-I‘AI”z‘3.:l3"fJi?I‘:\“ :,21~- .«§..’ _\ ‘ _ my ""-'r“'v'< _ ‘ ‘tr’;‘2c:ti\~'Lr tr_)~,d{§‘\!*Qlc);j(3: (j.‘ont.x“;.1vl t.:;'I"n’::+; S.(.u1};l.i;~zs_: §"<:;:zfll1 :(K,f(:)'Y.:l51i‘{_l§)."Al't5~ fax‘ CBS] -~ 54 cancellation, lthe profitobility regarded as "fair". o£1x1»d tho type of costs to be ocovered, would guard agé1.i11st needless public obligz1tior1s.W And the very exi.stenc:e of this provision would afford public agencies greater‘ f,le:{-5”’ ihi1it_v in the awarding of. contracts to :‘x‘dvancec.l but risky syofuold‘ pro- to jects. ’ n Moreover, a seemingly one-sided "cancelllation cl.z111s<:" could bf’ writ-— ten lofserve the legitimate i'ntc:r'<3stS of both c:cmt1*acti:n'g parties. --If the ;§ow~mxmemretains the rigttln. to c~f1I'c—‘cti.vel.y halt producdtiltm, l.hon the ques- tion z:1ri..~sosl of what is to be done with the plant. anal ;:>x‘ope1"tAy lalreiady» dov<;lop0d._ Cfancellatilon provisions could be;,.w1*iltt\_e11 \vhi.ch perr-om: }%)a:<'A-;%;:lo lizwxl <.:cnjx1Sensat.ion to project ow11<2rs who woulcl still retain the ph§~*sic:al assets of the project and the right to use them in \\'hateve1*‘ lhslxilon they‘ desire.‘ Or, if tlae reason for Carxcellation lies simply in world c‘n,c1fg_3' p1“ir:~<> shifts that make a syntl'1el’.ic process ux1ccl>1w~.peti_l1\ro for an impre- ""l“~r3‘i”*t.:l.;:x!d>.l(2 po.r‘io4.lof ti1'1l(:, tile go\r.or_f11mcnti might wish to c<*>-1m>¢;:1.d1s:oi,e ov.*no‘x‘s fully and ‘take. possession of the faczilitvy. 'I‘his sort of buy-—back aorrange-4' Immt, wl\<:)s~‘.0 texwns .~slmu}1‘\'e.lv.'li1ile ex-V ~ V . _ % t ploiting ihoonergy bargains that world marlmts offered once and may offer om:c l more. A.»\ fle.\;.il‘2l<:lcont1‘act price 1)ro.{,:I‘-a’m could include both (.1 model €ig,f‘I_"‘i?é'-' nlwonl. witldx the terms of obligaliorx dr_a\x'n but tlueooctual prim? !c.~2‘t= amen» l“o1*L:idclim;§ ;md 51 ;;_on'e1“z-11]“ I‘.C:«‘1(ii-!1C3_$S-‘$0-;1(‘:(.‘(>}..)t Spmtific: cromracrt propor- :—salo::;‘l‘:"om ;')fi\':é.f.£) <.l<;wull<‘>pc:rs4. flu !'.l1<: firssi. i:a‘.~i;v vll.ll<.? :e;tx‘u<:l‘dx.1‘1‘c_ l<§i7~ the L:<)fitr;;u':t woulzdi;,b¢;:l.§1th‘<» sa1hV{*‘*‘f<)l1;‘ all g11:x.1‘amo(2- ~. ;*>1‘o;:>m'loi(ma, ll*‘c.§dg~+1‘;zl §..f'U:3,I‘€xl"1{’t;‘(;‘S for lozzns-3, l*<;~clm"z1_i t:1.~:l t,1““(;":..i{?I'I"‘i‘(.‘F‘I7lAt,l. mm,» 3 ',<:‘l‘*l1‘;.itjc;.m~‘mid _.é’5=.<;‘:il:1t<‘f>1‘ <:l:1u$5«$:s;-, etc. "I.‘}1é;:* m<‘::.lul .<‘m1t'x‘,;1<:’t’ u'o1xl’t.l T- r. ~ ' ~' - ‘.'> : _ .‘ ,3- 5.. ..a,~‘ . .7 CRS "- 55 simplify Federal decisions by reducing the cost and benefits of a host of financialynariables to a single element--—Athe guarantee price whicheaoch. deve1oper—f‘”\vas~» willing to ‘accept fox‘ an ocherwise equ‘i.vaIenot' ag*'e-=-ement. . . : . xx 1 Readxness to accept mdxvxdually draxxemocontraot proposa.1_.s. ono,the other ‘u C: ~' a m. §ivot:§11 ternns and hand, would require a careful weighing‘of‘:L:the»ifi* xnost’ a recognition of the real costs imposedx» on »t}1e%13‘tede1“a1 Government by c{ist.om~made loan guarantee provisions, i ‘"1 1.. I 1.0.111 (iuarzmtee 55 Loan g‘uarantees.3:% s eves-§?‘o()u1d eittracst lyow-interest debt to synfuel financing; ‘ necessary 1‘or.§pro1‘it,ab1e synfuel proiduction; - some or all the pub1ic:'s saving in lower selling prices could in: offset by governnusnt outlays for covering repaymwents of loasns; and - would thus require great disorirmination by governnment in LI’1(w()E:i11g‘ projects to be supported. s ‘ Price floors or gusarantecs shift the risks ofix1adez}uatemarket gzsxfilces from private shoulders to public.: ones; g;‘Lj«a1*a1x1te€+.s of debt oapital a<:<':om- p1_is11t'he same sl1ifting"for the muc,hVm'ore compliscated risks ofa pro-5 géesé; proving unworlcable or subjcctto cost increases far in excess of e> not: create or increase prfiiazo eap?- ital but they can sharply izufluencethe c1e=.-ggree apd.ter111s of a\wai1a1)i1it_x~ to synfuel deve1%o;3n1e'xii. %}~‘or some: tecl1x1(>l{:gies, .1-'eoer:.11 g11a1fa§n\:ees; of all or a,po1‘tion of their}oomnieroizilirgation costs may provethe only‘ nwezmss‘ of assuf-ing pI‘(3,.£{bI"£?SS**t}1€¥i1‘{ 1"'isks z«1;*;~ _Si1}1j>ljg’tc)t)l;1i‘§_1»;2to a'tt’1~a<:t":.1es¥>t <::,1p- ital end t}1eir%si:?.otoejvast to e..*i:~'.l<_ (i?C]L1it§’.{)§' ,3 :T—3i‘X‘}gh ). V\«e1‘11:I1fe1'e;r'o11o.' I-31zt‘1‘1‘<;;x>’:3“1o.E=t’ pV;\:.rti:a§1§,‘{ ‘osj,'r1the»tici p1*<.><,"ess<“ssthe t:}¥oiré(- is not sohlunt; gjg-¢7,é,f«;,>1rn,n.~.c~:nt lmcsk-1n;;“‘s1'L:$1“_u ssxmhstaatztxai pori.1on_ of :1 p1m_~,¢>m:'::: I A V V ‘ V _:, A ‘ by reducing" oéerall finzmoingz charges, Could lowerthc se1lix1g«;)1éio<>e % ‘H .CRS-SBA ' %" "front~—erid" inve-stiniént can aflicceierate iitis .é1ct\ia_I coinmerci-alizeixiion and, at a spcicified profitabi1i.ty réite for venture Czipitai, i‘I1i8l'<€’ pé58Si1)iéi*&iT’Si,£§” nificizmtly iciwcer transaction priciza for its produ«c:ti(_mi H I i L Boizh tliesai effecrts irace to financial expectaticms underlying capital ir1vest.ment. Iélquity capital which can it: entirély lost by ai pAroject's invésiors éuStomia.ri1-Vy available at suiasitaiiiiai premium fiver tihe réite c11,é1rg<;d for cirbtibacked by a credible legal. commitmént for i‘ ui:1 rep$_~iy- merit oi‘ principal. an<:i inte‘rest. Xvhere a caoitalj investment genera_t§;f.s»‘r%‘ .1“ equity return at a particular price or a ‘lower price ‘necessaifiito 8S" sure,_a ig.iive1nc:quity return. 'l‘hese miles ge'herz‘i.}ly trharacterize inciust.ry- wide financing d<:c3iSi0nS arid are Hgspécially (iec~i:3ivc: ‘in the planning .01"? L‘ , _ ‘ WC _ large sixcrcessful’ cécrrpdratibrxis 5hiiin_:hi cairn; agtraét boncied debt at minimal rates. isiivaiiiabie tc;> boost equity profits, making;%pcissiible either highei*" ' .‘~. ainfoveirajil return above that payable on its debt financing, the iexcesésk Syniuel prnclu<:t.ion hardly qualifies ‘at this point the s,<‘)rti"io§f,g;3ig.;-, sohitcrlyrceliablc invcstmrent \_vlii<:his igiiigibie for minimal 1€2nici.'ii'r1?«;%*i éiiar;ie$s,. The precise premium banks wciuici clia1i'ge for lkjatis tci even first‘-—g(:n-— eration prqigrctis c~a1inotbe precis§2i§,* d<3ii;c:1§h4inc>c1i at present. Somcgpart of this risk premium would ii.n:re1‘3*:Qvocl by the» §.:<:mti~act price ‘it.ss’el.1‘ :;ind ‘éoimi byangoiri-gvrizlarificatitiv-MU? the §?;()\-'0 ifnmenfls mm em"'i>r(“)'I11.‘I‘}{:)z)z‘3.1 and regulatory" pcilicicts. Ifisiimateskof the 1‘(31TIfi1i_I’14(Zi(!I‘~Siiglilld ncitbc (:oii:‘i.dic.nt-* igy taken fr.cniw- synfuel p1"op<>sz11s,. i‘oi:' thr.éir auii1m".~:; h:£1.3.f.t'3Vi an iI1CfC‘11ii\"()‘_t(5 _ <;)"w2 I‘Si.£1i;:0V i.mt.li ti-1<;‘ Z dif1‘i m.1ltyi:1_z“fd the m;p(3nsi»<2A of {I.U..1‘('i,v(‘.LiIi.Lfi debt fimfi1i2<‘:iz*i;_=,'. “2\’<:\:cr1.h<+1~<:ss.s-;,% ‘jtiie’ shz1_i.<2r (iii '_‘plz11z*: ofi‘<:rmi by ’i‘(>S(‘T(r) iC3&.Il1.'..i1i)‘_‘t.§:7‘LlSCH! tr) iU1}StI“Z1.i.(?' ‘its: L')I“(_'iiI‘1{;{‘TO 'I‘()SC‘f(.),i gjoxferriiiieiii. g:z2:1.i:':,ixit;<‘:(:s ihr S(:\'unt§;~i‘i;\*u CRS - 57 percent of the project's cost would nisgke possible a fifteen percent re- turn to equity participants at a ccntract price e(su_bjeet to esce‘11_ati’on) of $11.15/bbl. 3/ Absent such guar.1nteejs,_ the authors assert 8.V..p1,"iCe of $16.75 per barrel woulcl have to be\ assured is order to attract to-— tal capital at an average return o1‘twe1'»~e terncent. The substafitiai tdif- ference in cc>ntr:»1ct prices arises because '1‘()SC‘.O assumes guarahtehevd‘ debt ?would he zgwavilablecatt the eight percent rate charged for-si¢xl'e'1‘1‘:-E-secured indzzstry leans. This "cheap" ca13i.t€z1:p reduces the overall rate atxvhich tile recover and pay for its financirxg t\tre;1tyt years.-~ connpounidthygf t;;lI1!‘1L.td{1H y over twenty years, evefixrhsmall_.dpit‘fe1"extces in rates cf return Amid up to substantial bcostrs pin "‘required‘f contract prices. &’et the difference. b€3t\w,'3C:I1 TQSC“.O’si.pp;~iee quot?-fiicxxs under the gueran-j teed and ntyn-tfuaxmxmteperl price schemes, well as Vdifferences in pre- viously citccl prices for 1)C1¥‘ and 13'ti1it;,tfir1:mcec1 projects, cztmt protve misleading in one irnpnortant respect. For inC1“casccl1*eve%x1ues arexleeded, in the nQn~;;uarante’ed. debt hoption, not .0111}; to pay a premium :‘<,1~ very»- i*,-;§3>rojects.\x'otx1me taié oh1igati<>11s that wouhld corhc with fuli equity fir1amcingf.pc At $16.75/bb1., according to T()SC(), estixuumecl income taxes oi $1,156 nulhcn cxver the clue oi the .‘'‘?*q,.' '0. V I‘. rmcnt under $411.15 perberrel guarar1tee't This sum is to about $3.: 80 per barrel of syncrucie; supbtracstizugjit from the $16.75 quot‘a.tir,mg to e:1e to My 4 3/ ".13. I3I‘()1'>(.>fL~3:;£tb}’ r'?.l.‘h<.: .(-)il.rSh:1I(2.j (.i‘c3rp’01‘:3.ti’o;§r.:un to C?ort1csst,rL‘:r:ttc it (r.‘‘rcizzl» Size (f)ic1i,_Sha1e I.)e11mm’=.tI‘z1ticm. l9’lz1tf1t,._. " p c ‘ ~ = 7 ~ -. sMuS_.a slightlycnegative tax pa;y‘~ ens - 53 the $11.15 debt--guarantee price puts the difference in the goveprnnzentis real price coninnitrnents at about fifteen percent.‘ -'_l__§_l/ X It is against this latter" fifteen percent gap that the advisability of Federal guarantees ought to be measured. Thechief counterweight in \\ any such comparison is, of course, the pos‘ihility of default from the practical. impossibility of the ‘project. Stan lard financial market analy-— sis argues that this possibility will be of approximately the same scale as the premium charged by private lenders for non—-guaranteed financing «unless the. Federal guarantee itself diminishtes significant risk factors. If the heightened financial ‘stake inherent in the Treasury's cosigner role l were to accelerate environmental or other governmental iclearances, or ( shift these policies toward a more accommodating stance on eneifiqy de- velopment, this requirement would indeed be met. But it is important to realize that the lower price tvould have thus been obtained by doing things we could have done anyway and which, if. thcyhad been done, might have made possible approximately the same "price without’: Federal. loan A guarantees. F. Tax Treat-men! V r p , . -. at The TOSLO example underscores the confusion which can arise 111 I 'ucl<“inr the re uired '”5rice' of s nthetics under alternative tax and fi- 3 ha y q pp p nancing schemes. Under existing V’ revenue codes, with accelerated v‘ . ._v “ -w- ,- . . - .- ‘ ‘ .=¢ ,~,.-~. ". '.~.‘x‘.n.i - -* ...-...' 43/ "Real price COIll]Tl]‘."CI1'l,@I1t‘_' is used l'I€:1‘_€i* topmean the trontract prices less the pelr-barrel income taxesa the goverenrnent can expect to ob» tain at that price. . Since the contract price is basically only a :‘or211i-pd rules for ceilculating government; receiptse from; or payments to a s}}*n5- fucl"d’e\!eloper («mil ‘provisir¢>n~_for resale at the prevailing price) VEl.ddi.tiOUZLt_}; .;;overn.nient revenues at a particu1a1" price xnust he x~e--. iflecrtede if the comparisr»n hstetweczi. altel*nati\-‘e financing, schemes is to he a legitlimate one. ' i a t ’ Ajcns -‘59« e c_ '" - de %reeiati0u and investment creditscand exem tion of interest a meats from taxable profits, projects with heavy front load coemnaitnemenfs can getierate sub:-:~ta1‘itia1 tax savings for their operators; .»,fll”fe.one‘compares "fjresent value" these eefrly sacvings with later inc.:ome‘tax ob1igati.0n:-5 on a" basis~—apstand:u*d corporate method for‘; recogixzizizig the greater vs,'orth\ of income now rather than-19a’t'cr~—-t:}’ze tgix effect is heightened and the unit price whicI1 a firm requires to achieve :1 gwen afterwtax prafu rate al1.'”Vt:Liie more . deciisively dependent on the tax treatment of its e:-a1"x1-— ings. . "As we haeve’seen, siznplycacltering _the method of finance can itself re-— duce both taxes and contract price subst;antia1§y. A11otl1ercf5ti0n would be altering the tax’ provisions»tlclexnselvcse as the;_y :1ft‘ect synfuelc devel- opment ‘pIr.(_)je_et.4. .l‘nc15cased investment ccrcdits of cfive to ten perceni.,e quicke1"\‘\*riLe-—0f1‘ of plant and equipn1er1_t} anc1rder'1y, ’c0mpeti'tive% markets, "prfices tend’t0\*.'ar(1%L_}w' 1:e\<'e1 crovcrs prcd11<;ersctczsts, i1iC111.fit"a.b‘}iIicty. _Pre“-» ._csu,'xnab}_y the governxnent, in kccmhract %a';,{1*ecn?.c:z'11cs,v xxculd be a1ctemp1‘ing to set its p1‘iCH(3:-C§OININi.1:1'N6!'mZ at a13p1j<>3:ix'nat:(:!y the same mm, akJ"«:*q=xa;r1te V to asstzre Scanzethizugi like 'n0z“1fia1 after-tzix ep.r~oi‘itcat3ility. 4 V\’herc s.pezu:ment”is c>ffcIfecc! in?’ c0nj1zn(:tig.m xx'ith f“(}§‘1(‘1‘£T11 p1‘icc c:o1'n‘n“2ii::m>m§; ‘ 9 CRS-60 it would basically constitute a cash advantage offset by :1 lower contract pricey :(Neitl1er tax nor contract price tdirfectlyi affect synfuel's retail price which would be pe god at "prevailing" rates‘. 1 If tax benefits were. made generally available to synfuell projects ioutsidc; contifactuéal. agrege-— ‘merits, they would constitute 61 tax’ subsidy intended 1:0 improve the com» petitive positicm 0*." sjyntlietic gas? and oil’. ‘i7i"he improvement couildbe made to equal or exren exceed the advantage zttlcready given to traditional i 1 A \ \ fossil ljuel industries that pay less than statutory’ effective tax rates. H For capital intensive projects like shale or coal synfuel plants, where investment and profitable recovery of investment can eas_il5ril2;91n{)riseio a half of the unit costs "loaded" into a required price; alniiadditional ten “ percent;intrestment. icreclitl would reduce by about fiize pe1"ce’nt the price‘ atA\\='l‘ll.C.‘l‘1.Syl’1fUOlS could compcteon an ‘equivalent profitabi-lit-y basis. Rapid clepreciation SCl1OClulGS can produce an even large-or subsidy effect, de endinf artlv on the financial ‘ Structure of the £3 n1'uel’enterlrise7.i P £3 ., Y P . For the lbenefits offered by SpC_(i:pi3.l tax provisions differ according to l whether and when a firm may take full advantage of them. A coin-' c pletely indepexiclent synthetic pI‘OJ£3(‘.“t will have to wait féiiprofitable pro~— duction to occur befmco income is available against which the tax ctr-=. lits or.bool«;lml1t 1‘at~c of t.w;el\re percent is =uSed as i‘r1cli:~;=.ti\'c oi? 1nrme§,nS e;,'1;*11’i11g p<.>w<;_ri in alternative‘ ilwestmentss, a four year dcl.2iyji11 exploitin;,§ ca t:~.1::< "b1*c:1l<"* ’cuts its izelall \;‘.-'OI‘l;ll- to profit-smaltizigl enter‘- iprise by more than :1 thixfcl. \..nu f’ on- The sort of complications which tax changes breed in assessingeither lmarket prices on contract agreements should not necesisarily deter their use. They would, alters all, provide a means of stimulatinginvestment in processes which mustat least d.enionsti‘°ate technical feasibility to their X “J-u.,, private backers--—they would encourage synthiitic activity in general vk:h.il.:e H . V ‘ ; leaving the choice of technologies to individual investors. K G. The Choice or15o1‘i-cy Tools Earlier comments indicated that a case may be made for Federal int-erference in energy: markets on special behalf of synfuel development. Outlined above have been several prominently mentioned tools by which government could giiicle market forces toward a more rapid and sub?- L stantial synthetic cozifnmitrnenty stopping short ofitheoutriightiicancelliafi tion of these forces federally-owned facilities operatedtswith continu- ing subsidies. The latteriapproach may prove attkractiive‘tolisome, es- L peciaily for the early stages of development in very remotely practical t synthetic‘ techniques. But expectations of a sigznificant synfuel industry by the early of mid l980‘s most lik1elyires‘t on the governmenwsiabiiityyi to spur rather thanl displace private financiiatl ‘activity. i . l ' i Ifltirnately, none of the incentives discussed can substitute for the resolution of those public policy questions in ‘institutional, envi«ronme;ntal and reg‘.ul.z>tory' procedure that new cast uncerrtaintytiover majibr deverlopé rnent eflortsiy, rlsut it may be fairly asl~:ed:~ How are {ve to decide these i questions with"ou7t7 arealistic notion of the prospective benefits of large F v‘/I. scale synfuel idevelopinent? A limited program of very g<'énei~ously' sup- ported synfuel projects could, if: implemented quickly, iibegin to lgene'rat~e t.he answers on which longer terlfn policies niiiflit be based. In designing a small l"crash'i'r syntheticprogram, the government might well wish to endow private developers with contractual price terJm#c,i,'1oan backing, airiditaxv preferences that would be to-oexpensive for broad ap- plication. Such special treatment should not bie'rc('>n1"e', either in prixriate expectations or public ones, a fixed precedents ifortlater int-estnient prods; p “ % Consideration of this last point illustrtes the flexibility that any synfuel policy must retain: ltphoughpFeder’l> efi‘ort.s~ Ollgllt to benbased on a coirnprehensive and consistent picture \‘ofU.S‘.p‘cnergy needs, they can and should employ different methods toattaeki. ixidividual aspects of the problem, and to exploit particular opportunities within the array of synthetic techno1ogi.es.p Where heavy capital ‘needs and long ti‘me~to- .com letion undercut develo ment, rice V arantees seem“ the most a - V P 3 y P hpropriatc aids. A two-tier guarantee system could offer relativeily loiv floor prices (at the equivalem: of S9 to $11 per barrel of crude,, example) on a wide scale in a generalized contx‘vact VfOI~‘nlat,‘. while specia1- ly ne;.§otiated terms were reserved for those teclmoloigies‘ that promised the most in advancing our understanding of ener;_2jy development l’>1tp whose iynhimcdiate costwcaleulations put them beyond expectable price levelsi Where practically feasible yprojects lool< rnarginally unprofit- able, the balance may-be tilted b)radditional”ta>; benefits, especially these affect idetscllopment at the initialinvestment st'age.i ,-cz.uaran~ tees require a great degree of. pscpfhistication and discretion on the part of the granting’ .agency because they remove so nymph of the iz1c:en'iivcs for acscurate ju.dhge‘ment from privaterinyvestors; tlieir chief. advaxitagge would lie in those projects whose sheer since ma.l«;es t.l'1<:~m r{z*m1'i.e](l;;c'items t on the nation's, unguarjanteerl lendingi markets. ‘ , ’ ’ ' . I ’I;.ow.~le\rel corvtract pricrczs ancli/tz:1j_»; advai_nt:atg<>s y>r'c2soi‘\*e1ystrongspurs ~ for ci‘ficiei‘1t ‘, private <.Iec.ii$sions~-tlieii‘ t availability to :many' syanfuel,‘ \.a&ILJ \.ttJ deve.1o;';¢’i3s could thus constitute‘ the broad lines of Federal. synfuel pol». ‘an, icy, pushing capital toward this priority energy target. Loan ‘guarantees. and high contract prices V (or (.‘,()I1lLI‘aC.t. prices subject to escalation by sea tual project outlays) could formta comple'rnentar_9y "leading edge"fi‘to ‘this broad approach, focusing efforts within synthetics ‘on those processes whoseestimated benefits to‘ use public justi£y/ generous and ri.sl»;_y‘ jpfifb. o o ‘i ‘ ‘ I ‘ ,\ I "-9 c g K . lie commitments. The comparative gsroportioxtis of.t.hese two approaches shouldidepend largely on the p;ovei'nrnent's confidence in its own ability 0 any ltopweigh both risks and benefits; it is reasonable to expect that the ex- .9 ecutive branchfls understanding of‘. technologiyt should jtrnprove rapidly as its importance in the -Nation‘s energy neeclslincreases-4-it is unrealistic: to '3;\:peetthat l-‘ederal agencies with varied responsibilities will .alwaystprove alert to the possibilities and drawbacksof all alter» native techniques. Synfucl policy, therefore. pmust retairi strong iindiuce-‘ ments for private sector ¢';1lOI”l’.l’lCSS in botli these areas.‘ Synfueldel\*e1- opment, according to .,the.trz~:ipi xxatiecr, suit theijsolid wastes, but the environmental impact the use of the products produced by the’ facility; i i Befbre a. disC}1SSi0n 0VfA e_nv"iroinnw-inta}. effectsfiQ;f ;1 typi7‘c:a:11 fac:iiit;3} gasi1‘.y’iI1g_cior A1iq1i1%efyicn;i;‘ coa’1,*V it must be poirited (">1ittiI:iat‘tYic1*e issfib .1‘.yp-.. H icialf great va:‘iety,V_gf :§i;ifi‘crc11t tccimologies have laser; p1.1t“f(‘;)r-’~ ward, each therir cwn cf inputs and outputs. c For ‘ex... ampilc, ‘me 'R.o;.3pers-—'I‘otzck’fprocéss-Afor '<::ca1 ;::,aSiiAfiVfC.at’ibri?~hz1S beevrx by its prc5porieI1ts_ to p011uti.c}nV.frcc. aiid .inc.icc:p<;-,'-r1ci'ient. havcbsiencoriducted y§'l1ic2I1ibasiCa1.1yrstipportithiss conclusioxi. 'J;’hie‘:.4>13x?<§»%r.€-1-i-i uctcof process is,i 1iiowsev»er,~ ai lsmw-13tu gzais of less tha:1_ ipipclirxc V quslit VA i i i Some g.{e}r1e'I‘;ai1:i2iaiic11 ofien\ri1fig1?1mcn1.a1 impacts ipossibicz, bijt ispc-~i .:;ific_quantificaticm c;ficihicsséi impacts ().1:‘.{3\-'en ti'z<;~:ir existernccr ciepmifisi cm the specific technology en1p:loyed.d addition, the technology has-l-been developed which can, at a i given cost; control virtually e\}*c1‘ypoll‘ut::mt produced by the synfuel facility. ’l‘heniajort present exccptican sulfur oxides in stack gases. The costs of such control devices may be so Q‘ high, however, that they upset the«delicate economics upon \’\"hi(,:h acsgynw fuel 1ndustryu*1ll operate, lf at all. Tl113s anfr dlscusslon of the environ-, mental effects of a synfuel industrywmust presume a certain- level of the installation of pollution control equipmeht guaged by economic feas- ibilitjé. ‘l. Primary Land Inputs. The construction of typical coal gas3l‘ica- tion and liquefaction facilities is estimated to require from ~22 1/2 to 5 years. The selection ofthe site for the plant and its supporting facil-- ities will be crucial. Not only is a large surface area needed for the plant, coal storage, andsolid “waste disposal, but more in*1porta11tly the site nius. be accessible to large amounts of coal and watei:'. The availability of these materials has apparently dictated the siting of the lfirst group of announced coal gasififcation projects: tufczuty planned .‘pI'OjeCl’.::~alS":Cf'De(:e1T1beI‘ 15,} 1975, six were located in Illinois, three inNo1'th Dakota, and two each in Montana Pcrlnsyllvania, and §».‘ew 1\/lexico. These are all states with significant coal reserves. Selec-. xi tion of felatively rural sites has been dictated. both ‘ll5;3§:...lintense opposi- tion from local residents in populated areas to such large scale industrial -activities and by lower land purchase: costs. Paradoxicalllpy, among the — lrnajor impacts synfuel facilities may have _wi1lbe xm create population centers» neali5b‘y'siniilar_ to those whose:'rcsistance will keep the plants away from already urbanized are'{‘.s§ Scalectlon ofltlxe lnitial ‘manta site cannot be made without cozlsidcrirlg the land required for supporting trlanspo:t~tatioz"1 facilities and e1'z:plo§’e<2 V (.‘RS?-- 67 housing and recre-atfiox1.‘ne.eds. In addition, ‘if the plant ‘and employee. housing areas am inco‘nvenient1y_ far from adequate urban health, shop- ping, sieryjice facilities, additional population will be r-equixfed. In» V? g. cludizigpfaniilies and supportive personnel and their families, :1 typic.al syxifuezl plzuai. with 21 payroll of 500 to 1000 perscins may p;eI1o1'*ato' fa com?- oare replacedfbypefmarienhto»131pio3,fe‘g§3~'_»'_‘i A i i _ - A fur: 1 pI“<“).d1.rr:I_i(")I1. i I munity of five tinms those numlimr.-‘5. The dramatic Ciffcflti in changing; vth€3ki~C11£11"£3C‘T(3I‘ of :1 rural circa Caused !..)y this; maxi’ population not im*o!\~'<“:<1 in agriciruitxzral ‘c>ri<:>§t‘hc:i1* tn?-u;iiiic)ri2:;li I -J‘ rxzral. pursuits will - not be :1 g‘;‘i‘a_duail one:-.«-thc+ infiu:~: of {3&J;5i1i1}ii.io21 1"or the .;>_ : . initial construction S4t£1g€fS’o0fAt'h€$: plant may C:-{creed the }:reoI‘.n'1anc:ni pop». ulation the plant will support. Alth()ug“h {)I‘iI”I‘aE1I‘;i‘i},*'tI‘8.I}Si.£3I1i., tl:o1z3.bor~ ing force and toc:hni(~.i:a.ns who c:1*1nan:ent housihng; and.sservic's::~.= reqixired duz*iz'1g the life of tut: facility must .‘~E1f1ti.C;ipaLO the beginninhg of \~.'(>rk on tiioaotizal i’ac:i.A1i§y‘?.i:*: or<.:i<:_:~r to avoid chaotic rievo1opmont.» i‘;1’U1o area. i Such ifandom and ummsthetic growth v.~ouI.d SU1"Vi\.‘C‘ the dcépaz*tur's2 of_t:he c:onstrur:t.ic1>x1 (.‘.I.“£;=\*.'.¢3 mi: tgiby ~a..:..‘.“ " i‘E3ss«3.nt.iz1l)y,.V~_.V§;i,;;;;___ 1 ‘__ tend far‘ i)(3§.::j>mi;t}1oso of the I)}i(‘7:.Y'.1t‘ its-::U‘,' a.nC1"1};:I_‘@*i-St i»oAc:ah1,*o.t‘u"}1iy :r:n'i<:ui\~’och1 of g: 1191 fa<:ilit_\* will .thm;‘<:-1’o*1*e> eix“- 2 and (executed s?imu.lt::’2~ne()u$ly .\‘.'1'th thei initial plans “for “t'i‘.t(.-3» plum {o z‘::in- injmze the ;xd\'eAx*s:2 i.n:;:>z1<‘ts; on the land am} surromidina rcgfions <_;»2‘ ;;yn,~+ (I. Z\‘Izztvz~i.;1iis In;3uto.L:; ':;mi<.iS<:::grit;!o:a_rv I.z1:su_i ilmmtés. ‘Tho masses-c3.s=‘;.ic_»;‘ ssm:>h \ »f:=,<:iIiioir::‘.~;h for wahtex‘ irmzi *:i‘1i£~3= <’io‘trir::<.>:2!:3l% €:.f’fe<.ti cm‘ {ti_‘)I$?;)f§¥iiXi§Tf 1% ‘A .::s~.1 €3__{';1"iC11}H! mi h:’_i.x<:o buzz": strp;1r3’fo1:j»* t1'<:ziz€.v“*£i. '.15h<: }}tT}'.‘3S~5_i31:§_? 2..2*1\’i1*o3*m>»<:mg} >3’ (ms — G8 .cffects of this water Llsagc will bevrclativelgy grcuater in \Vester*n arcms without :s-mundant rzzinfalll or_,:lprolil‘ic:Aunderground .s3<‘mr"ces.A 'l‘lu;.>. ;)v(,~_.r-A sonal. requirements l‘cli*§*" water of the" c:ml>ll<7Z*‘(:(:Ss <3h(lltl’1c3- 11(2{.>(353 of their coxmmmity sservices mrxy equal. tlxose pf tsm plzml: itSell'. Sui{l7i<:<* it m_; say l1<.;21‘e that warm‘ 1‘Cqt1it‘0m{mt.$3 will pass :1 si;_{nill‘ic:m* plnlxliimw‘ px‘c>l3-~' l . 1 lem Tn Si.til3;;§ £3Y‘l(l‘(’_)p(i'1“{lti(;)l”l ml‘ the fa<;:1it3,*. Tlxe enV*irox1n‘lex1tal i!"ll‘:')£1Ct of p1“oclu<:l.ion of tl"l<:7lo:>:ll requircal for‘ the l'aa:ilil;}y will b0pc1‘l\z1pS the mm:-;t .2:-ilg;;n;§fi<_tzm1 loxfal t’)I‘1‘(.?gi('m.:1l ntly ’{>lar1nc:c.l p1~«l)‘;'(:ctss C.‘?<,pC(':‘t‘ndfizll‘i?‘(?‘f§nS1:ni'pt.icm mi‘ * up to 1.021}, :3()O tcms pér r l“<;)u1* fL1’l'l-.sl1 plz.mt.c‘l:1~ x‘z1::ti.on of tin? .~euz‘z‘:1m: {hr 1"r:nc:wc-ld Vl_l»S('. as l':,n:mlzm:.'l ornlhlox‘ nulr;‘nL>sL>::; al'te r\'.'a1‘cl.~3 may or x:':i1y not be p()'s.~3il>l»::. Simtc in nmsst the coal "<:x1r:;<:tion will m_:c_=~m‘ in‘tlu~ 3.";‘jiI_l()Yl Qf,tl1e‘planL, and in mami cases will lye an imjegral part of tlw-=~\'e1‘~ alllc>p<:'3:*:_xt‘ion5, "it (:anxmVt lax:-.‘ r:onSi<.lr.~rc.-(l in ’i'.*1()l;’_1tjml l‘l”‘(‘rll'3' tlm’ ntlwr i‘m—- % ‘‘_l u pa<:l.s of H1c_>“fa<_?ili'l.\'. Tor‘ e.\'::mplc:,. mining: uperaliorzfis may imc-rJ:‘e.rc" . xx-itlwlojxwuxlcl xralx-_x“ 1‘e1l)l<:5-,’~__}..l;l_‘_.t2lV_ \\':at.«: 1'‘ q12:,1llitL§.', c'$>;;1c«;-1"l);.xtlimg’an ;1lr«;.~;x‘a:;:a.:«.r5 lw lV?\‘1‘!‘}(4)I(.‘i m‘ at tlw mine\Zm:~;fu~l, in the l.' :1 (l 1' N, fox‘ H:';.m5:p'<:1“:z.n’lam" f;*spili§i(:.a4 v. ill “l)<:. l*<{<_l*L2‘<;'.-3(l,[' zgml ills: ;.1c_l;."<;-.2.*S5<.: l<.*m'i1‘m1~ . . _ I'm‘m.:1l in‘:p:'2l:1€ml: 10 .§;l‘ii" l<,:.§\'.f<:t‘.l ;3<>s:.§3llll‘lt.%.— ‘ A »'l‘»hi:-3. its l:><_'..r§m§ . ‘*1: -9 ¥)‘3A£1‘!.»¥3‘-fit‘-?(‘:§ V fmg‘ :1 »!ll.lX‘1":l)t'I"h_€)*: ;2§é;i~';’:Ii::;k"‘v)#ki)i1i 1’£‘2\;§{“"7'>“1(‘r‘)i.‘l>}£$ &;>;;.'::;~5il)§<.‘. in :“:zi:n§ 'l v;:l-;=l.~:;:2i.~;+; ‘A ‘if 5j:.‘zlTl‘m~:‘ll lsl:.mt:?< 3*:*r..>l&l‘m':lmF~l :15: zluxxf ‘mi 2‘wg=.:ix“m.l 33f; 2: Tful’.:3r};.1l«* :"%:%lll:i:.2«te>. CRS - G9 on this technology: the necessary resources do not frequently occur insuch proximity that the impaets of using thexn can also belcom;:en~i "um- tratcd. , ' X . - 7 ' i V i l ‘L. 1”-’l:mners of synfuel facilities must also anticipate the possibility oi" seeonclary land usage and gro\\*t.h«*in.’adjzi7"c.en§/ areas not directly related to the plzim, its supply, its employees, and tljaeir support. The assured} eavalloahility of fuel=,suppl.ies from an operating synfuel. V-1 ant, despite l . ,. . .A l their prob:1bl.e liigglx cost compared to conventiorzal luel suppl1es,xm1y l;)C sufl‘ieic,ent; to atttraet to the same areas other industries whicglz depend on stezlclgw %I‘uel. supi)li«:=s. 1"“)(3llI‘OC'Il('}‘I1ll’(;"i‘"2'l;i"“’i'fi§'§l“3"$\‘~S,' for example, might I Vfoll<:>w com~pletio‘n ssynifuel i‘aei.lities in an ar"eaV7if the production of . l V . l l the sy1ifu<.~l plant wfpre not precledicated to ;-4 pipeline or other trans- portzxtion to other regions. Some ofthe synfuel. pls;nning,'t1ox\' fqoiiug ‘ '7 - V‘ . _*u”’ I .w I on envisions plants associated directly with petroczhemieall consuiztptiori near the site, Thus the development. of synfuel. faeillitilestin a p1‘e~ \'i(“)l.l&5l_V' rtxral give;-1 D‘ll_L‘;'l'll2 not create merely an industrial island axlcl <:o:‘xnn1:xtiit;»\,:,i but niigjghtg be" the inception» of me[z1m Azmd ec)olivigg xvstel‘ will beip1*e'sent. J’ 1%. (-"}t>ltvI."1t\$$ of l"otem;i:.1l. l~’ulli1»l.ants. The r>xxtpms_,ol” sy:il‘u«:l plxanttsi a‘1+eVrel::ti\~c,-lg 1"<;:>,I‘esec::;.2.ll;1c:. (."(1)xltI~(.)1 oqu ipm-ent‘fo1.“ g:ase»ous,s li‘(?1‘Iai‘{V'Ll, gmcl :~‘ V solid \*.'aste‘ emissions viill he plzsmmzd‘ in aclvanec: as :z:a‘i~:1‘ife“§‘x‘a1lpoi‘-_ t.ion rncmox1de, nxtrogesxt ox-— ides, sulfur didxidcs, and partWic1_11ateSl.%$ lquamit%i.<,-5: ~ ' ~” A . t ~ ~ ‘ J ‘ . - v.. .'g.,p~ 3.3 -. a_ . ' of c~arb<;>11 clio.x'itflle.. 1jitVr'c>gcnl. gixfcir “p}i~()l<.ltt{c‘£t?E3;' :il't.)lxisj‘;"\’“x"'itll1.n;iin'm‘ ;31?::cu'1n'l::-;~ ~ of rare‘ gases ant‘! llyclz.'<‘$Carl:>:;més.— l')et)ex'1:.lir1§§ on (:a<:m1<_.>mlc i‘ca:5il)ilitL\*, * 5 the c:%'a_1él.>0r1tt1ioxide""&11ns will ()t?ttu1‘ r1ot(;m1‘§*tlnjc>u,r,g;h the man: gitts exl1;n1st.1t>m:m;l in t;.l"1u,far:ilit}.', \~:lmx‘l.= cénntrol eqtlipmczm; is t'eE§;§;»il.)lliz1sm;1lltl a,mount.:3tlzrougzl:5lk;:alltem<:z_1l:fd :~:1:l:'i.2x‘ frtm: tlu.~ .~;:~;i<.l«:~ tln'ou:?l1 (‘l;u..-: plant .,,l.t:clm0l<);:y, 0lm:t‘1fmst;sliétl p1“<:<:i~;:»i1.;nill§‘5l'lvlllffl”1l ;5m1~’- _v lu‘t.:mlS:” is; '>::5ssill)-l-(*5 :‘l<;»z* tlm _n_~e;r\~'t‘nti:lu::tm.l CHS - 71 may evade capture. In no case, lwwexfer, need the gaseous emissions from a1syr,l‘u‘<2l facility create significant air qualityldeterioratirm in areas lo<"$»a;,1:flto the plant given the application of C1lI“I‘€2}.'1t.l}"',p1"{)'{.’(2I3tlt£2é}h’i“ A ndllci gies. A . \\ ’l‘lma>c;~ have beer: reports that some cf‘ the m;1_tL>rials used in syn- fuel plants or emitted fru'm thern are .§a1"ACiIlO§;CI1iC,V posir1g a 12o1:c11tiall~ Ly‘ significant heztlth risk’ to plant \\-'(\1‘l‘:{(:1‘:=3 zxr1}l,' to :1 lesser le:~:tc—:nt,to Qccuguziznls ol‘ surrmlxnclirigk l3ll‘lv.éx~ ’.l"lm Ad.. ministr.ation‘s Task 1°-‘0r«::e m1lSy‘m:h'3ti<: l-‘uels 1.‘(21_>‘c>rtcdtl1at, "Ad\'er:~:<.> l1umanl1eal.th el‘f<3cts. li11c:lu(ling .c:.:mcer, miglu. rtiiszllltl frcvahj ‘;l.g%>x1'g?¥1lg:1*,:'n elxposatxrelto p%olj_;c:yc:lic a1'omati(: 'hyclr<;)car‘ll>o1js and t1‘a(:<: elemenlsl L~:mil~— ted fronl s§mt.~hc?tic: lucal plzmls in7 flat: l"<)..1‘*lAhA~. or .=.1d;~‘:m:'l‘>c~.cl (in fine par» ti.1cu’lat<-;-s. " The liquid wastes‘ associatecl with s:ynfu<.§l p1*o<:tc»:3ses will im.:lu'dc J’ Wale 1" 11se<;l lo xx .:1.<3sl3 l:an"(T" p1'epa1;‘Q v‘(":Q{1.l., l.c:c>xf:tz1,ii%1%'«i1.1'g§: l-;3“l)o11tl l:".~‘1} Sllspcrrlcleci :s0lids.r.>I‘ firle clay‘ 2m'cl(:c3,al, v.»'l1'1<:l‘l will havce luocm rec:i.rc:ulat(>cl ‘.*.‘i(ll*1in t'l1epla%n'Lfo% '1-ha} paint. tlml can he t<.»le1“atc2cl_ prim‘ to <.lisctl1;a~r;:£r. In l.som¢ cases sotllling ponds*1l12ay be usz~1l)l(é tc>\p1‘ulllm‘.ion.‘ \'l’:3tc:x‘ ussed ‘in the I:‘>1‘i1naI%‘.\.’ §_l§las:~ifi.<.::;zl.io:‘1 £117dl1iqu£A>.Tl'a(.:Vlkin rt:-— actions “will ’l)c.3§.::)x‘1,1(2 qui te salirlg, zmd will clomziin”sigrmlfilczfiat ::m:<>1xm.s <)fza1nmonia,% plu~.nc>lL<=;, Ac:_yalnid<>"SAa1'1Ll .s3Lzll‘i'llx.:1i(>:1 comrrol t(#c:l*z_x1ol(l>;3.;i0s (::;m blur zippli'c:fH‘.“l‘tl<>% 1‘om<)\§c t_li§llmlk’l0l" ;§(‘)l— 1m‘;;mt.s;-, z.m<,l some of tljxml: r;_1a_,)f‘, in <_':(;2rt.air1 (.‘LlS2(..:é5, L hi: c‘c*:x1<:»x‘;'2ivally . sallablc: l>,_\'-prm;l\.1cts3. ’ v'I‘1*‘;u~g,;,, alnm_\lxm.~’;‘ zmcl p.'~r~lmp:-; ll‘;f?:(.t\.v“l(.?I“ c<)m**vm1‘:1-— ticmss 01‘ tllxcr&:l,> I’ll,{1l'(‘,.’(‘i€ll;.‘.~7 1'xé.a§' Hm!llxcirxmy R.) the m1\*i:*<.>m'mmt l.m"*, V'\(!i“€1i‘I-}f&§i?_(?V “l‘ru1%fx.'<.*;~‘.:.' ..-'l:3;;lin l3m;>‘- ~ xfxmnié: ‘§'£iC.‘t(i)1‘S and tic)‘:%rm:lm~c>llfagzgicall will :‘ :t.~mi~.~:li‘d 1 z “ _ V \x'aSticS generated ma_y lead tO€lCidlf1lCat1OI'l of the water runc‘)flTs.l Toxic matemals present _ in’ the waste ‘SlI.‘_(i‘€1.l1fn may also be detectable in waste pile xumoffs.‘ V 'l‘he water, pollution impaetfls from this sou'1‘<:c could be s,ubstantial and most dil"ficult to c()m.rol. The sc;>li.d wastes themselves will not l1a\'e,anj)' commercial \.'z—1luc.> and will simply be disposed of. ll‘ the coal far the plants -is 1.*inecl%;‘_; at ' a V ~ ~ ‘ - . - ‘ \ u ‘ v ‘V ' 1n proxnmlty to the pmilcess O})€:1“at1OI1S, xt may be f€‘8.S1bl€3 to 1'e—_11fans*~" port the solid vsaslos for disposal. in the aress, ts be \'3\"(.‘1*€.§(.l by Lthepverburclmw mi-movecl during the mihingoperations, farior to reel-—.. l.:lmzlt;lon 01' mt: mimzd l H A %'l‘hc ‘z.1‘\'.:<‘.<.>'~’:‘nf>£v‘lI'’a‘\.''irig % fl-g:;uIfc, , f_19o:m 3 the l’x.‘eject lrlde.{:(21’xd<:m“:e ll«3l;;g,fpr.int 'l‘asl< 'l'lc>1*(:<2 Report ‘(in s3muae,:ic; l~‘ur::ls fxsmln Coal,» pr~o'\'ides :2 s;:+;m;:;m;: ;r,g1‘*apln'.<: -cll<~pi<::tin of llxeinputs zamd <>u1.puts l“r<)xfh sncll to tllf.‘ :‘lz1‘tm*:1l ‘«.¢:l- \*i‘zf0r1:mem, of 3 tj.'pical‘s}.'2r;fuel l"2:_£:ilit_x'. ‘ .~m mm¢uV1qwm~ .»mL&m>oz .u.m .ccuwaw4mm3 .Mmou scum mwmsm uwqmxufimw -.r. V uuuoamm muuom.xmm~ Hmcwm .ucwuam:~m muaowmmaomcw uowmopm .V:o«uw»umwmwaw< mw»m:mVMw»ovmu nmzwauw CRS - 73 w. . . . .. .. ..u Vm»a<;mVxcN»u«mmmoHg mza xowwaummwmqu g..I;flwVV.o.n.....c.. \ wzxr... film. .1 . 4... I.) J . V . .. .I: V mix a nlxm xil ‘hi V. Vru V. .~1\’.~u.m_.‘/x . V V .,n|.4 cu/u_., 3»! .fl\ 1/ 1I‘V...|....v.IOIlIlII..lInIl..IO..Il\» C V c.kh\_\.\\I.I(Q &C.bq.\. . L . um»4(—.V txz ..\ Lsm 0L.w V V V .1 .IV. . , u .3 . ,2 V n V .o . ~ . u 5. V $...,:.3.0uV I 3... J.Ofi¢x.§ 20 - O2?.EVw.fl.>a ....x..:x9qV.V...V. :1 I V. A ..L V V 3.0 . . V V V .n...Ou «V3 .V V N «K .V V . V q 1... M V o. . Vv &V..(...V «A W VYLS. V. V V,V..V Vfm Vm W V4,... N “V. 4 V. -5 «JV J. NW. nu- V V V .V V V O nnv n V, W, N . V V U V Vsl. VVl\, )1 an o . ,. 3 . F; WV .1 5V Vwu % (J... .3. 1. \. . r w «.1 . Vim r I. VI» 1, . \ (. .VV. mm ‘x. V. .VV v.. .0 d. V C; I. IV . O . M. V... NV. 1, V V ‘H. .3. H _ e = ¢ * : : O . V V V J. \ .n :3 I . 2 W V .. u . . ..‘...ua . blr )5. . 4\.V\Vfl l~fKI~. .h|\|l.|:V M . . Kn»! V . . .‘ ., \ .3 I U . .V. V V .1 ... .<... .u . \ A . «ass. 3; .. ..r v; 3; .;P;ax;:.V;. . . . . W 4*... F . « .o..n P. 4.. h : . V 3.. 4...? _. .u MW. T /..m....V Von. flu . * . . .0 id. . . . 2 .\.,V V. . W V... .Vs.V:.V .V . r .V 00 u. _ . V; V . V W 1 W . Vi. I m x VA . . V . Mt _ .VV 0.... . ~ . . V , . . V . . . __ . _ V . ucmEcc»w>cm uw»m£uwoEu< V V . .5 . V VV V N muwwwm w...11.o -‘ (9: 4. Fuel Outputs. The other major ‘output of the synfuel proleess. the gaseous or liquidlfugel produced, will als.oW'ha\.'e envivi-‘Qnmental effects, although these should be largely be~nefi(:i.al. In aclditionl to per-_ mitting the continued use of equipment tltrouglexout society erequirinef oil or natural gas eifter supplies. ofothose fuels are ‘interrupted or exhausted, ' \\ oneol" the motivating purposes‘ for the ctrxation of :1“ sy11l'uel, invdustry is to convert coal, our mostabundant jfos ‘ll fuel, into other forms of 4 fossil fuel, stz‘ippi.ng ‘it of the chara<:teris’ti<::s that hm-'e made it less desirable in the past: solid xvzxstes, handling problems, air pollution, etc. Thus it eennot be ignored that although there may-l3t’e‘h‘%sig1tifiea11t en—— virox1ment.?1lt" aspects of (St synfuel inclustry that pose. .;).i.sa:lvantag‘es to surrourxding a1'ees, they are lz:u'*gel§; present as a result of a delib- erette cl(:~si7l1‘Fe'lto lt'31*e'ver1t oflhe sahte p_If()l)le1n from coal c.:cmsurnption dirmrtly by end users. The soliclewastes generated by a synfuel facility will present storage and disposal problems, but an lidentieadl or ,<._;'reat.e1" uz-tlnxoxmt of, so‘%licl‘e_~x~.’as-tes woulcl occur rm;~. «.1559. ,bexxsedfeonsumlption of the coal by enclLus(:1‘5. and the storage anti dist;-'-t posal problems, u'ou.ldVbesworse for" leek of ee:jl.ral lwandwling ability ‘or coordination.‘ The sulfur eompounzls renso\=<»<.lfroth, the coal during" %Eesi.l‘ieatio11. arid lique.fact:i<,)n.~aI"e sull'u,r eonltpotmndsl that will notlbefien-% tering the atmosphere of mo1‘e;>o1iulate<_l ’:i‘i*eE;,s, with eurrcéxatly lox\°e1* éli.1“ qu;<1lit)=~z:mns,L1mption ofe_c>;1l,- hand the, _C‘T'\“"(?I‘Ci.U (>x19ex1rs§5,§NL_(5 s<)<‘,iety— of their I‘e1’noval lxivilel he 1<>we1,*,\~.el1en ’ hzxntllecl at inassivel [T)1“t‘,+pl:3l'-lI’1€?(l 1‘e‘ei,li.1ies 'r,ateher than at irx<.li,x-'icltml ;>ol-- {Iv hxtion ssmxrtce poims, .mz.m‘xl-of u'hi_.;.. ln.g:enex:“L:tl‘, therefore,l one am best.ec:onsitle19 the enxxi1~onmem:>lel'~— I -fm.:t;:e: of synftzele ixtxdwlstuxr I‘rc<.3m a. holistic: ;'3ers‘;,pe<.:tixxs, It is lr.;:.iitt<.:-V likely that Vwhen the ‘deleterious effects t-he polltitants that ‘escape the control meclianismjss certain to be incorporated in synfuel plants are we'i:ghe'd against the be-nefjcmial effects of avoiding tliossc samepol-V lutants in direct cons'ufnption of coal at end——*usc ytxioints, of ‘avoiding the gx~e'au::~ investment reqtzirelnents ‘of multiple {air and \\«'ater treat- ment facilities instead of one niajo"15'faci'iit§', and of avoiding .thc'il1cl waste from coal consuzmotion in an uxzban as» opposed to a rural em-rironnient, vvith the iattendaxit trar1sspo1a‘tatio11 {ll’}£i__h£3.Ild1irlg facilities, the net. result of the equation may be that synf*ue‘l operations liavcr apositive erivironmehtal effect. V i i V, lzlxzen the iilaincl use impacts ot‘An1ini3hg, idisiposal, and tzrbanization would lai*gcJ,y occur \\'hCUl€E1" coal were processed in S)'llfllC1.f£—lClllT.l€S ,or consumed diroctl_\,-'o’ by end users, except that in ithcisiformcr case the impacts \\‘oulc.l occur‘ pI‘i1T1€l1"ii.y_ in rural sott.ing_;s.”". Given these environmcnt.al.: constraints on sym‘uel operations, and‘ the investment and ene.rgy policy ‘restraintstcm the development of tliis industrytliat are described elscwliere,» it .is-necessary to considers the regulatory e-xwironniexit that now ‘exists and is being developed . » ' ‘ _:, through whi.ch t.-he governxmrntal ir1_terest.ancl public interest in s_1cz_1- ..1‘ucl operations are being expressed. ’ F ' V A L g X 13. L Regulatoxry Aspects i 'l‘he‘ remilatory sscl"xo‘:_3l11tl€:=;Liv for %Sy1v.ifuol i‘a<:ilities;’ t-(insists of.i l~'c*deral, firitatei, :begii\‘:fr‘rum*:_1t '_:1_L:E?I_:€:§a:.€,< xxshich xtoultl alter the en\'ironmont.p Once the statement is ~fi;nis_hed, involved in’ sy’nfue'1~lproject is. beyond the scope of this study. ‘This section, however, ’ discusses the most frequently involved Federal en- lvir'Qor1’m;enta1 a.nd.uti1it§' regulations, along with the agencies’ delegatetl the authoi*ity to enforce, these‘ regulatioms. 0- Somo State %2%e,glfulations are also discussed. “._ .1, Environmental Rf-:'g'1ll£11fiOl1S. 1lf'l4‘lecleral lalmds, \‘.«"c).t(3l..”‘S‘ or mhixueraxls are afl'octed by the s__\'nfue1 protect, the Nauonal l:.nv1r_onmental Pohcy “ Act (Public Law 9I.~1f.)0> requires an lemfironmexatell impact statement’ he com'pleted by a Federal Government agemry. The agencty is Selected on the b£?1SiS_ ofthaving primary juri§3diction over the total project land,//1. conducts the stud;»' ctxzumining the follo\_\'lng areas: 1.- l the envi.1**£‘>nnicn‘ta1 impact of the proposed action; Vlandy :3;d\'cr:3o em'ironmcntal effects which cannot be avoided should the proposal. be implemented; altto1*natl\"eS3 to the proposed action; and’ any 'jr1‘(:\.’C?1‘.:’-3il‘)lc and irret1“ic\>‘ablc commitments of rcsour'<:es plemoutcd. ‘ 'I"l1eptz1*;3ose Of_'SUCl”l an impact statement is to require that dcci- \\'l1i’ch‘:wloulcl t)C§.‘...,,i'-I11-'."~Ol\1'(?Cl. in the proposed‘ action should itbe ‘im-c sion makers ‘C0l1Sid»€;?I“:-s;a.11- possible approaches}: to atparticu1:1r pro,j.e.c;§§$;_ I it is relt-:asedlto the il_-’rc;>sident's Council; on linvironmental. Qt1a1it§',’a11y = an involved l"ccle1*zll X and Sgtzltc agcmties, and to‘ tjlle public. d The cfix~:i:*E3n~ . mental impact ioslti11'1po9éax1t;= because firot, ititsoini‘orpmat§ve;% and smulxzig LY. itols l*<22sil1?tib’_£‘i~1.’ in t.h:‘lt no ',l«‘edeI'z.*«l action c;1n‘b'<'§:'“tlz;tln-~‘ llov.-over, e\fen_a.1‘tcr the cnvi _ are l5t1<:lp.t‘c2_jcc.:t .i‘z~lcc'~;-5 -at rna;-to pol’ ~L?t§(.{‘(.‘l1(;3§" ayvprovalls hc1‘o1:'c it train actta;2lly % he ggixll ' 2. Air Quality. The EnvironmentalProtectiorx Agency (EPA§~»i{s requiréd by’ the Clean Air Act of 1970 (Publéc Law 91-604) to testab-»t. lish national am'bi.ent air ‘qua1itj,ta tstandards safeguarding the 7, public? healtfm and \.w1fare;4 V"The Act: also 1'<~:qu*i4r‘<§3'ts thé EPA to establish per-' formvarice standards sgaecifying the maximum amount ‘of particu1ar-po1- lutantthat nwaybe exnitted by a stati.o1;\ar§,2' ource-2 of air pcmtztivon. As; a result‘, IJJDA would have to approve an establish compliance dates for a synfuel progeét to fneet the Federal ah‘ standa1°.d:3. :I‘he Act leaves thet”implemetntation‘ of such Izxvfderal air‘ sttamiards tottthe States, §wit.h the stipulation that EPA fimst t‘(=:vi.zm* each‘ plan. If a state doetstnot prepare an implexnentatiqna plan‘; not teams- ‘fix pelled to), or if a atate ‘p%reparea a to_EPA, the a EPAiS ati*é‘1‘1o1*i'z.ed to take the necessaryt actions to aclmieve the tstane (1'8.,Ifd;'5'. 4 Most statéS“;'I1o\\-*eveI', have filed implementation pltz1n.~3%\vith the EPA along with their own standard, and somehavc also ado;)1,ccl’ air quality. 1°eg;ul.ations tspecifically for synfuel plants. 1-‘or examgzvlo, New I\Te.xico has passed a sr<-wriest of em’}ssic>ri standards 1‘or"gas§it‘icatito'n plants and ‘W '5 asstociatedtactivities, incltidixmg coal handling and. p;j;Qcess.i:1g,‘ , 4 . Water (.;)L:a1it%y. t In 1972. Congress passed tin} 1?‘edera1A‘.K’at%e1* Po11’ution'Cvc5htr‘o1 Act Amendments"(Pub1ic Law 92-E300) requiring major \\.'atc:1‘ t13o1’l1.1tCi5:{§"%t0&‘limit the amotunt of efflxzcnt c.1isc:l1:,1I‘;.f<: 111;’: i%n:~;ta1latiou of s‘pecifi<—3;.1tL*mc.¢x1tt fc>r scvzzrcets ll! tdigctlmaargiangt eff1uerntt111‘c>ugh c<.;m<.1uit 6,31‘ 22. pipe. Watm‘ utsod in scrub}-rt laerézs and t:~.:3,«'nfL1’Le"i f£':tedst<;c1;;'rzaa111.. i EPA must also approve and establish eomplianee dates or a syn-A fuelproject to meet the water quality standai*d%.¢ In addition, State _ Water Quality Control Commission's have set standawbds to which syn"-"l fuel plants are subject and whiclt may be more stringent than the l“e<9l- eral staxldarrls. L ‘ 0 ' n \X‘ I’ 0 \ ‘ \ While water qualxty as a major consl. eratwn tor a synfuel plant, water supplyforthe plant can be a more i portant consideration. Some synfuel plants, namely coal gamfleatnon plants, reqmre large amoums of ‘lxlratex-,pA1;1p.\\rarere c.~c)}§1i*ng froth an lll(ll£1l‘l reservation. the Company must also negotiate vsith the Indian tribe as well as the Burean of lndian "At- H K _. fairs. In adhdition~ a mining plan wo1a.!e«- tween the ('.‘0mpnn3;'.% and the l’S(’£.‘5 xxrould he f2C)¥lClll(7«‘lC,(l togassure npptto-~ [:>1‘iate Teelarnétti tins of the lands, Byyirntue of the‘ Clean Air Act, Ftacleral l\Vater_¢Poll'ution.Control ‘l Act Amendments and Ftédereil mining re8‘ulati0‘\S,‘A the 1?‘edoral Govern-,-' ment has asserted itself in px_fe\re:ent.ing potential (3I1&’ir0n111€rr1t abuses by V vs’ the synfuel industry. However,_‘the Fedezoal (§§o'\r‘ernon1‘éntV has not been - . xx so assertive in synfuel utility reg;ulation, 5. oUtility Rcsglllations. The-3 ]"ederJ1 l;’o\‘.'er Commiasion"{1“PC). regulates the interstate aspects of natuxtal gins. The l1t~‘PC reg‘ulatets tl1e‘u~*ell.’head astorice as well as the price interst:.~1tel>i: olintzs ma 1 ‘ _ in? * Y charge its c_t1Sto113t2rslg";7 With tlto FPC‘ in lc:lmr;,.;'c3 ‘of-’itnt<21'.9:i.at'e$ n:_=r.t1.1ral gas, it seeametl logical to add nwanufacturod to the 1-‘I7’C"s _juris- V diction by requiring I?‘PCo1ir:ensin’g of co21li‘~;§"éi':ési-tication plants, o How-- ; A jecot to\»<':ommiss;ion jurisclictjoxa. ever‘,‘tho 15?‘PC ruled in at landnxatrk decisionl(l4'l3’C Opinion 663) thtat it lacks jnrisdi/ction overf the liconsingo and noonstxtncti or1»»t:f"nggzagifiozl-r.,. tionplants. ‘The I3‘PC__ xnaintslinecl that to they con1'1ectio'nS from the plantsto ,inteI‘stato ;.)i})velj.nt3s ond ?.»;)ri(:es of szsyntluetic gas \\~'h<~9n it is. ':rn.i.xoc:]J?1l.=‘Im. .’p4ilpelinost with natural gas ‘sub-3 If gs. p1‘pe}.i.no cc_,~mp:‘my w%istAhecl totransport nwirtocl wi1.h_ natural ‘gas, it wouldlhave to file a rate scluetiule \x'i.tAl1tt_l u§ ~1'5F‘CZ.' In the. coal--.gVa.sification case tofoome bofore the }?‘P(”I‘,t the contmissionflrukd (l"-‘PC Ortier '7l?3)¢that the initial lrzato of ‘gas sly *nltclLbel wp<~.r~ .1 l_j1lou- '_ . 1: -.r.7_":" A , h. - ‘ » . sand cubic t‘«_~.c‘>t (%MlC.‘.l'-'). problcaxxtstzuocasg: l3e::::i1ns<: tl"m~c0rn-y~ pétnies involved ha-.1 calculated production costs ttokbe 13.22 and prose wr- j(:cted. in'flzat.ion- to l:)_<: 20 to‘%3‘S;;.._po1éc:<:nt; ‘thus, this l.‘)?'8_S:\’G ::o:2:t wotxld trainge from to 7'0 per "-’t.\l(t§t‘L.l?t',.%.:» .‘l‘lw n'I—‘1i{’(‘ abknOx\'l.cé\\-'. tlltj apyulxctants t:r;:‘1"<.‘<':s1}s sstigtqtltllx»: «amortized over the life-of the project and recovered through su‘b‘s:ie~ quent rate increases." ‘be higher and FPC certification of the plants isneeded so that inves.- tori: will be guaranteed they can re coup their investments or else face a lack of financial backing for these‘ highly capital intensive "pro-‘~ jects. f1___4/ i l . FPC critics argue that SNG pipeline rates must- State regulations alsobear on synfuelsl production. Sorne states have i.. 1 l l passedlaws that expressly. include "1i1anufactured" gas within the def- initionoffi "gas plant" or "gas corporation" making them subject to reg-l ulation by the state public utility commission. Forexaniple, section 22101‘ the California Public 'Ut_ili.ties Cocle defines?"»g;.as"lplai1t" to am. cludeiall property used "in connection -..~.*ith or toifaicilitate the p‘ro-only duction generation, transmission, .1~e.iiveryi,i or furnishingof gas, nat-— ural or manufactured, and defined to include. cor orations "exerting .;on- 1 V I . . an trolling, operating, or zmanagfing any gas plant for‘ compenesation-" {seem-W tion 3-22), are subject to regulation by the public utilities coinntission. ‘In other states, "howo\«cr, it is unclear whether coal ;gfa:’sii‘ic-atigm plants corne uncler&is'tate ‘jurisdiction because .no*nien.t1on is made of "rnanufactured gas" or "SNG" in the statutes. For ‘example, C9101-:q,do* law ciefinesvexplicitly tlieduties of its public utility <7:o“i*ziin‘tission .otIer gas é:oporations, but does not define what is meant by gas corporation,’ or the scope ofthe meani11g<>f "gas"(C§:olo. Rev. Stat. Ann. Sections 4o~14—1o':. and «1~O.~'4—~108 p (1974-i). As in the of _(Ifol(:ura<.lci's regulations on gas corporati<>ns.,"most c_>l" the regulations which may applgg to the nsynfuel industry v;er~e not 1;,’ , . 44/ See ,aTahl.ei I .for recent. 3.‘.PC ~ruling~s, CBS-81 written with Hue indusstrgv in mind. Consequently, synfuel, projects axwzz subject to 1fx*2a1M1y regulatory jurisdi<:tion;3 v.éhichjfo(>erat<2 in total isolzw tion. This ca«ifiiea1 projc~c:t "cm-line" ’ . . .» xx . 1 L .; . A at“ :1 txmce when must (:r‘.t1(_:S gucige tha. <.1mm:stk1c: »z:11m‘;;'y prougxctmn necedss tcibu in<:~:*. ‘used. G; I.c.;3;ia:I;:tio:1. ‘1"hc~ C0f‘1gI"c&l~3S - . é . / \ ‘ I . ‘ . ‘ ~ ' I ‘V’ ‘ V of the: synfuel 1.I1(.3L1E§{.1‘_}'b_‘»' m2.1‘n:‘<>l)!sJ;»zma ax;)Li}}:\1‘t.i};l1lj,~' ix1i¢.r;:;1*a,1t,im.;% Has; ‘iz1'c.Iu:;:t1*§-‘.25 1“(>gju!.;1tL_.)1‘y p1_“«T)<,:u..t’.*.i.~T-3. *.Ehz.:s i"€¥:“5§)Ql1dCd to th-2% {.f_'I‘O\\‘.iI}.fj x 1m.§ds Thu }‘\‘a;.tzxx'a1 (Jag P1‘_()duCt'i(3:2 and (’.,‘o.2:1sc2rv;;:tirm Act (8.. 6&I.’%)"xy0u1d“ <‘3xtc='nciVthat-1“}'~’(‘*3 jurisciicftiontcv s.yn1h_cti<: gas maxats; in am Tcrffort t.<:;E’:.xui!- itme fiz1.:14mé»in::{ zmd z‘:sss=,~.\.:r.*i> that the <‘~<.ms:=;ru<.~tion :.a.m;i cm«.2t‘:zwtiT<.>:'1 of mxcrh '1'.'is«ti‘iitfii(i~$3 men; :3 m.L:i1<: (?(§!1\’£}1’ii(?'I'1(?(.“Clflti xj1<~ce.~ss;§t§*"L‘test. I‘ir1am‘imI is .._3‘ac:3’liii’l..i(:f'.mt <.::>s;t. 1*-:.:su«i7a:Vl.<:xx1"a‘11c:;.:&3. 1‘nrf_«.e1* S.‘ (4912 p}:.mt im'(*smrf.~; x~.'!i_:’~.‘ .:m<.: <'xpu *(iiu‘ the c-efrmgjlc‘-.\; f)V!‘,é_!(‘\:f."j-EVEAS‘ xsxhivh § «“f«'=:*::¥ .11 r'is:.-1;~;c>v;z1},:.Ix'_%~ :"~.:m- mi‘ 2*<>t12rn on (3(;L1'it_y iI‘1\'a:stud. 1n‘2.a,(1Lh€iO13,_ Hg»? puéyg lit: u~:n'f.*n<“«.. am!'%n{;=c~0s§ssit_4},' «.:?<.fr:ii‘iV:=:s:; pfw. ;#d'c~.:~: fim <‘\;~;.mr;_~A tfqrxit} for public; 4? .4l1}"¥i.(‘.‘ip.1“.¥.1'('.)l"‘! in 1310 plgxnningég :1rad em'ircmmt:mfig::s:%:»«:c:'s: "of S.\'G plum, ‘c:c“>nst1'1xc1i« m.and c);){:rati()n; % !.{.'£€is53i~:?'i<>:1 (:3. ~;?T:f’.»i3}~'cI‘e..‘z3t$x1z:: 3.13:3 § Int:1‘;:*j' V!mlcépnt:1m: (>t§‘<.'.." thi:*::3I%1:l3:32,‘ 4. =".e.!:‘;‘n>:'~;f.l’.t‘ "*:2:‘-H 1U..>;.% - "¥ :0 » z« ’ ‘ ' l - .!Hu"Uas;f é-§(')!»t'.‘ z,;;’3;>§»:i.':fi.1'z:: 1'«‘zgm_::*«-» 1:3’ g;_: ? ~ J‘: ~:’:« 3- . = ‘_. ".+!’i¢3. :‘s.‘\fii¢.<‘;x I.§'..T‘a€i. ;‘}‘.;X‘{>=. $1,? H3’ :23 is ' *i‘ ‘ ‘*“" = .’ ’. 3'!“ , n In _ V ’ . §;;,.§,L*ti, !y.lz»1\w to consider them. Ifndcr cmrtairi conditicmsa (._1{3‘('.‘i.‘_i‘-i()Il musttbe 1°‘e-.nd<3rcd by».A._,t!:e regu1at.ory agency ‘within a time periud sp<;=c:i"fied by xx " V A ' A UK: 1'-‘<2_<;ie rm Izinrz r ;1_'},’ Ad m ini.-stral icm. '1‘hc*2 i\1L11cr':»U (I;aSifi<:;1ti<>nan1<.>p» -1‘:1t:fit:1:':a2<.:i1‘i<:z11!:y, .:\K‘cL..‘\f' mld: (I) mak%e;%¢%'h:)anS i‘m~ the pur1)<:>:=se (of t-§n’;:ag{in;;< in 1‘r3.~:;<_:.;1,1‘<:h,; cl;-\»*c~mpmvxzt; my] <::cnm1wr(.:ia3 op<.rr:;at1on c>fLs'g,'nfue1 1'aCi1.§t,ies; (23) enter into puréilxase agrcéezxzents am}/c;:»r p1‘i<.‘<:*. :=;uppm't ao;mcn'u:r11s,V v.'it§': a4}‘)pI‘(‘.>pI‘i£it(: terms zmd m>nditi’«m.~s, ‘to‘z:‘::5:~‘ure:> .'1%n'~.::rk<:>t 1'<>r (kw output of such f1‘!.(‘iHHt?.*'.S rm :1 ’r<.~:1s<)rm1)1c.Pprufit hasi.~.3w; (1%) pyuaramec pe1*f()1'n.mn;:c ca!‘ cmmtracm by p«;.~x'*-~p “ sons I‘(...‘(‘.t?i\'iI1,‘Z§7 iozms; *’rc.>m .\I(:I,.v\fo1‘ the pux*c:!‘xz.s<:. (:c>21st.:*1z<%:ti:m.>1'1t. zmd s1.1ppli<.,~.~‘s nu<.re:ti;.<:sz1r';.' to dcwelewp, <.‘«:.§::~5I"1~1:<"‘t, and flpprafi§{wn;SuCh fiH§lH§.v‘ "Pr’obab{_y the: most: <‘~r>nt2'0vcx‘sial ss<:—<‘1ig:m <21‘ the bin is sscwlicm ~-T which 'c>:<3}\.1;~‘s1 thm*1_\.' ‘l,.w..2rdvn.~amnv, or ‘:::%;.r*r—A:1- '. ?i¥:§~ ;»,u:‘a:.1i;l_‘,' :,*l‘u§:1\‘:1 t;h«.~ <’.'m.:.~'~4tr‘u(:rtim: m;'><*i‘Ir‘2iz>%1 of 3:23,‘ .~‘~::_wh :':u'i}::~; _. U I fig: ~ ,.. . . ,.‘. .‘s‘:( 3!.A .«’\rIx::Sr1i::;§r:mi»r) [ 1=;:;1~; ‘.~;;2i\.»*> *.§~.~.~ x‘ws;.uir‘s;+m(-m t§:.;;1-E .~:zs<»‘?s :l#:7."*;"qi‘ ».«iu~ 1::-;x.~r,£ m .%:*..:<.:.i: f:1(:i.§i-1}‘. V »'‘E‘“. V i.<‘:*:Ls;%z;ti\w:: .I-\i:«~*:‘:1:a.?wwz. £3 =::«.~ ( v"::a;:.:'w.;.<% <2» vhf» § ~*‘ , ,. ' fi k ,‘L . V . ..' ‘ ' _ 'k¥. > 4 ‘ . i ’ ". J.V :1a!2\«:A lP:;Hwix11An} 13. V ibxa(%~n~®F> ‘w "¥f*‘* “’ 'i" 5”’ .5... ~- s an « ~=.;».w«~» (‘RS - 83 syrifuel regulatory process, options for possible cortsideration could " i.n'- V elude p1‘o1111z1ga.ti15.gt}1e f011o\\'ing‘~: 1) a compreh<=:n'sivra1, State, regional or A {A .5 i 3 local a;;cnc:i.e:‘s ixuvuh-‘cad; n 2) :1 System fox: tra<:lli<;_;;1at i0x1.<3 or petitions §§ _t11r‘cau;§};*z 1;hc: :1pp'1*c,>\zJz;éU prc:c (3:sse?s.= as x:~s.;t.:1l:>I.i.=V:»h¢_-:.c! lay tl1ér¢£:Vs})‘c>nsibI<: a;§eI1~ °b'= 3() a ;)1:‘c>:‘w.!1x:w*:~ tier e.\‘pc{:dit’ing the pr‘ocessiri:{ uf such appli<;::.m’xi>§1:’s or.“ E pc1._:i’ti<)r1s, upon t!":L~§r.“0t1% % % 3 _ V i is det:<:r%‘rnir1e4d to E;-1%: in %th«%:: :12‘.uNioxfi1;‘.1 iI’1t(_‘.I“(‘S7'£, b_y ir')t<::t‘c:-(?(1vin_Q: or :~.«ms:.. ;xting bc:t\\’<:cx1 {ho £:£}){)H(f3flt. and Hm x‘<.~:~§pc)x*xssihh:+‘* ageru:_:p* to assfic Ailm- timcrly c€.;x1siL*u:.-rz1tia:>:31 am! decisicin in :u~<:o1‘ci.f.11‘x<:o with th§=,V rt,-1o\'a11t x‘':‘0r quningf: zxnd s<:E:<.'>c!ulin;_: the n:“*”"<.*;~%-.:::;";u‘y a;’>pli‘.(‘£1€i(.;+:‘::1 .01- V petition so that (.i(:<:iSi0r1 relative to sud: licbgxrxses, -iveassus, ;'u::%r‘z‘ni‘«.>.=, c<:r- ~ 'fifi<.:mus 0rc>asen':<:~nts: is £l(3(f'(A:)_l)fiQ.Iib_$5h<“°(1 in the nmsat; expediticjus. nzarmex‘. c:IzS- 34 V11. OV ER\’IEVJ‘ 01-. ISSUES AND o15PoR'r1.fN1Tn::S I>EP{TAIN11~:C; To A A (ffOAI..-BASED SX%NI*‘UI1‘.I;SL1§\IiDUS'I‘RY ’ This seciioh prescynts 1.-najof :5.r.1x{ar1ta;j.§cS and di§a.c#vant:1ges¢ of esté1bw- uslming aAc:<,>mn3¢1*c‘ia1 fiynthetic fuels iqdxzstrjf irrthe United States»; The in‘ip0I‘i‘.'£1n(?(': of<:FsFtablisI1in,s2,‘a C0n\p1'Cl’xex‘:.siv(:National Synthetic: I-‘uels Poli- cy adckczsased. ¢ Avn iif‘1‘£1_y of possible c1o11_qz_‘c:ssio21a1 opfigns i.s§ 1ist7ercfia1 S_}»'i1th<9ti%c .}«‘m.,r.s iz'1‘ci’1 iSt“r‘_y* fivv h V Crc;-ptzmlc.-. s3ynfue1$i1:riustx‘s from coal can be based on thé ~1‘ollowin:z argu- me;-ms: 1; '1‘l‘*u: 1'~‘utxm;:- 'I.:3n<::x‘§:i\' Supply S§§;;na!:5 the N<.—§~e(i for a %(;“0fa1- Busml .Q»:'t1HI(.T3i‘i(7 1+‘1Lc:1ss- In(1u.'2.:t In garder to .vnni1mi:»'.e. futtwcr }:><:t~tx‘ulc:'um i.IJ\~f)OI‘1.:5; one of the (>‘p%i}i0x1S%z3;’¥.*-é.;i:11:)Io 10 the I'nLi1<3d Stzutvs is to exp(+ditL0 the use‘of coal-based s}rnt‘uQ1s as :1 r:::*+.j<>1i €?f1€’1‘-,;':_’:':_S’ sourus.‘ d(.{!€:l_‘)'S in hringging nuclmuf ;~c_)v;cr plaxxts on }im'i‘.ie<.i ;zi1dtdt2~ crcasirxgz supplies of C.§;>Ln-\.ré;-"r1ti?on;«z!».fuels: unc:€.~r%ta.i;nt‘ies as to the :‘utur<;* :1\‘aiIzmi!it§.' of of‘{s.;hc>z~c? znwzii %irfx~.p0rt.mfl’ 03! am} ;.{z1.~3; the t"‘.3‘b3iL' i:t';pz.1ct.':3 of .‘.§?.!:‘ii}:":U!1T éf(}n$C§I‘\‘at,i0{‘t px‘a:>§ic:v.£~:; .t.mgL,;m“:V_iim’itcd% pz‘(>j(:*C‘.?(:d Vc»~m::”T1*‘ii._m—+ \- . tiun 0:’ cm-'r;:_v from ssu3:s.1' and;:.{0<)tié1c~1*1:x%:i¥ .¥;oum:<::3.$i;2;n:1I thv m~e_-:3 i’E;j.pr(>+ mz:t.«_:: ;hv :f:z‘<).\\'th of :1 c;">:‘;:rm;~x‘«;:iV;1i~.("Q31~1%_2:'x&ém.i s~;Q\,*n§m:l%s: %inriu.=-;11‘ \'._ ..........¢.. u.-5--no... .¢..«.,.a..¢a-can .. ---~» - » - -r fun», 3, ;'_~ ~;1;}(:~\’ t};v_;«V _\.,';;1ur;;{l ‘(‘::‘<-S S;1;p;.§-1*.‘ §"a".H:; ;‘.iz.T,>¥1§x_‘. H‘h‘- 1Wx)Hs.‘¢3. .‘4_1.;:"..-,:*',~.- {‘!"?}.f" , . * . tiyn-As-2f.>:~3 1<"i,’\§':‘>_z‘-aao«p»aan.........»... 3.... .5 ‘.-.;a.. .....,.,.»,..¢..-. ....: .. .. .. ,.. ,. .......¢...- . a-an-ocunau-re:-~;< -viuuwvav-» .ESv.t)*..“I*cL:.s.:;.- I3<+:*C‘z3.13s::t.- $1:-St? of nxgtu ‘£11 £.":‘s.:~?~ «.55.: -r:~<‘i<:s‘§ 2Li:z,~_.q%:x“:'«. :2‘ gjy V’-~ L:¥.»H.:*I“; ‘(K-",¥\t"\'~‘ 7 S<.mt“‘<,.Tt!i‘f5... inn! ’::£L,<‘:~.:.;::«*T <=:« $3.15 &-«.w;‘:«- mn:.'- D .I"1§.(‘)S: A rmiozzalc for anecofnomically fcéasiblc zmci cnviromfnenta11y930-. situation (as % evidernced by El number of curtailmexats by nuajor interstate pipeline cornpzzmics), am e'cono'mical1y 1‘easib1crax1<1 <~2«xwironm-ent.:1Hy ac- ccptable syntlmtic gas industry could be promoted. a. 1”-mductss 1‘rom :1 S§mth<+¢.ic }*‘ua-39$ Indu.~3try (’)£i‘<>r ~§\IVany lrlcgoncmiic anci T<::<:h~;1i<;+a1 (")pp<)rtx111ities. Production c‘ )Lo\r-Btu gas from coalflmay prove" to be an <2uom=>xui<:3l 111eia,§§’§,:‘t<) convexjrxt near Site, high su1i'ux*coz11s into :1 poxver plant fm3I_ X§"1V’1i(3}iA’I‘!.:1‘(3'C>«!:.’S .(£~3uU‘u1* =(:1i.§3.\;"i(le emissicm stiz,indat'.dS. % ‘ . ‘ V at "4’. ,..»,\.w-'3‘ ‘ \U;a'ov U I.(.>\~.'—-Btu ;3;:1s;i1‘i<*;ztiox'1 of 00:11 1’na_y, in the fi:vtu :'f:§*;:g“<:<.>mpetc: s:::t,i$f';3<%:tm‘iwlyp ‘with stacxk r,§asL:1eanin;:t as .21 Inea"__1_}§3 .7to cc_)ntr(,)1 sulfur emisésitms f1‘<3x3:1 . ei.octx‘ic:a1 g,-fer1.o1‘zi11,ic,>z,1¢plzmts. A clean, pzu‘tic1x1:1te-free, 1m\=—-Btu I'n;1§;‘ ’ ¢ he us<;:d in csombixxc-d”;,;‘:1L~:-3 tu1‘bineL-steam turbincz powc:-1* cytéles, pro\*E\\'01‘ ;:er1c:r;1‘r;ion ox‘-01‘ the COI1\’O;f1“;3'#E!IR'&7§°.fllrL‘.§}'L?1£3 al»on;.:,. .1?’:"<:;:- churtion of a rm;-\iiLun-ism: utility kfas m:,1yA)r<,_w*<3 ta be (:,<5j)c(':i;1ll\*i;n)(j1f~- V J ~ - I tam: in the c:i:u3t<;~x'r‘z Prlitczd Stategg. It is pmssible that l%1i.§»:hi--Hm ga$ :‘rj0rn coal 1na¢\,' rcchutc, coal <~j11<:-t';3:y;tuzznsportation costs by’__1n<.»\‘i:’zg c2x1<:1';;}* from_ coal in the 1"m*m of pipeline ggas. Syxjxtf.}1etic~»fuc1«oil l"l‘1{2)’}”TL"‘('}'1 l(’T”C m1<2r,r:y t1'anspo1~tati~0r'x 21ml S-i(;)1‘€1£."U costs as pc‘>1m:j>;2re ’§-‘1u;e.E::; !nciustrjv"\\’c>u‘.d I11.c%W$.'3Se the 1750 of¢Dm2i<~«s:t.Fin (‘o;:l. C?0rnmuI'<éi:x}i:-tuticm of (:03! £:fasTift‘i<"ati.c;>n tint!-«1i’qL1(,‘f€1(?ii(')!‘i !c‘l~» 'c,>£7?‘iC=~3:“<'f‘(}l1l‘<.i rc:r.~i‘»u1t inzm il’”1(..‘vt‘<3:~*..‘~.‘§(:d :.x;~s<;* 1>$‘(icmz- dmftixm zimi puz‘i1'ic':;1tiozaui‘ I_m'c~, m<.‘di»u1‘3“:-, and hi;g}M: -1;'.t1.x%:;:";1scs frgxz j‘.yi;_:}.- stazlhla‘ <~c.::.1i:‘; 1*.-;:z‘\* :1Hm\ <*m11.n1m_.~<1 u.'~_;u tn. tE\:>s_5<.~.c:z1céz‘,i<_3‘j»' Sstmm.-(~:—>:, ;>«->s~;—- :.~fii§:;}\- mzizimzxinizagj an\‘irom:‘:<>mzxl .‘Si:.,'1n<'3.'}I.‘_(i.‘-;.A ' u I‘ ’- V! ' .' I‘ a. « , .:‘«.~;:~:~»—.~m.:¥..:;: }.-%~~. « I¢Q ..-.—./~..u~.n-.-.- x-m.a~..».-aw .-.. , . ~-‘ucw- L '1»-'-...-. .3. {)4}<_‘:r<~;'i%::<‘~:_l.J ¥R'£§ 'ii:.1x3<"L> on 1:v.‘z;*»«.>1.“w<‘! ‘l“T’ri‘<'*1" -.».a~.-s-an-. .,-way...»-V. (,‘<>:~.::~.:a-'1‘<‘i;'1!1:5'.;i:iin:'x ti)!‘ :%\'m'§j:v1Mi.«:;:§,T.-z_,§¢g._;§,;,.. .~ 1‘!“()I*s3 (33:11 \~}(>u!(i 1‘:-m. 0!" :1 s§'11t,l‘1etic fuels in- dus1'_r§5"\‘}ould crreatcxmzny n(‘.*\'»‘ job o1)port.unit1'C~s and st,re:\.;_'rth<:x1the iii-% dustria1“basc%o:“ tlua §IV'x1ited‘States; promote a more i;av(>1*able baiamzca of trade; and ;)'r0\'id(> p more stable cslimutgs for cm:0n<"i;i”§i%§i?f¢%mg:§;ro\«:th. : C‘O.\.=S: l)1sach'amta;:<:s; 01 <:.:.=.taI.)1x;~3lm*xgg a S_\mthC‘t1c‘. fuels 1ndus1'1‘;.' m the I'niT.ecl St.:1~to.<3 ixmhxdcr: 1. 1-‘ix1’am*i21s: wt‘ 21 3-3_\'mh(L:t.ia: I-'u(.~lsis I"l_:1nt !“I.\:11‘mm.-lixr l~Ix;>\‘;*.*:1s-.:i%\:c-"‘. _l.)u- vc:}0p m<:r1t of a si;_:nific:am'"lL§,' la'x‘g€:.i’xjdx1%stry, x‘oug;_!.21j3.'L- 20 comma-rcial siim plants, would 1*<:>quirc vast sums mt‘ %capital.; v'I‘hg» <:o~s~.:t of £l ‘_E;}'I’XCI“ud(:’ plant, prou'Vu<:in;,3. E30, 000 ba1‘ArcslS hex‘ cizfy or .21 s.:a.<.:i‘i‘iLration v;.;~Iax%n' [‘)x“.r>:§§.2(ri11g:’ 330 million crtzbivé feet of gasLI>C%Iy‘_ F1‘§i§' 'I.;‘()L1}(l‘1‘ 2:U1..£’.‘;f.". l)céi’ci\L'c3v..*.x1 $800 mil- 1i.;>m*.-»x"im:.1t<~!at. :1 C":~".30,hiHinn im<~ssVt%1‘:~.cn2‘ {win if‘“.‘?» dcvllzirss) \m~.:ld he m~«‘c1.~.ss:"4;zu“\* mt‘ U"l‘L) _ C(..§3‘x"}V}»‘1_'xL_3’1:1‘ii‘:ii:«i{iIi£’)fl m‘%»«tm’V~.v§l:_\*::v;‘u’aic~ plcuaua am} ten ;.:':.:ssifi<‘:z1tiorx plants. As :‘mnw.i:€.~'§ sm**.i<,>n <.>! thi:a .~;;\:<3}», tin) 1:-x-«::~.z.>:j, :s :::9u- ‘ _ :1: ssmntis mi’ :1 co:“:i.pvti?tix'c v:~;:‘\J'x11'L:c%:h-".%m:':-*.‘ ' ‘ ‘ %T T~mr‘1i<;>r\ :3? tin: crzmitifl ¥1€.“f‘¢‘:<':~?:‘i!‘V‘~ .3131‘ 3‘ :~~:.'t;*Y~»«-:é«- 22:» . CRS -’ 87 1 -—«- Must the 1‘-‘ederfial Gove%rnment offer loans (>xV'gimrz§ntees _of pri- vatcly financed loans to assure ~de\'e1opment? V -- \&’hat:‘ impact.{w on other industries an§1 ou the e<:on01n’y—in general» . wauld re.<..;u1t from 1'11vestn1ents of lnxge sums intoa synthetic” fuels V indus:t_1‘y ? ‘ xx» 2.» ASynf11e1s Llndustry 1\1ayT Requir/0 Pr'ot‘<~:cti.or: from Sudvden F«1u‘c- tnaticms in the \'x’or1d1°1'*ices of I;3nc1*_cLv, or 3\I+w i{ej‘:%quire¢ Long TeI‘3m‘* % . X % ‘ I;1k:er1ti\.'r'<_;iul si‘%;c%<;:Vp}.a.nts. If the pricge 1 c)1‘()P%I:;(‘ oil is lox-.'ere;~d to $9 :1 baI‘rc:¥1, S14 shale oil or $4.22 S}'r1C:rl1d(: 1‘r‘%c>m’<;:oal, ixvillv become less ‘auract.i\'e. Ifr1cort‘ uim._§* 2-.1%i.mut fum71‘c.: price “1c\=e1ssis.; a;;;§1+;1\'atc2d by the fear that c;.>i_iHI%, €‘}£p()3_‘Hflf'..{ c0untries¢ rnis:¥htycn-« g’age:¥]in tcnwporary zimvd p‘reda1';ory pxéiccs cuts .dc::.;;';m%<2cI tQ’uncic;rf1:‘.iz'1e tlw de%\~*elopxi1<:snt of ne\x' czicrgyr sour<::c:es. within the oil Consuming coumricsgs. Alscb, the c!c1i5<‘.=ratc undercutting 01. a s,\'n1ue1s mdustzry %2x:1g%I'1i be com-- . birwd with vothcr mar’z~:«;‘:t. prc:ss:u§cs t.c);pcrS11z1 g~.:u?t.e: p1ann<»:rsw?.n mg-— dUCC~t’1(3‘ cf{’<~<.:1i\"(: prictcr of world mil. 3 I ‘:X.i_ssy712>xcIs mz.iu.x124‘i\w.:::, in~ <;:3u(§i:1g;?‘ I%a'::1n ;..*‘.!rlz1‘:1nt~;?~¢‘~:és, px"i(:‘c2 :'~é{1{:s;‘)<“)x‘(.<.:A, ;;1r1<:i/<.s1‘Vz‘;\ u;i‘<1 t‘:’:4\< 1*i".v»..,-v:::".-: tut-~ -2‘ur'e it tzc.-‘c‘;n2*m;:-3»Vnf<;:mmrz‘u1<.,i tI'u:';_!p-‘¢-:<$m“;11_£§m.w~r'z‘2r‘.:«7m. m3m‘\um%~ ;::W 1- - g . :‘:“:a1“:lis?:x :1 flr,mt»ix:;>. *mzzs::; :~;§.‘,~;=im: Vt!‘ :;»:w»u«.E rm-~ . - ans - as > industry? V Altiefirnatix-w31yV,' should the "'.lT1‘edera1s Governmsrfl c.)'\\'n an<1.c¢>p- V erate synthetic: fuels plants to de\'e1'op publi-clys--owned resoxuéces‘? 3. lfa S_\/ntls_1etic I-‘ucls Industryssls }[)eve}r>ped in‘t'h.<;- West. \='as»%ti Quantities of Sc:ar<:e \\’ate‘1*s£\\?’%o11]d Be ml’-‘veemptecl from (‘Se :f“OI"_()fl1€§:l‘ }_L"f_urposes. It is possible that a‘ high-Btu synthetic gas industxfiv may begin in States like New 1\1e.\'ir 3, 1\lm1t:.-ma, §No2:~th Dakota, a11(1'VX"\s‘r)n1sim;§, 7 g ‘ In some of these regions demand for water is intense. (s‘om.}3etiticm ‘:\'iU;l .6*;hk::1f cI101*g§y1)1*oc:sessi11;;findustries, i. (3.4. oil shale~a.i1d*possi.!>t§*tar sands, wiJ.1.a;g‘gx~a\rate existingxvater supply problems. Other competing uses of water f<:>rV%agricu1%tus_ra1, municipal; and possibly rec:r4¢atsiVcrn~sfi*-purpcTs<3s furthervemphzisize the diff%ic:u1-tsp’1:‘ob&1cems alleacl in d<’3t1e1‘n1inisng 't:}ieo’p~€ timum alilocation of sfcarccz water reisou1‘ces. \' ‘s 42,,1:2x'1\s'iron1'méntu1s 1)c:§:§1*a1<12»xtsi<>n (:§used ‘Coal Gasifivaxtion z1z2('E‘/Q}: I,ique1‘acti0n~-Plzmts Could Sc\'ev‘rcly lf)..isturb the Integrity of lzripacteci Cioal Lands and Su1“r0u1'1c1:7n§:§ Ar'o:.1-s. (;To1mm=.rci.a1ization of coal g:asifi- C3l.iox'1._1nc1 coal 1iqum":1t:tim1 ‘te.<:h.nc:§togies tm;'eat.z1m:(_> butsc)t!1<.>r:5~m>u1d be of an .<;~.§:pzmgi-ins; na-~ tum: and havcr c:g11”1“:111z1tix'c_ imp:1<:t.. s'T‘l1.r‘ 1‘e;~:_§i(>ri:;;l fc‘lm119‘<:*s xwwmg. c:c:m‘.'iict; mm us<,rsFoi‘Vts!':(: land i1self,~\\~ii;h \‘:L4Tfi:I“- 1:‘<'>s.o1x1‘c<:“s%’;md .;m~ «’;ua1- iiy, \~.siH~. \\ imlihz h:‘:}:»§ta1_,- wits}. rroctr<'*atic,nz1l zu1i%ic \';xlm~.~<, :;:::i with nc)§mi.o p;zm_arn.~s'. Thxfr :.»1ci\fe1‘s§'.‘. ".?!’i\'i‘.l"().!'1’2'I‘s(s‘,l.’H£‘t‘ii"'_iI“H§}i}fI1'_S; “<‘;m.~:ml by 4;; s<‘H:“za:: vrvrizsi .::;.~’n.~~ti::Iw1t«~.;:" ::*;.'<~:+ -:~«=* .1,h«.: ‘~»w *2-xix»! CH5 "' 53 B. ?Nat%iona.1 Sym,het_i<:Lhueis P;oIic_y W Regardlesé of the fact thagt enormous hqxaaxmtities of coa1.z%1re .~l<)Vc.:aixvted in. thc UniteclASt‘ates, tlxere th)eS notpxisth co2"z1.;314ehc2nsive anci sup.pc.2rti've National Synthcztic Fuels Policy. '1‘hc: lack o1”'a ‘clearly défin~5d and colxerficnt ‘I-"eclcral p0li<:.§: on ssynfucls (2:-r~?\<-t ihieezchl laczk of a c‘r1e:;;1‘1_\' de- fined ?.\hii.tional. 1:3mLa-rgyh Policy) restrains the (2: onomic £‘<¢.:;::3‘ik)i1ity, the rate . I . h of dexrclopmmlt, andthc futureprospec:t~s<.>flt11e:‘ industry. The time ~'11cec:Iecl‘%to enact a sxxpportiver syhfuels policy can be conssiderehd to be f’1c):g;.;v,» V (fominued §:<_)ns‘ic1.eratiVon# may nccrd to !).§§f%';,§;i\féx‘1 L6 suhhcl‘ e11§rg§* Aquestidns 33:. V % i ~-‘\Vl121t_1:m1Lh should the: 1~'edg~.r.:1I (.}m'm~mm:m h:1\=e in the (lezyvelcwpw mcrnfof 2.1 5:5!‘-1t“1';»:t"j£' t‘u<‘:l;s i11d;i.<:str'y? \K-‘hm; level, 0!‘ s11pp.m*1',“i!‘ an)’. Should be §‘i\"entr> these €§'f1'('‘)“ff‘1if3''?‘ % h T --- What slihimxld be the fu‘.u1"c (‘.()uI"S(: of l“('(1CI‘E11 "mine;-rzzal 1.0;-1sin_g§ pol- i'c:i<;2:+;; ]‘)L‘1"lai11i!1_Q to svrlxhetict fuel 1"(;'.:‘r$(m).‘(?(.‘.:T5'? V~~ \«\"hat, if‘ am‘, (:.:<,mo1hic~ ixxccrathivcs sh<%;z:h1 the F}-‘0<.ler‘a1 (3.ovc:~rnmenhto pr'0V\*icig~ In ._<.;1ir.:11l_z1tc zmd/01‘ to ;"1SS111“0. the grjowth; Q1‘ 51' comp-.:=titi*\'e Sy11fu<:1s' i:1ci11:stry? ' V v = ~—-- \«VhuL simul-Ad be the future C.O:‘.l1“.‘5<3- pi‘ h]-‘védhérral 'p’.)1i.Ci(,‘S__.(‘)h'Oi)‘_i11’1f- port lcxjms-3 and pI‘ic(2S, and on“inn:1‘sth:3~1.e.:mat1h11931 {gas pric,in_p:‘? ‘_ -— What, if any,» incenlwé-S shoxxld the !~'ed<..~rai Gm-'e1‘nment ‘p1*m'ide ow_»y~1m;» nefem t:<.~n yL:z1t‘ss tn i.vn(3I‘(;*{.1S'(;' t1f_’z1im_>(,l 1'nanpuwe1‘ 1‘1(9c‘L~5sa1‘fiy for :1r.;>'e.~ (ma! _u1"<;v.‘111cthin:*1'and 1’0xf_r3,':1sijl'i v;»,zLifac:t.i1‘.icvh>1*’i.t_%\' .<;.;mu1(2 L.'L[;')}')1i(.?C3U()}"1.‘.’- and pg.*rr;x‘:i‘1:'«5 for watu 1‘ 1“is:'ET3f5 for .'.~3li"> 5¥1<.1L:s5!r"§’ Hi)‘: ’;ixH<‘w-.<>ri an ;~:‘1HS-ch diS~;1‘1_h:D!i(m«F:=:‘ <>t~hm: \=;:3.t,<':r‘ xxsms? V -- \’Hmtf sixtmhi he tho ilxmuté §'?;%-'n::1_ mi‘ !‘uh<.iin;,::x;' 1‘-‘u:.§«Sr';"1i}f.1~¥$;1s:~;‘= n1.“.u'dV r'(:-.~3<::u'<‘.h mmi <§<.‘:\.*uln;>1m:*ni rm s‘\'ml'u..~1.i«* :'méI.»:'." T h “..*I‘1}.€.‘.'$»‘>3 sx,u:?j1n<%}lic‘_\r i.<:-zsahuerss zzftw‘ c‘-Ih5':.1~AI?i\' r*'<~s«»3~.'«w5; §1!‘i\ ;{t.«- in-‘§=;.~~'* 3‘. 2 ;§ - N &i—oc-an ‘:6- ’~,. C3. Congrossimml ()‘pt‘ion'.~3 to. St-i‘n’xu‘1ate ti‘1e,Gro\vth of a Competitivé S;,:r3~..- thetics Fltels Industry ~ ‘ The formulation of a <:Qrnprehén.~'.;ive Nati<>ria1Synthetic I«‘ue1s Policy may x‘eqi1ire a series of c:ong.r:ess5;ional actions.‘_ “Time-.ly and supportive congressional and executive init:iat%i\’~<=;s and policies are necessary iffhe A \\ l'%r<2sicie1it's goal.---— the producti:.m of 1 mi lion barrels per day of syn-- 1:h<:~tic:} fuels and 2-;'h:»1Ic: oi1by_lS)85-- is to (2 met. For unless the I“ed- & oral C‘.ov<2r:1ment pr‘ovides%an array of incehuvcas and cmatcs an m1vir0n- rnent whiczh gnrohictesw the grmx-'1;h 0*‘ a synfxxels induswjy, the to‘ta'1~syn—% fuels pI.‘c)duCti(m \\'ou%1d ;)r‘obz1blyAr1ot r'c2a<;h :_1 garoducttion level of one half‘ xnillion barrels ec;ui\g..:l<:nt po 1‘ day %ciLir§.m;; flue nc2x t {$11 years. A mix Q{‘cQr1gres;sio:1alactionsyincludixxgé: casing c>1"(f2¢(>:ior¢_n‘ic:, em*iron—~” nuentai, and rc,rm1a‘tc)1~;x~ c.oz%1su‘aints,% grantin;:*«>t‘ ‘ailoan ,<,ft2z;.rah.tec2%aut}1or— ity to the Admin1:;«tru1«)r a;»1‘1;RI)A. .iI1C'L‘(fl?-;‘:1.*.¥3ififi 't?x}§e1}(1.itL1I‘eS to (:f~£ P€_3di*.u adva;'1cc—:n1ex1ts‘ in..tc.:Chnology, %or' revising éxistingpolicics peftairiing to‘ syntthctit‘ fxzels de\'elpt a n .axti<3i1ai pole’ icy to stimulate, pron~.ot.c, and assu1“e: "the L:o:mme«;>cia1izatiox1 01‘ ‘sc\*era1 s_vntheti4c 1'\1els’p1*ocessx:::"s, ymsssilalrg acttions to c:4on‘3id<=:r%imrludc; 4 (1‘\ as.signin'g wate 1°, materials, land ;1nd/or -~ca*pita1p1';c%>ri1,j;es to 3 ' :'-35*’x'1tiwx%ct¢i¢<'E fuels inclust1‘_\_,';; § * X V ~ (2) g2xtc.~mii‘11g pllut.ion r.:«{:'1t,.1‘c)l sctiwecitim,-5 foi". a s§!x'1thetict 1'1'2.g'-371:-.:Tix:- 'dL1Stry; -~1(S}"Tl1(3 §$§‘~Y'1I'\1x3lS5 I111-t“:‘;1,_'f"n(:_\' Tz'.1L:~'$kw .1“ r.I>1'*(:‘(;3 Ll."t:;)u1‘tt:dL in th{*i1:‘_ l‘I: if -'?‘._i;;~ tim'1::§ to the I-’m~;~.:id~.~n1-‘.ss _;§..r:I}(.‘I_“.£’;"_V§." l{c:.~'sr.>m‘«>.<-.~‘. (‘<::,m~:H ah-mi in V‘:;— 4'2» s;(’%m:<: of ' 1*a*d(:e1‘:rl};x’Vprn\'id«;:e»!%? €.¥<‘:m‘:<~m$i<‘ izwxjmix «v>r~»~at‘§:mé% r>x‘(:,atin;:“a Stabhé :1’m.i 1'mIcx:i.f:i'>I§? i:?;\‘_«:‘st¢xm.ir1:__gI*zx\jsrnzzgé1-711:, ,~:;:.‘.¢. % ::x2=x"z<>11af1is3 of ssymkzel-5 zlzfv 11<>€ 3i5~:v;:§_f_» Z<»>Hh‘_<_‘a'}11'=eai::m~:§ has .;*s.:'.“.',‘ V » <3) '14) (6) (8) (10) (11) ‘of synthetic 1‘-ucl. processes, in1cl.T3'd§;n'g fi, sources; . F E (9)? ACRS 92~j l streamtlining the Aregmlato:-y process pertainingtcv coal~basecl syn-— thetic fuelplants, axtdonecessargy pipeline facilities; est.ablisl m1ex1t of long range’ definitive: environmental standards‘ in order to permit 1011;; range pltanning by industry, ‘ ‘ creation of an economic climate \x«'hY<':l1‘a§.t'c)_1.1lcl favor exploitation % cal and taxation poll-— cics favori.{1gdevc1opment of i11di.‘genotr§3.‘”'et;‘e1‘g)r SOLIFCCS, and eco- nomic incentives such ‘as"Vco_mbilne(l price supports or contract prices, and/or loan guarantees dcpenditng on fuel market anti teclmical con5=;dcrations;t A ~ \ creation 4 of one focal poi*nt~iVn1the I~"elf)c Cc)171pa£~i;l)loeo V\‘.’.l1}"1 :1 <><*m;;>oti: aw.-~ <%«ia>;;E~;--1.-;:.ll-ti L catzrsccl by S§’h{l1el§S commcrcial-izati<.m,t and the economic stablllity axnll‘ c<)sts’to the ctotxrttrgy. Caxfeftil oversifghtt and control oi‘ ltillte enét..=xee-;;_‘1‘m',:‘ pt‘m*i:~‘;i<)x1 to St.inu1l.atc its gI‘.o%-c.'t§1. (It \:’i;_;*<;»rm,zss eif<.:>r::'s to I‘x1<:<‘.'.’l and cm‘m:cc 're:1.s<)x);:lblo<~ cnviz‘*<:.>:m;cnt;1l tmtl ‘:"47'E2'tl*- synfuels industry. The re’ is’, fi['na11y,; the option of allowing current.I?‘ed4~¢ eral policiesI%concerning ~$*ynfi.1e1s development to continue as a;re.- ‘ i WASHOF UNIVtl:":3GnTy°~ .___..___._. CRS76—56SPSpecSheet.txt MU Libraries University of Missouri——Columbia Digitization Information for Congressional Research Service Digitization Project Local identifier CRS Capture information Date captured Scanner manufacturer Zeutschel Scanner model OS l5000 Scanning system software Omniscan v.l2.4 SR4 (1947) 64-bit Optical resolution 600 dpi Color settings 8 bit grayscale File types tiff Source information Format Book Content type Text Notes Stamped with property stamp for Washington University including deaccession stamp Some have labels on front page Some have black out markings on front page SuDoc numbers handwritten on front page Item not added to University of Missouri collection Some items have very light print Some front pages have colored backgrounds Derivatives — Access copy Compression Tiff compression: LZW Editing software Adobe Photoshop Resolution 6OO dpi Color bitonal File types tiff Notes Pages cropped, resized, and brightened Page 1