Wasted Billions: How Your Tax Dollars Were Lost on Synthetic Fuel (Part 4)

December 9, 1980

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During a congressional hearing, Hollis M. Dole, an assistant secretary of the interior for mining resources, described the Princeton plant – built and operated at government expense – as "probably the most successful of our pilot programs."

The following year, in March 1973, George R. Hill, director of the Office of Coal Research, told the same House subcommittee that the Princeton plant was "successful." He declared:

"It has met all the design characteristics. The next phase of the program is now moving ahead with industry picking up the ball. Any company could have done it. A consortium of companies has decided to move ahead with the next phase at no expense to the government so it will get into the marketplace quite fast."

Another report issued in 1974 by the Office of Coal Research called the technology then being used at the Princeton pilot plant the country’s "most advanced coal-to-clean liquid fuel conversion technique."

Today, the Princeton pilot synthetic fuel plant does not exist. The equipment was long ago dismantled. An FMC spokesman says the project "was very successful in that we were able to convert coal into high-grade synthetic crude." But, he added, "the economics did not looks too promising at that time."

There will be no commercial plant using the COED process in the 1980s, notwithstanding the assurances of federal officials seven years ago that the process "will get into the marketplace quite fast."

While operations at the pilot synthetic fuel plant in Princeton were winding down in 1975, the Energy Research and Development Administration was starting up another pilot plant, this one in Bruceton, Pa., to evaluate the Synthane process for converting coal to pipeline-quality synthetic natural gas.

The new pilot plant was designed to turn out 72 tons of coal a day into enough synthetic gas to heat 2,100 homes during an especially cold winter, using a process developed by government researchers in laboratory work that started in 1961.

Federal energy officials gave a promising account of Synthane technology to a House Appropriations subcommittee in the spring of 1975, noting that "the simplicity of the process. . . results in good operability and reliability characteristics."

Three years later, in response to questions from a Senate Appropriations subcommittee in May 1978, the Energy Department said the Bruceton plant "was successfully operated in fiscal 1977 using Montana sub-bituminous coal. Sufficient data was obtained to establish economic competitiveness of the. . .process with the most currently available processes."

Today the Bruceton pilot synthetic fuel plant is shut down, the equipment in mothballs. An Energy Department official says that "we decided, given the results of the testing, and what we could see in the future, and the cost of completing it, not to go ahead. We got some useful data out of it, but we didn’t think it was worth going any further."

After a government investment approaching $100 million in the development of the coal gasification technology, the Energy Department now has abandoned the process. There will be no commercial synthetic fuel plant using the Synthane process in the 1980s.

Not all the federal government’s pilot synthetic fuel plants have been abandoned. Some are still operating, like the coal gasification facility in Homer City, Pa., that is testing the Bi-Gas process. Nearly a decade ago, in the spring of 1971, the Office of Coal Research, seeking funds to build the Homer City plant, submitted a report to a House Appropriations subcommittee offering this assessment of the Bi-Gas project:

"Conclusion of the pilot plant program can be expected to provide data and process variables to design complete commercial plants."

During an appearance before a House Appropriations subcommittee the following year, Dole, the assistant interior secretary, gave a progress report on construction and reaffirmed his department’s belief that the Homer City plant would lead to the building of commercial synthetic fuel facilities:

"We have let the contracts out, and are receiving them at the present time. We expect to have these bids accepted sometime later on, and hopefully groundbreaking will come sometime this spring. . .

"The purpose of the whole program is to arrive at high-BTU (British Thermal Unit) gas through the pilot plant stage, so that we can get into the demonstration scale plant sometime around 1975-76, in order that a commercial plant will be available for construction sometime around the end of the decade (1970s), the early part of the next decade (1980s)."

The formal groundbreaking followed in July 1972. Six years later, in May 1978, the Energy Department forwarded this report on work at the Homer City plant to a Senate Appropriations subcommittee:

"Construction of a fully integrated pilot plant was completed in fiscal year 1976, but due to the complexity of the process considerable delay was encountered and a long period of shakedown and start-up activities were required, and it was not until fiscal 1978 that short, continuous operations could be achieved."

Today, when the Bi-Gas process, by the prediction of federal officials, was to be ready for use in commercial synthetic fuel plants, the Homer City facility is still running tests.

When an Inquirer reporter visited the plant in October 1979, a spokesman for Stearns-Roger Corp., which is operating the facility under contract to the Energy Department, said, "We still have another year or two to define the economics of the process."

At the time, the plant – scaled to a hundredth the size of a commercial plant – had failed to produce the five tons an hour, or 120 tons a day, that it had been designed to handle.

Instead, the plant was run for two to four days at a stretch, at below the five-ton-per-hour design, and then shut down.

The coal then being gasified at the Homer City site, which is surrounded by some of the richest coal fields in Western Pennsylvania, was shipped in from Montana because it was easier to process.

As for the synthetic natural gas made from the coal, it was flared – burned off – because it was too impure to use as fuel even in the plant’s specially designed boilers.

Commenting on the work in progress, a plant spokesman said in October 1979: "We feel we should have another two years to either complete the project or define what must still be done."

In September 1980, one year after the visit to the Homer City facility, an Inquirer reporter asked the same Stearns-Roger official how work was progressing at the plant, where the government’s investment will soon pass $100 million. Said he:

"Still basically the same. We are making more progress in our operation. We are still operating up and down, you know, and that kind of thing, but making more progress all the time.

"The Department of Energy has decided they want to continue at least one more year, through fiscal 1981, so we’re still right on target, right on course, moving right along."

Has the plant operated for any longer periods than the two-to-four-day runs of last year?

"We’ve had a good five-day run."

And how much synthetic natural gas was produced during those five days?

"Oh, we don’t measure it. We really don’t look at it, you know. It’s just no advantage to us. We’re more interested in looking at the performance of the gasifier. . .So we just haven’t really pinned it down."

Has any of the synthetic natural gas been burned to generate heat or power?

"No, we strictly run it through a thermal oxidizer, burn it in a thermal oxidizer. That’s an environmental word for flare."

And the coal is still being shipped in from Montana?

"Oh, yes, Rosebud coal. Yeah, we’re still on that. We’ll probably be on that for a while longer."

Obviously, no commercial Bi-Gas plant was built in the late 1970s, as has been envisioned by the Interior Department at the beginning of the decade. Nor, does it seem likely, will there be any commercial Bi-Gas plants in the late 1980s.

This, then, is the federal government’s record in synthetic fuel development:

More than a dozen pilot coal conversion plants and experimental facilities erected since the 1940s, some abandoned, some still sputtering along.

All proved what has been known for at least 100 years: that it is chemically possible to turn coal into synthetic fuels – with some processes potentially competitive, in price, with conventional oil and gas, some not.

All failed to come close to meeting their advance promises. All failed to result in the production of synthetic fuels for sale to the general public.

All these plants were built to test a different coal conversion technology. In simplest terms, coal is turned into synthetic oil or gas simply by adding hydrogen.

But there are scores of different processes. The coal may be heated in the absence of air. It may be reacted with steam and air or oxygen. It may be reacted with hydrogen.

A variety of different catalysts may be introduced to improve the conversion. Temperature and pressure may be adjusted up or down. The coal may be ground into a granular form, mixed in a slurry or processed in lumps. The equipment may be adjusted to turn out all liquid fuel, solid fuel, gas or some combination of the three.

All these variations may be likened to recipes. Assume for the moment that Nabisco intends to market a new chocolate cookie.

The company’s bakers experiment with any number of recipes, adding or subtracting ingredients until they come up with the desired formula. Eventually they agree on a single recipe and begin mass production of chocolate cookies.

But the government and the oil industry, after a half-century of experiments, are still testing recipes, substituting ingredients, unable to settle one, two or even three, and to then actually begin mass production of synthetic fuels.

Energy Secretary James R. Schlesinger himself acknowledged the problem in April 1979, when he testified about federal energy research projects before a House Appropriations subcommittee.

"In the gasification area," Schlesinger said, "we have got half a dozen processes. We have got the Hygas, Synthane, Bi-Gas, slagging Lurgi, normal Lurgi and so forth, and each of these things has cost differentials of 5 cents per thousand cubic feet, or maybe it’s 9 cents per thousand cubic feet.

"The real question is whether you are going to have a process that looks reasonably good commercially. In my judgment, we should pick one and get on with it, or pick two or three and get on with them, instead of going on and inventing more and more new processes.

"We could go on. The number of processes is virtually infinite. We could have 50 to 75 processes that we could continue to put a little bit of money into every year.

"It is not going to solve the national problem, but it is going to keep a lot of research and development types happy."

And indeed it will. For the federal government has already spent not hundreds of millions, but billions of taxpayers’ dollars to build and operate more pilot and demonstration synthetic fuel plants.

One of these test facilities, operated under a government contract by Ashland Oil Inc., started up in June at Catlettsburg, Ky. Designed to test a technology known as H-Coal, the plant is supposed to process 600 tons of coal a day into about 1,800 barrels of synthetic oil.

More than 120 years ago another synthetic fuel plant started up in Kentucky. By the close of the 1850s, the facility was turning Kentucky coal into 2,000 barrels of synthetic oil every week, and selling its products as far west as Chicago.

A century later, progress is not so swift.

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