should be achieved in two successive waves of development. The first would be the use of existing technol ogy on a commercial scale and the si multaneous deployment of demon stration plants for more modern sec ond-generation processes. This would ensure immediate production and the operational experience necessary to operate the newer processes in the future. The second wave would begin in the late 1980's and would involve gradual employment of the newer technology. The technology of the "two-waves" runs the gamut from conventional Lurgi gasifiers to advanced biomass conversion and most of the other proven processes. Lee believes that if a start is made now, by 1992 the im portation of 2 million bbl per day of foreign oil could be eliminated. D
Benefits accrue from oil import reduction of 500,000 bbl per day $ per barrel 3
Year 1
Year 3
Longer term |
Direct benefit $37.00 $38.49 Indirect benefits 12.41 Oil price effect 19.07 Inflation effect 9.92 23.04 7.32 Employment effect 22.92 6.71 Security effect 6.71 TOTAL $73.36 $110.23
$40.00 12.41 11.90 8.78 6.71 $79.80
a Based on 1980 dollars. Source: Gas Research institute
of a billion-bbl strategic petroleum reserve, increased conservation, and drawdown of private inventories if there were an embargo. The benefit of $80 per bbl over the long term is roughly equivalent to $14 per million Btu. The comparable costs from a variety of synfuels would never be greater than $11 per million Btu, Lee says, and usually would be about half that value at the point of production. In calling for the immediate launching of a synthetic fuels indus try, Lee is encouraged by the gov ernment's recent establishment of Synthetic Fuels Corp. He also is convinced that the seemingly impos sible goal of eventually reducing oil imports 4.5 million bbl per day through synthetic fuels production and conservation is achievable, but only with total and immediate dedi cation of available resources. The two items of President Carter's fuels program of greatest concern to Lee are development of facilities to pro duce 2.5 million bbl per day of oil substitutes and the requirement to shave 750,000 bbl per day from utili ties' consumption of oil. Lee believes that the two goals
Charter calls off Corco acquisition
Point-of-production costs vary for different energy sources Supplemental sources
Cost ( $ per million Btu)
$4.00-5.50 High-Btu gas from coal (2nd generation) 4.00-5.50 Medium-Btu gas from coal (1st generation) 4.00-5.50 Solvent-refined coal (solid) 4.00-6.00 Crude shale oil (all processes) 5.00-6.00 High-Btu gas from coal (1st generation) Low-sulfur heavy fuel oil from coal 5.00-6.00 6.00-7.00 Distillate fuel oil from coal 6.00-9.00 Methanol from coal 8.00-11.00 Gasoline from coal
I
Note: Cost based on 1979 dollars. Source: Gas Research Institute
|
6
C&EN Aug. 11, 1980
Commonwealth Oil & Refining Co. (Corco) once again has been left at the altar. This time the reluctant bride groom is Charter Co. Charter last week terminated its agreement to acquire the financially troubled Puerto Rican firm "because of adverse changes in Corco's opera tions, coupled with the failure to ob tain certain regulatory settlements within the time limit provided in the acquisition agreement." The regula tory settlements refer to problems with the Department of Energy over the alleged overcharging of customers for gasoline by Corco. According to Raymond Mason, Charter's chairman and president, "Charter management regrets the necessity of taking this action, be cause we continue to believe the ac quisition of Corco would benefit both companies in the long term. Although we believe the present adverse con ditions are temporary, we have de cided that to proceed with the ac quisition would not be in the best in terests of the stockholders." Corco is now under the gun in finding a way to save itself. The company has until Sept. 30 to file a reorganization plan with the bank ruptcy court in San Antonio. Corco has been operating under Chapter 11 of the Federal Bankruptcy Act. If the reorganization plan is not filed, the bankruptcy court can place the com pany in Chapter 10 bankruptcy, which will mean a court-appointed trustee will run the company. The federal government has been trying to force Corco into Chapter 10 for some time. The one hope remaining for Corco
seems to be Roger Tamraz, who led Arabian Seaoil Corp. when that company was trying to invest in Corco. Tamraz's overtures were cut short when Charter announced that it was in the running and that it had the backing of Tesoro Petroleum, which owns 37% of Corco. Π
Exports, ammonia prop up fertilizer market The U.S. fertilizer business made it through the spring with reasonably good financial results, but such health was far from uniform, and serious weakness spread through two of the three major nutrient types in the U.S. The business really got by on two re maining strengths, ammonia and ni trogen solutions in the U.S. and ex ports of just about everything. Although the export bulge is com forting, fertilizer company sources caution that some of it may have re sulted from the very weakness of the U.S. market, especially in phosphates. Given a drop in effective price of the major phosphate, diammonium phosphate, from a high of $260 per ton to $200 or below this spring, for eign buyers rushed to take advantage of the situation. The strength in the U.S. in nitrogen nutrients was due largely to a 4% in crease in corn acreage, points out Edwin N. Wheeler of the Fertilizer Institute. Wheeler doesn't add that this was a stroke of luck in a year of highly unsettled conditions in farm ing and falling farm income. Overall, Wheeler reports that U.S. fertilizer use ("domestic disappear ance") picked up 4% to set a new rec ord in the fertilizer year ended June 30, compared to the previous year. Production was up 6%, and inven tories generally rose except in potash. In the main nutrient categories, nitrogen use rose 7%, potash use was flat, and phosphates use fell 1% compared to the previous year. However, Wheeler notes, "Fall shipments, especially for phosphates and potash, were unusually heavy and provided much of the momentum for the year when the spring season turned soft." Soft it was this spring. After across-the-board use drops in May (C&EN, July 14, page 6), June continued much the same. What saved the month in June was record exports, which Wheeler says were about 1.7 million tons of finished fertilizers and 1.4 million tons of phosphate rock, according to gov ernment data. Industry sources con firm that exports are their mainstay now and will need to stay strong to keep up industry profitability. Π
