Synthetic Fuels Corporation
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The Synthetic Fuels Corporation (SFC or Synfuels Corporation) was a
U.S. government The federal government of the United States (U.S. federal government or U.S. government) is the national government of the United States, a federal republic located primarily in North America, composed of 50 states, a city within a fede ...
-funded
corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
established in 1980 by the
Energy Security Act The Energy Security Act was signed into law by U.S. President Jimmy Carter on June 30, 1980. Thursday, 19 January 2017 It consisted of six major acts: * U.S. Synthetic Fuels Corporation Act * Biomass Energy and Alcohol Fuels Act * Renewable Ene ...
(ESA) to create a financial bridge for the development and construction of commercial
synthetic fuel Synthetic fuel or synfuel is a liquid fuel, or sometimes gaseous fuel, obtained from syngas, a mixture of carbon monoxide and hydrogen, in which the syngas was derived from gasification of solid feedstocks such as coal or biomass or by reforming ...
manufacturing plants (such as
coal gasification Coal gasification is the process of producing syngas—a mixture consisting primarily of carbon monoxide (CO), hydrogen (H2), carbon dioxide (CO2), methane (CH4), and water vapour (H2O)—from coal and water, air and/or oxygen. Historically, coal ...
) that would produce alternatives to imported
fossil fuel A fossil fuel is a hydrocarbon-containing material formed naturally in the Earth's crust from the remains of dead plants and animals that is extracted and burned as a fuel. The main fossil fuels are coal, oil, and natural gas. Fossil fuels m ...
s. With a seven-member
board of directors A board of directors (commonly referred simply as the board) is an executive committee that jointly supervises the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit organiz ...
, the corporation received $20 billion in initial funding to be used in
joint ventures A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to acces ...
with private firms (primarily
oil and gas companies The petroleum industry, also known as the oil industry or the oil patch, includes the global processes of exploration, extraction, refining, transportation (often by oil tankers and pipelines), and marketing of petroleum products. The largest ...
), not only to construct plants, but also to help finance coal mines or transportation facilities.Anthony S. Campagna, ''Economic Policy in the Carter Administration'' (Greenwood Press, 1995), 143. The SFC also researched and promoted the use of
alcohol fuel Various alcohols are used as fuel for internal combustion engines. The first four aliphatic alcohols (methanol, ethanol, propanol, and butanol) are of interest as fuels because they can be synthesized chemically or biologically, and they have ch ...
s,
solar energy Solar energy is radiant light and heat from the Sun that is harnessed using a range of technologies such as solar power to generate electricity, solar thermal energy (including solar water heating), and solar architecture. It is an essenti ...
, and the production of fuel from urban waste. Over its 6-year existence, the SFC only spent approximately $960 million (barely five percent of its initial 1980 budget) to fund four synthetic fuels projects, none of which survive today. The corporation was abolished in April 1986.


History


Creation

Initially proposed as the "Energy Security Corporation" in President Jimmy Carter's malaise speech of July 15, 1979, the corporation's funding was allocated from income from the windfall-profits tax set up in April 1980 under the Crude Oil Windfall Profit Tax Act.Victor Bondi, ed. ''American Decades: 1980-1989'' (Detroit, Mi: Gale Research, 1996), 282. After long congressional conference sessions, due to heavy opposition from candidate Ronald Reagan and congressional Republicans, the ESA was finally passed in June 1980. Congress authorized over 12 years funding of $88 billion plus $35 million in annual administrative expenses (adjusted for inflation) for the SFC, with a maximum of three hundred full-time professional employees. The SFC's mandated goal was the production of at least of crude oil equivalent per day in synthetic fuels from domestic sources by 1987 and at least per day by 1992. The SFC was kept out of the
Department of Energy A Ministry of Energy or Department of Energy is a government department in some countries that typically oversees the production of fuel and electricity; in the United States, however, it manages nuclear weapons development and conducts energy-rel ...
and legislatively chartered to be free of normal government rules, regulations, and procedures. In September 1980, Carter nominated
John C. Sawhill John Crittenden Sawhill (June 12, 1936 – May 18, 2000) was president and CEO of The Nature Conservancy and the 12th President of New York University (NYU). Born in Cleveland, Ohio in 1936, Sawhill graduated from Princeton University's Woodr ...
to be the SFC chair, but the
Senate A senate is a deliberative assembly, often the upper house or chamber of a bicameral legislature. The name comes from the ancient Roman Senate (Latin: ''Senatus''), so-called as an assembly of the senior (Latin: ''senex'' meaning "the el ...
Republicans refused to confirm Sawhill or any other board nominee. Signing
Executive Order In the United States, an executive order is a directive by the president of the United States that manages operations of the federal government. The legal or constitutional basis for executive orders has multiple sources. Article Two of th ...
12242, Carter assigned SFC responsibilities to the Department of Energy and
Department of Defense Department of Defence or Department of Defense may refer to: Current departments of defence * Department of Defence (Australia) * Department of National Defence (Canada) * Department of Defence (Ireland) * Department of National Defense (Philippin ...
until the SFC could be declared operational. The DoD used this brief window to fund the Union Oil Parachute Creek and Colony/Tosco oil shale projects. In October, Carter was forced to make recess appointments of Sawhill and four others. Pursuant to the ESA, the corporation had to issue its first solicitation for synthetic fuel projects by the end of December 1980; the proposal deadline was set for March 31, 1981. Sixty-one firms in 24 states submitted proposals, and of these, 19 were for coal liquefaction, 17 coal gasification, 14 oil shale, 8
tar sands Oil sands, tar sands, crude bitumen, or bituminous sands, are a type of unconventional petroleum deposit. Oil sands are either loose sands or partially consolidated sandstone containing a naturally occurring mixture of sand, clay, and wate ...
oil production, and 3 for other fuels.


Industry response

Wall Street was eager to begin investing in the synfuels industry. In July 1979, a report called ''Helping Insure Our Energy Future: A Program for Developing Synthetic Fuel Plants Now'' was published by the Committee for Economic Development (CED), an independent research and educational organization of 200 business executives and educators, made the case for the urgent need for synfuel industry development. Industry lobbyists in Washington formed the National Council on Synthetic Fuels Production headed by Walter Flowers, a former Alabama congressman. No less than three trade magazines were launched — ''The Synfuels Report'', ''Synfuels Weekly'', and ''Synfuels''. Two industry-insider books were quickly published, ''The U.S. Synthetic Fuels Program'' and ''Synfuels Handbook: Including the YELLOW PAGES of Synfuels''. In the run up to the ESA's passage, the Executive Committee of the Ad Hoc Coalition on Synthetic Fuels hosted a reception in honor of congressmen and conference committee staff on June 19, 1980, funded by four American natural resources companies:
Ashland Oil Ashland Global Specialty Chemicals Inc. is an American chemical company which operates in more than 100 countries. Headquartered in Wilmington, Delaware, the company traces its roots back to the city of Ashland, Kentucky, where it was headquarter ...
, C.-E. Lummus, Tosco, and
Tenneco Tenneco (formerly Tenneco Automotive and originally Tennessee Gas Transmission Company) is an American automotive components original equipment manufacturer and an aftermarket ride control and emissions products manufacturer. It is a Fortune 50 ...
. These firms had significant investments in synthetic fuels projects.


Reagan years

After Reagan was elected president and Republicans took the Senate in the 1980 election, President Reagan severely cut the SFC's funding, scaled it down, and finally phased it out. Constant reshuffling of members and congressional meddling succeeded in stifling the SFCs functioning. In January 1981, the board members submitted undated resignations to Reagan, and Reagan accepted them at the end of the month. Jack McAtee assumed the acting chair position. In April, Reagan nominated Edward Noble as chair in April. Edward Noble, a real-estate developer from Atlanta with roots in the Oklahoma oil business, was a large financial backer of the conservative
Heritage Foundation The Heritage Foundation (abbreviated to Heritage) is an American conservative think tank based in Washington, D.C. that is primarily geared toward public policy. The foundation took a leading role in the conservative movement during the presiden ...
, which was very supportive of Reagan and paid the salaries of several SFC transition team members. In May, Reagan nominated four transition members (Robert Monks, Victor Schroeder, Victor Thompson, and Howard Wilkins) to the SFC board. After Noble was confirmed and sworn into office, McAtee resigned. In October, the other four board nominees were sworn in as members of the board. Finally, in February 1982, Reagan issued Executive Order 12346 proclaiming the SFC operational and officially open for business. In May, Reagan appointed two additional SFC board members (John Carter and Milton Masson) who were not sworn in until August. In August 1983, the SFC president and CEO, Schroeder, resigned his position but remained a board member. Over the course of several months, starting in January 1984, five members (Monks, Wilkins, Schroeder, Thompson, and Carter) resigned. Not until November were three replacements (Corcoran, MacAvoy, and Reichl) appointed and in December sworn in as board members. They were not confirmed by the Senate until June 1985. Hollowed out and neutered, the SFC instead became a place to repay political donors and friends with do-nothing job appointments. This was then used as a pretext to abolish the SFC. In December, Congress passed P.L. 99-190 which terminated SFC authority to award new financial assistance and set a 120-day time limit left to transfer projects to the Treasury department and to shut down. In April 1986, Congress passed P.L. 99-272 formally abolishing the SFC.


Assessment

The Great Plains coal gasification plant in
Beulah, ND Beulah is a city in Mercer County, North Dakota, United States. The population was 3,058 at the 2020 census. Beulah is home to the Dakota Gasification Company. It is near the largest lignite mine in the United States, owned by North American ...
, still producing natural gas and
sequestering carbon Carbon sequestration is the process of storing carbon in a carbon pool. Carbon dioxide () is naturally captured from the atmosphere through biological, chemical, and physical processes. These changes can be accelerated through changes in land ...
in 2009, was built with the support of the Department of Energy and applied for further support by this corporation, partly as a result of efforts by Reagan's Energy Secretary James B. Edwards.NYTimes, ''North Dakota Utility to Buy U.S. Synthetic-Fuels Plant''. August 6, 1988
/ref>


See also

*
Synthetic Liquid Fuels Program The Synthetic Liquid Fuels Program was a program run by the United States Bureau of Mines to create the technology to produce synthetic fuel from coal and oil shale. It was initiated in 1944 during World War II. The Synthetic Liquid Fuels Act approv ...
*
Dakota Gasification Company The Dakota Gasification Company is a synthetic natural gas producing company founded in 1984 in Beulah, North Dakota, United States. It is an operator of the Great Plains Synfuels Plant. The plant is located at . The plant uses lignite coal to produ ...
*
Colony Shale Oil Project Colony Shale Oil Project was an oil shale development project at the Piceance Basin near Parachute Creek, Colorado. The project consisted of an oil shale mine and pilot-scale shale oil plant, which used the TOSCO II retorting technology, develo ...


References


External links


CNN, "Glenn Beck: U.S. is a suicidal superpower"


* ttps://www.archives.gov/federal-register/codification/executive-order/12346.html National Archives, Executive Order 12346 establishing the Synthetic Fuels Corporation
World Energy Council, "Sustainable Energy for the 21st Century: A Market Perspective"

Heritage Foundation, "Remember the Synthetic Fuels Corporation?"

Great Plains Biofuels Plant History from former Department of Energy employee
{{authority control Corporations chartered by the United States Congress Energy companies of the United States United States federal energy legislation Petroleum production Coal in the United States