For more than five years, South Africa has sought to turn its oil-from-coal technology to diplomatic and financial advantage in the United States. Now, with production of synthetic fuel becoming an explicit policy goal in Washington, the opportunity may have arrived.
After years of being reluctant to cooperate with South Africa on fuel development, the State Department has reached a compromise with Department of Energy researchers who want to know more about South Africa's coal gasification process.
Through falling short of authorizing government-to-government contact, the agreement allows the DOE to purchase information on South Africa's conversion plant from private U.S. firms - a move that synfuel proponents such as Rep. William Moorhead (D-Pa.) hope is a first step toward a closer working relationship. And the promise of federal financial backing for synthetic alternatives to petroleum has boosted the already active interest by American companies in the South African technology.
What most attracts both private industry and government enthusiasts to South Africa's method is the history of practical experience behind it. Moorhead, who sponsored the synthetic fuels bill which passed the House in June, argues that cooperating with South Africa would result in "an extraordinarily important savings in time" because "instead of having to develop a workable, commercially viable system, and going back and re-inventing the wheel, as it were," the United States simply could appropriate South Africa's process.
South Africa's experimentation dates back to shortly after World War II when, faced with a lack of oil, but possessing vast reserves of easily mined coal, the government set its scientists to work on coal conversion.
The South African Coal, Oil, Gas Corp. (SASOL, for its Afrikaans initials), a government-owned firm, opened a plant for processing coal into a whole range of petroleum products in 1955. The facility, located 50 miles south of Johannesburg, is generally believed to produce about 20,000 barrels of synthetic petroleum each day, an estimated 5 percent of the country's oil consumption, although all oil data is officially secret in South Africa. For 25 years, the firm successfully has employed the Lurgi gasification process first developed in Nazi Germany together with SASOL's own "Synthol" method for producing synthetic crude.
Construction of a second, much larger conversion plant began in 1974 after the Arab oil embargo imperiled South Africa's supply line and pushed prices high enough to reduce significantly the gap between SASOL's oil (estimated to run about $25 a barrel) and Organization of Petroleum Exporting Countries oil (then selling for about $16). SASOL II, as it is known, originally was scheduled for completion in 1980. After the new government in Iran cut off oil shipments to South Africa, which had been getting up to 90 percent of its supply from the shah, Pretoria announced a major expansion of the facility, boosting the cost from $2.9 billion to $6.9 billion. This plant will produce 120,000 barrels of oil daily, according to an estimate by the Financial Mail, a business weekly published in Johannesburg.
Two Moorhead staff aides who toured SASOL facilities last year said in a private memo that the record of SASOLI demonstrates that costs can be lower and "income per ton of coal can be higher" than American experts have forecast.
Some scientists dispute this view and several other types of coal conversion have been developed, but SASOL's existence is in itself a powerful argument for the South Africans. "After all, they are the only ones with a real track record in this field," one industry source said. He pointed out that SASOL I is the only commercial oil-from-coal plant operating anywhere in the world.
The Carter administration is trying to walk a thin line between advocates of closer links to South Africa and what is expected to be vocal opposition. During hearings in April of the House Banking Committee's economic stabilization subcommittee, which he heads, Moorhead learned that the Departments of Energy and State were working out what DOE research head John Deutch called "a responsible arrangement for having U.S. corporations discuss matters with the South African corporation" (i.e. SASOL). Deutsh, who is also Energy's acting under secretary, told Moorhead "that obtaining detailed information" from South Africa "might save us as much as three to five years" in building a coal conversion plant.
However, State is making clear that its interest does not extend to the possibility to an official arrangement with South Africa. CAPTION: Picture, The SASOL II conversion plant under construction in South Africa. By Nico Van den Bergh