Plans for the nations's first large-scale synthetic fuels plant have apparently been blocked for this year by a legal dispute over who would pay if the project failed.
General Motors Corp. said yesterday that the future customers of the proposed Great Plains coal gasification plant shouldn't bear the risk of the venture.
Five natural gas pipeline companies headed by American Natural Resources Co. are backing the plan to build the $1.4 billion project in North Dakota to convert coal into synthetic natural gas. The plant could be in operation by 1984 if construction begins by early summer, a spokesman for the pipeline group said.
But the opposition of GM, a major pipeline customer that bought 75 billion cubic feet of natural gas last year, may well be fatal to the project's chances this year.
GM said yesterday it will continue to oppose a federal ruling which would make the proposed plant's future customers pay in advance for construction.
The Ohio Consumers' Counsel also opposes the advance payment ruling, and state officials in Michigan and New York have challenged it as well.
But the project's sponsors hoped Michigan and New York would drop their opposition in return for a commitment by the Energy Department to guarantee the project's first-year construction costs.
Last week, top Energy Department officials tried to end the impasse by giving informal approval to guarantee first-year construction financing, but they wouldn't take on the whole project now while Congress is still finishing work on major synthetic fuel legislation.
For GM, half the loaf wasn't enough.In a statement yesterday, GM said it will continue to appeal the ruling on plant financing by the Federal Energy Regulatory Commission. Loan guarantees wouldn't be possible in the face of such legal action, energy officials said.
"The Great Plains partners themselves and the Department of Energy have admitted they have funds to pay for this construction but have declined to commit them because they consider the project too risky. Instead, customers who buy gas from the pipeline companies involved are being asked to bear those risks," said David S. Potter, GM vice president for public affairs.
Arthur R. Seder, chairman of American Natural Gas, sharply protested GM's, decision, calling it "short-sighted and not very informed."
Noting that the plant can produce some gasoline along with synthetic natural gas, Seder said, "Frankly it is somewhat puzzling that a major company whose future is heavily dependent on fuel development should delay a pioneer synfuels project."
He acknowledged that in the early years natural gas from the plant will be relatively expensive -- the charge to consumers is estimated to be $7 per thousand cubic feet, compared to the current average industrial gas price of $2.37. But Seder said the plant's synthetic gas price will be fixed, while natural gas prices are certain to continue to rise rapidly.