In 1980, with the price of oil skyrocketing, the nation launched what was supposed to be a "crash" program to develop synthetic fuels. In today's economy, the word "crash" alongside the phrase "synthetic fuels" conjures up a different image.

To say that the industry is troubled is to put it mildly. Confronted by rising capital costs and declining oil prices, commercial venturers one after another have dropped synthetic fuel production projects over the last year. The one that made the loudest thud was Exxon's decision to shut down the Colony oil shale project in Colorado, a joint venture with Tosco that has cost Exxon something close to $800 million.

In an environment that tests the faith of true believers in synthetic fuels, it is surprising to find a convert.

"From my once doubting perspective, I am now convinced that the Congress was correct in its judgment that the contry needs a synthetic-fuels capability," U.S. Synthetic Fuels Corp. Chairman Edward E. Noble told a somewhat less assured congressional subcommittee last week.

Noble has headed the Synfuels Corp. for a little over a year. A former chairman of the Noble Inns Corp. and previous director of Noble Affiliates (an oil-related company), he hails from Tulsa and he's not a fan of big government. Nonetheless, he sits at the head of a quasi-government corporation that will hand out billions of taxpayer dollars to companies in an effort to create a U.S. synthetic fuels industry.

Not yet a proselyter for synthetic fuels, he is low-key in preaching the need for the industry and the corporation's role in it.

"I do think that synthetic fuels are going to play an important role in the future of energy," he said in an interview last week. But "I don't think it should be oversold," he added, noting that synfuels are but "one facet in keeping us energy independent."

"I wouldn't write it off, but I would say it will not solve all our problems."

The collapse of Colony, which would have been larger than most projects proposed or under construction, clearly has made synfuels backers think smaller.

"We need to develop the know-how to produce synthetic fuels but not to do it in such a massive way as to mislead the marketplace," Noble said. "We want to get it started. After we do that, we want to turn it over to private industry.

"We have to demonstrate our ability to produce fuel in an economically viable manner," he said. "Ninety percent of our fossil energy is stored in things that are not currently being used for oil and gas," such as oil shale and tar sands, he said.

"I don't think too many people know what synfuels are," he added. "The name is a little misleading--they're not really synthetic fuels, they're all fossil fuels."

Producing synthetic fuels at a given price--even if it is higher than oil prices--would create a ceiling of sorts for oil prices, he predicted. It would represent a point beyond which the Organization of Petroleum Exporting Countries could not "push us around," because the country would be able to counter high OPEC prices with its synthetic fuels production effort.

"I like to call it a club under the table with a handle sticking out," he said, noting that to make that threat as effective as possible, the corporation needs to pick its early projects carefully. The initial projects should improve technology, thereby reducing the production costs of synthetic fuels. In the meantime, Noble indicated, he hopes the projects chosen will represent the best and least-cost production methods.

The Colony project, which got initial approval from the Department of Energy and was inherited by the Synfuels Corp., showed signs of massive cost overruns shortly before it was put on hold by Exxon. After reports that the plant might cost approximately $5 billion--far more than the $3.2 billion that Tosco had estimated--the Synfuels Corp. threatened to cut off $1.1 billion in federal loan guarantees and took steps to make sure the loan was well-secured.

"The taxpayers are not going to lose a dime," Noble pointed out.

"I was disappointed that it came to an end," said Noble, but "I wouldn't be surprised to see it come back to life. It kind of bothered me that the press played it so negatively."

Noble said that on the day the press was focusing on the failure of the Colony project, the president of Union Oil, Fred Hartley, called to assure Noble that his company's project one of three that the Synfuels Corp. inherited from DOE was on time and on budget.

Hartley "was just bullish as mischief," said Noble. "He had that kind of oil-field hand, roll-up-your-sleeves-and-get-the-job-done kind of attitude. I was disappointed to see the Exxon thing, but Union may tell us something."

The Colony project was not as advanced as the Union project, which is expected to be producing by the end of this year, he noted.

Exxon's decision does not say anything definitive about the future of the synthetic fuels industry, according to Noble. "Everybody is having to take another look at capital projects, not just in synthetic fuels."

Noble even sees a silver lining in the whammy that the energy marketplace has given the synfuels industry. "I think this soft market is good, because now you know who really is serious," he said.

"Given the lead time that we have got in these plants, of five to eight years, to wait until we've got a real crisis would be a mistake," he said. "I do think that if we have a few plants out there, producing oil at a constant dollar, it will represent a real signal to oil exporting countries."

At best, synthetic fuels are part of a bridge the nation is crossing from dependence on nonrenewable to renewable sources of energy, he said.

"The thing that worried me in the very beginning is that this was being offered as a panacea to all our energy problems," he said. "It sure isn't the answer to all our prayers."