The U.S. Synthetic Fuels Corporation yesterday dropped one of two leading contenders for funding by the corporation and extended the deadline for concluding negotiations with the other after both projects lost their oil company sponsors.
The agency said it would postpone until April the deadline for concluding negotiations with the sponsors of the Hampshire coal liquefaction project in Wyoming. The project took a sudden turn for the worse in October when the Sohio Corp. dropped out of the venture, writing off millions of dollars already invested in it.
The SFC dropped from consideration the Breckenridge coal-liquefaction project, which lost its major oil company sponsor, Ashland Oil Corp., last month.
At the same time, however, SFC Chairman Edward E. Noble told the board of directors that negotiations with sponsors of three other projects have progressed to the point that he may sign letters of intent to provide funding before January.
The three projects are the First Colony peat-to-methanol project in North Carolina; the Santa Rosa oil sands project in New Mexico, and the Calsyn heavy-oil conversion project in California. One of the sponsors of the First Colony project is the Energy Transition Corp., whose stockholders include Central Intelligence Agency Director William J. Casey and four former top federal employes.
The SFC board of directors gave Noble authority to enter into a cost-sharing arrangement with the sponsors of the First Colony project for work on refining its cost estimates. The limit on the amount of the SFC's contribution to the project is $4.65 million.
The board's actions yesterday demonstrated its overriding interest in finding a project developed enough for funding. With the setbacks to the two projects it had hoped to fund as its first real ventures (the SFC inherited two other projects that were launched by the Department of Energy), the corporation has become more politically vulnerable to moves for its extinction.
The board noted that several months ago it targeted funds for three specific types of projects, earmarking $6 billion for coal projects, $3 billion for oil shale and $1 billion for tar sands projects. The three projects that may get letters of intent include two tar sands projects and a peat-to-methanol project that falls outside the three specified categories. The SFC board said it still intends to hand out the money designated for coal and oil shale projects and is accelerating its outreach to the private sector to find fundable projects.