IMAGINE for a moment that, by a miracle of technology, America suddenly discovered billions of barrels of new oil within its own boundaries, and hundred of billions more in other parts of the western hemisphere -- oil that is beyond the control of the OPEC cartel.

This is either enticing fantasy or hard reality, depending on which side you consult in a dispute of growing importance: the prospects of converting plentiful heavy oils into gasoline, heating and fuel oils. The implications of the dispute are enormous, obviously, for defining the true nature of America's energy problems in the future. But, remarkably, it has received scant attention from both the administration and the Congress.

Lawrence Goldmuntz, a Washington engineer, insists that the miracle technology is already in hand. Heavy oil can now be converted profitably at today's prices, according to Goldmuntz, who was also among those who pointed earliest to the massive size and importance of Mexico's oil reserves.

Oil company experts, however, demur. Heavy oil has a bright future, they agree, but one that is much more complicated and distant than it may seem to outsiders like Goldmuntz.

The so-called heavy oils are, both literally and metaphorically, at the bottom of the energy barrel. They have been ignored in the government's count of proven petroleum reserves on the ground that they are not economically exploitable under existing production and refining technology. But Goldmuntz, relying on research done by oil companies themselves, claims that this is no longer true -- that new processes developed by the companies make heavy oil ready for profitable exploitation.

As the name suggests, heavy oils have far higher densities than lighter grades of conventional oil. Swirled in a jar, heavy oil pours like chocolate pudding. Some heavier grades are as thick as asphalt and must be mined, not pumped, from the ground. Still other varieties, such as the tar sands of Utah, are like black lumps of sticky tar or soggy pieces of coal. But once they are taken from the ground and the impurities are removed, heavy oils can be refined into gasoline, heating or fuel oil.

If Goldmuntz is right -- and some experts say he isn't right yet -- the profitable development of heavy oil could stave off Energy Secretary James R. Schlesinger's often predicted world oil shortage. Over time it could reduce dependence on Arab oil. It could reverse the labored tale of America's dwindling oil reserves. Indeed, it could reshape the entire politics and economics of the western industrial world. If...

Nobody disputes these numbers: There are 35 billion barrels of heavy oil deposits in California and 30 billion more barrels of oil embedded in tar sand deposits in Utah.

These resources amount to twice the U.S. proven oil reserves, placing the two states potentially in the same world class as, say, Iran. Some environmental obstacles remain to be overcome. But the deposits are well known to geologists at the U.S. Geological Survey and to the major oil companies.

Beyond U.S. borders, an estimated 750 billion to 3 trillion barrels of heavy oil are underground in Venezuela. Another 600 billion barrels of heavy oils and tar sands are in Canada, with still more scattered throughout other nations of the western hemisphere. With current technology, Goldmuntz and others say, 20 percent or more of these deposits can be produced now.

By comparison, Saudi Arabia, the world's leading exporter, has 175 billion barrels of proven oil reserves that can be produced at about 30 cents a barrel and sold on the world market for at least $13.50.

The Exxon Process

SITTING AT his desk, Goldmuntz says he became interested in heavy oils while working on a research study funded by the Energy Department.

Goldmuntz found that while the government spends hundreds of millions of dollars a year on coal and oil shale research, there is no comparable program for heavy oils and tar sands, even less effort to survey the extent of U.S. heavy oil resources.

"I suddenly found myself in disagreement with a lot of current government policies," Goldmuntz says, "because it was clear to me that after looking at the heavy oils and tar sands, that oil shale and coal conversion may not be the most economic resources to replace conventional oil supplies now being depleted."

The story, however, doesn't end with his opinion. Following consultations with oil company experts and correspondence with Exxon, Goldmuntz tripped on what he considers a mindboggling fact: Exxon has a process in hand which, according to the company itself, would enable it to produce heavy oil below the price now set by OPEC.

Paging through a proposal from Exxon Research and Engineering Co. executive W. O. Taff, Goldmuntz ticks off the figures laid out by Exxon experts: cost of production of Jobo heavy crude oil (in Venezuela), $4.20 a barrel; cost to upgrade the oil, including removing metallic impurities with a "flexicoker," an advanced refining process, $5.23 per barrel. These totals also include 20 percent penciled in for "capital recovery." That still leaves the price per barrel below the $14 or more that OPEC actually is charging now.

While the capital required to produce and upgrade heavy oil is well above that needed to produce conventional oil, billions of dollars of investments in heavy oil would be justified at current world prices. Exxon's Taff cautions, though, that the figures could be subject to inflation and unforeseen costs of scaling up for a major production project, factors that would reduce profit projections.

Exxon is not alone in entertaining bullish prospects for heavy oils. Union Oil Vice President Joseph Byrne, for example, says that exploitation of heavy oils in California could increase California's oil production by at least 50 percent in the next decade.

But will heavy oil be brought into production before more popular synthetic fuels from coal or oil shale? Byrne says, "Our company has big resources in oil shale, but I see shale as the next step beyond heavy crude oil."

Union and other companies -- Getty, Cities Service, Standard Oil of California -- have staked claims to heavy oil deposits in California. Union has, as one oilman says, "a big position" in Santa Maria, Calif., where some of the largest deposits are.

For a number of reasons, including the fact that most of its Venezuelan properties were nationalized, Exxon hasn't committed the necessary billions to develop heavy oil in Venezuela. It has acted, however, to develop heavy oils in Canada, where its subsidiary, Imperial Oil, has proposed to invest $4.7 billion in a project at Cold Lake, Alberta, that would produce 150,000 barrels a day over the next 2 1/2 years -- a total of 1.3 billion barrels.

Paging through the Cold Lake proposal, laid out in a 2 1/2-inch Exxon presentation, Goldmuntz asks: "Why doesn't the United States have a program to press the development of the heavy oils here and throughout the western hemisphere?"

The Glacial Pace

ONE REASON may be that the heavy oils and tar sands do not yet have a political constituency. There is no battery of heavy oil or tar sands senators as there are coal senators or nuclear senators or even oilshale senators pushing for development of their favorite fuels.

Another factor is that the government, still adjusting to the new era of energy economics and politics created by the 1973 Arab oil embargo, makes policy shifts to new resources and technologies at a glacial pace.

A call to Interior's U.S. Geological Survey produced this assessment from Ozzie Gerard, a staff geologist: "The Survey simply isn't doing any extensive work on heavy oils today."

Howard Ritzma, a geologist with the Utah Geological and Mineral Survey, says that while Utah has 95 per cent of the nation's tar sands, Washington has been caught up in an argument over whether tar sands -- most of which are on federal lands -- should be leased to private firms as coal or as oil.

The final explanation may lay with the oil companies, who acknowledge that their interest is not in suppressing new energy technology but in maximizing profits. "The fact is the pay-out is quicker for 30 gravity west Texas crude than for the recovery of California heavy oil fields," says one official whose company has heavy oil and tar sands holdings.

The rules of resource economics governing the companies' livelihood are, in the end, primitive. Exploitable reserves are defined by a combination of the resource base, technology and market prices. The most profitable deposits are developed first, the less profitable saved for later.

While it is not clear whether heavy oils can be developed as quickly as Goldmuntz says, it is clear that the issue deserves careful and urgent scrutiny by both the Congress and the administration. Perhaps Washington could then begin to catch up with Wall Street, where the promise of heavy oil is well understood.

Consider this assessment offered by Goldman Sachs Research in a May 25, 1976, prospectus sent to the investment banking house's customers:

"The oil industry has been very quiet about its heavy oil development programs because the major tax on the oil industry is the county ad valorem tax, which is assessed on the present value of future cash flow from a producing property."

Goldman Sachs advised investors to consider companies with substantial holdings in heavy oils: Santa Fe Industries, Union Oil, Stanard of California, Shell, Mobil, Getty and Texaco.

"The overall domestic crude oil shortage has opened up major new markets for heavy oil," the firm said.