EXXON (XON) SEES SYNFUELS ROLE BY YEAR 2000
Development of costly shale oil,
liquified coal and other kinds of synthetic fuels, halted in
recent years because of cheap and abundant petroleum supplies,
will become economic again when world oil prices top 30 dlrs a
barrel, an Exxon Co USA executive said.
    Joe McMillan, a senior vice president, told Reuters after
addressing a Houston meeting of the American Institute of
Chemical Engineers, "By early in the next century, synthetics
should play a significant role in this country's energy
supply."
    McMillan also told reporters at a news conference that he
believed synthetic fuels would become economic to develop when
world oil prices reached a 30 to 40 dlr a barrel price range.
    "You're talking about a 50 pct increase in crude oil
prices, but I think that time is coming and we've got to be
prepared," McMillan said.
    He predicted U.S. oil demand would rise by about one pct
annually in the next few years while the nation fails to
replace its oil reserves through exploration. By the turn of
the century, world oil prices will be significantly higher
because of declining supplies, McMillan said.
    Ashland Oil, Inc. chairman John Hall, who also spoke at the
meeting, advocated some form of federal tax incentives to help
spur development of synthetic fuels.
    The United States, Hall said, has nearly 500 billion tons
of demonstrated coal reserves, an amount more than triple that
of all the world's known oil reserves.
    "We must encourage research now in order to make synfuels
competitive later," Hall said. The average lead time for
development of a shale oil or liquified coal project is between
five and ten years.
    Until last year, the federal government had subsidized
synfuels development through the U.S. Synthetic Fuels Corp., a
research program created during the Carter Administration with
the goal of developing replacements for up to two mln barrels
of oil.
    The corporation was shut down last April when Congress
refused to continue funding its eight billion dlr budget
because of uneconomic projects based on forecasts of 50 dlrs a
barrel oil and 10 dlr per mcf natural gas during this decade.
 Reuter
