Government Support for Synthetic Pipeline Gas Uncertain and Needs Attention

Gao ID: EMD-82-23 May 14, 1982

Because the Government has already spent millions of dollars and could spend much more assisting research, development, and commercialization of high-BTU gasification technology, GAO saw a need for an independent assessment of the results of this investment to ensure that future funds will be spent wisely.

Converting coal into a substitute for natural gas is one approach that shows promise for supplementing gas supplies and reducing U.S. dependence on foreign energy sources. Some private groups are seeking Government support for U.S. plants using processes which have been used abroad sucessfully for decades. While these research and development efforts have been going on since World War II, no commercial size plants have been built, mainly because of economic and financing problems. These projects will need Government support because of the huge capital investment and uncertain production costs. In the past, the Department of Energy (DOE) has provided most of the research and development support for these efforts. Now, commercial-scale demonstrations must look increasingly to the Synthetic Fuels Corporation (SFC) for financial support. One coal process which is nearing commercial readiness could contribute to the diversity of resources and geographic balance of the SFC program. DOE needs to define its policy of funding only long-term, high-risk, but high-payoff research and establish adequate overall criteria for funding research and development. Until recently, DOE has continued to support other activities that GAO believes could be left to industry. In addition, DOE is moving away from the environmental research which has been recognized as the responsibility of Government in the program.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: James Duffus Iii Team: General Accounting Office: Energy and Minerals Division Phone: (202) 512-7756


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