Once lauded, now ignored, synfuels will rise again, experts say

Don't look for a course called ''Synthetic Fuels 2.63'' in the latest Massachusetts Institute of Technology (MIT) catalog. It isn't there anymore. ''No interest,'' explains Ronald Probstein, the MIT mechanical engineering professor who created the course. The school once had a lengthy waiting list for applicants to study synthetic fuels technology; now the faculty has to hustle to get young researchers in their labs. ''Students aren't going to waste their time in something where there's no money,'' adds Dr. Probstein. ''And now there's no money in synfuels.''

Once hailed as a key to weaning the United States from imported oil, the nation's synthetic fuel effort was dealt unexpected blows from excess crude-oil production and sagging oil prices. Synfuels manufacturing technologies are still young, and they make widespread commercial manufacture of the petroleum-like products uncertain. At the same time, the Synthetic Fuels Corporation (SFC), a government agency set up during the synfuels heyday of the Carter adminstration to help finance industry synfuel programs, has been the subject of political tussles, a philosophic challenge from the Reagan administration, and growing industry apathy.

As a result, scores of expensive plans for turning coal, tar sands, and oil shale into more useful synthetic fuels have been abandoned. So far, out of its $ 14.8 billion fund, the SFC has extended only $740 million in loan guarantees and price supports, to two relatively small synfuel projects. The corporation has pledged $6.8 billion to eight additional projects.

But the SFC's future spending authority will be significantly curbed. Last week, congressional conferees agreed to take nearly $5.4 billion from the corporation's funds. The debate over that measure centered not on whether SFC's funds should be slashed but by how much. President Reagan proposed in May that the program be chopped by $9.4 billion.

The organization has been effectively shut down since January, when five members of the corporation's seven-member board resigned amid charges of conflict of interest and mismanagement. Nominations for replacements have been held up as the Reagan administration and Congress wrangled over the SFC's future.

''Clearly the current state of synthetic fuels in this country is below earlier expectations,'' says Roger Legassie, a former Energy Department official who helped set up the federal synfuels program under President Carter. Many of those expectations were shaped amid fears of an imminent cutoff of Mideast crude supplies during the Iranian hostage crisis. ''The general perception in 1980 was that oil prices would rise,'' he adds.

That perception continues. ''The question is not whether, but when,'' says Michael Koleta, president of the Synthetic Fuels Research Institute (SFRI) in Washington, D.C. Domestic sources of petroleum, he says, could begin to drop precipitously in the 1990s. ''The realization in the industry is that the mass production of synfuels will happen. What we're seeing now is that the urgency of synthetic fuels has flagged.''

The cost of manufacturing synthetic fuel is about $67 a barrel. Crude oil, by comparison, now sells for an average of $28 a barrel, nearly 20 percent below 1981 levels. Yet US dependency on foreign crude continues. According to the Washington, D.C.-based American Petroleum Institute, imports in 1973 provided one-third of America's 17.1 billion barrel-a-day appetite. And although conservation efforts have helped reduce national consumption to a 15.8 million-barrel daily rate, about a third of that still comes from imported oil.

Meanwhile, the technology of synfuels production has been slow to develop. Much of it, scientists say, consists of refinements of basic theory developed by the Germans of the 1920s and '30s.

''Perhaps it's time to break out of the technological box we're in,'' says University of Utah engineering Prof. Wendell Wiser. Scientists are trying to develop coal gasification furnaces that can withstand higher processing pressures, and find more efficient ways of squeezing high-grade crude out of oil shale. ''Any hope we have of developing a true synthetic alternative to oil may come from a new technology that has yet to be developed or even discovered.''

Department of Energy (DOE) funding for that kind of basic research has increased slightly, even though overall support for synthetic fuels research and development has sunk from $729 million in 1981 to next year's estimate of $47 million. The Reagan administration believes that such development is the province of private industry.

''We've seen time again synfuel concepts that are just wonderful but economically out of step. You can put them on the shelf and wait for improving technology or a different economy to make them attractive, or you can subsidize them,'' says Arthur Vaughn, assistant secretary for fossil fuels at the DOE. ''We won't cut back on the basic research that needs to be done, but we can't afford to support projects without results.''

But there is concern among scientists that some viable research projects may fall by the wayside for lack of funding. Many complain of a lack of DOE funding for ''process development'' research, the stage in which a scientist's pencil-and-paper conception is translated into a workbench-sized demonstration. ''That's where two-thirds of the work in synfuel research is,'' adds Utah's Dr. Wiser.

Nor is private industry apparently taking up the slack. The SFRI is conducting a study to chart levels of private research-and-development funding for synthetic fuels. Although the final results won't be in for several weeks, Mr. Koleta says he believes that private support is off somewhat over levels in the late '70s.

''Synthetic fuel projects are the sorts of things (for which) you put money out for five years and don't expect to recoup for 20,'' he says, noting that the time to take a synfuels project from laboratory stage to full production is usually over a decade. ''There are lots of more profitable things companies can do nowadays,'' he adds.

In the meantime, there are some bright spots on the synfuels horizon. A coal gasification plant has been operating near Los Angeles for two months. And a consortium of companies has formed a synfuels research cooperative with MIT.

Even the decline in student interest in synthetic fuels at MIT is probably temporary, says Dr. Probstein thinks. ''When things start to tighten up again, synfuels will be back in the spotlight - and so will those researching them.''