Synfuel Success

Alchemy in South Africa

A labyrinth of pipes and valves, tanks and towers rises above the flat bushveld 60 miles north of Johannesburg. At night chimneys spew a gas that casts an eerie orange glow over the surrounding expanse of coal fields. Downwind from the plant, 35,000 people live in Sasolburg, a city of green lawns and broad highways. Their job: to produce Sasol, a synthetic oil made from coal.

South Africa is ahead of the U.S. in its development of synthetic fuel. For a country boycotted by most of OPEC and without its own oil reserves, necessity has fired innovation. Sasol now provides less than 10% of the 240,000 bbl. a day of oil that South Africa requires, but the country is spending $6 billion to build two more Sasol plants, which are expected to meet about half of its needs by the early 1980s.

South Africa was early to capitalize on its coal resources, estimated to be 25 billion tons, or about one-seventh of the U.S.'s total. In 1950, the South African Coal, Oil & Gas Corp., known as SASOL, was formed and by 1955 Sasol gasoline was being sold. The state-owned company, which charges just over $2 per gal. of gas, began showing a profit in 1973 and last year had pretax profits of $140 million on sales that totaled close to $ 1 billion. Although environmentalists were alarmed at the potential damage --indeed, smoke often hangs like a gray curtain for days over Sasolburg--people are now prepared to accept the air pollution at the remote site. Says former SASOL Chairman Pierre Etienne Rousseau: "The oil supply situation shocked many of us into a new sense of reality."

Precise details of the process are state secrets, but the general outlines are known. To extract the oil, the Sasol plant burns coal with oxygen and steam in a big cylindrical vessel until a gas forms above the ashes. Once the gas is cleaned of impurities--yielding valuable chemical byproducts in the process--it is mixed with a catalyst made of iron and other substances. This catalyst transforms the gas into liquid oil. Production costs amount to $17 per bbl. That is well below the OPEC price of around $20 per bbl. and much less than the $31 per bbl. that South Africa would have to pay on the spot market.

South Africa has contracted with Fluor Corp. of Irvine, Calif., to build the two additional, much larger plants.

Sasol II is being put up 100 miles from the present plant. The $2.9 billion Sasol II will be environmentally cleaner; precipitators above the boilers will extract chemical fumes and reduce air pollution, and water will be recycled rather than dumped in rivers. In addition, productivity will be higher: 1.78 bbl. of synthetic oil from each ton of coal, vs. 1.26 bbl. at present. As soon as that plant is finished next February, construction will start near by on Sasol III. Once the three plants are in operation, they will save an estimated $400 million a year in foreign exchange and produce about 112,000 bbl. of oil a day.

This would be a drop in the oil bucket in the U.S., which uses 17.6 million bbl. a day. But even though Sasol production is helped by South Africa's exploitation of cheap black labor and the low cost of coal, SASOL's success indicates that synfuels may be a solution to future shortages. South Africa Economic Affairs Minister J. Christiaan Heunis notes: "We are well aware of how we stand on the energy situation, and we are considering all alternative sources."

They include plans to build plants that will convert wood and cassava into methanol, and sugar cane into ethenol. The most basic campaign: flower power. The Minister of Agriculture is also encouraging farmers to grow sunflowers and extract the oil, to be used instead of diesel fuel in tractors.

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