Wartime Needs Spur Interest in Coal-to-Oil Processes

In 1944 General George S. Patton's Third Army was racing across southern France. In his haste to be the first U.S. commander to cross into Germany, however, Patton overextended his supply lines. His armored columns ground to a dead stop. Faced the choice of waiting until he could be resupplied or draining the fuel of captured German vehicles, Patton chose the latter. His tanks and armored personnel carriers continued to steamroll toward Germany, powered by the German's own ersatz gasoline – synthetic fuel manufactured from coal.

The leaders of World War II, on both sides, knew that an army's lifeblood was petroleum. Ironically, before the War, experts had scoffed at Adolph Hitler's idea that he could conquer the world largely because Germany had almost no indigenous supplies of petroleum. Hitler, however, had begun assembling a large industrial complex to manufacture synthetic petroleum from Germany's abundant coal supplies.

When Allied bombing of the German synfuels plants began taking its toll in late 1944 and early 1945, the entire Nazi war machine began grinding to a halt. More than 92 percent of Germany's aviation gasoline and half its total petroleum during World War II had come from synthetic fuel plants. At its peak in early 1944, the German synfuels effort produced more than 124,000 barrels per day from 25 plants. In February 1945, one month after Allied forces turned back the Hitler's troops at the Battle of the Bulge, German production of synthetic aviation gasoline amounted to just a thousand tons – one half of one percent of the level of the first four months of 1944. None was to be produced afterwards. Lack of petrol meant the end of the war and the end of the Third Reich.

America Becomes Interested in Synthetic Fuels Research

Germany's efforts to supplement scarce natural petroleum with synthetic substitutes was not lost on America's energy industry – or its politicians – during the war. Oil was in tight supply in the United States during the war years. As demand for petroleum rose, the oil glut of the 1930s, which had driven the price of crude oil to less than 10 cents per barrel, had dissipated. America was now pumping full out, and demand was still increasing. Gasoline was rationed, and some began to question whether the days of America's petroleum industry were numbered.

During three days in June 1942 and again in July, a subcommittee of the House Committee on Mines and Mining held hearings on the production of gasoline, rubber and other materials from coal. In August 1943, another round of hearings on synthetic liquid fuels was held by the U.S. Senate Committee on Public Lands and Surveys.

The Bureau of Mines had previously conducted early exploratory research on synthetic liquid fuels. In 1925-29, Bureau scientists studied ways to squeeze oil from shale.

In 1928-30 and 1937-44, the Bureau had experimented with coal hydrogenation, the fundamental process that Germany's Frederick Bergius had first discovered in 1921. Read more about the origins of the Bergius process.

Much of the Bureau's early laboratory experiments were conducted at its Central Experiment Station in Pittsburgh, adjoining the campus of the Carnegie Institute of Technology. In 1937, the Bureau had constructed a small-scale, 100-pound per day continuous coal feed test unit.

Congress Passes the Synthetic Liquid Fuels Act

As more U.S. oil fields were found, however, interest in developing a synthetic substitute for petroleum had waned. Now in the war years, a combination of curiosity, concern, and military strategy led several politicians to call for a revived program at a much larger scale. West Virginia's Jennings Randolph, then a Congressman, went so far as to fly from Morgantown to Washington DC in a synthetic fuel-powered airplane in November 1943 to call attention to the potential for an American synfuels industry.

Finally, aided by Interior Secretary Harold Ickes and U.S. Senator Joseph O'Mahoney, the Synthetic Liquid Fuels Act was approved on April 5, 1944. The Act authorized $30 million for a five-year effort for:

"...the construction and operation of demonstration plants to produce synthetic liquid fuels from coal, oil shales, agricultural and forestry products, and other substances, in order to aid the prosecution of the war, to conserve and increase the oil resources of the Nation, and for other purposes."

The Act directed that the Secretary of the Interior, acting through the Bureau of Mines, to construct, maintain, and operate one or more synthetic fuel demonstration plants "of the minimum size which will allow the Government to furnish industry the necessary cost and engineering data for the development of a synthetic liquid fuel industry and of such size that the combined product of all the plants....will not constitute a commercially significant amount of the total national commercial sale and distribution of petroleum and petroleum products."

To begin implementing its new program, the Bureau of Mines expanded the laboratory work it had been conducting near the Carnegie Institute. The work was transferred to new laboratories erected between 1945 and 1948 (at a cost of $3.5 million) on the grounds of the Bureau's Experimental Coal Mine at Bruceton, PA, about 13 miles south of Pittsburgh. The site had been one of the original field stations for the Bureau of Mines, created to train coal miners and improve mine safety when the Bureau was formed in 1910.

The Bureau's early research drew on a wealth of data uncovered by the Technical Oil Mission. Made up of nearly two dozen government and oil industry experts who had followed the advancing Allied armies into Germany in early 1945, the Technical Oil Mission had searched through some of Germany's synthetic fuel plants, interviewed captured scientists and engineers, and confiscated thousands of technical documents.

Some Congressmen and Administration officials had wanted to offer the U.S. oil industry subsidies to construct a coal-to-oil demonstration plant, but the industry balked, convinced that the technology would not be competitive with conventional crude oil. The Bureau of Mines, therefore, decided to proceed on its own. In December 1945, the Bureau persuaded the War Department to transfer to it an Army wartime synthetic ammonia plant called the Missouri Ordnance Works in Louisiana, MO.

Under the leadership of Wilburn C. Schroeder, the Bureau chemist who had headed the Technical Oil Mission into Germany and with the assistance of a few captured German scientists, the Bureau contracted with the Bechtel Corporation to convert the plant into a coal hydrogenation test facility. By February 1949, engineers had a fully operational, 200-barrel per day coal-to-oil plant.

During its initial test runs, the plant processed a North Dakota lignite into diesel fuel. With a flair for promotion, the Bureau used the synthetic diesel fuel to power the Burlington train that transported guests from St. Louis to the plant's dedication on Sunday, May 1, 1949. Later that year, the first bituminous coal was processed.

Optimism reigned supreme in the first year of the expanded national synthetic fuels effort. In August 1949, the Bureau's synfuels experts issued a stunning assertion that they could make gasoline from coal for as little as 1.6 cents per gallon before profits and taxes.

From 1949 to 1953, the Missouri hydrogenation plant – which had cost $10 million to build – produced 1.5 million gallons of synthetic gasoline, 1 million of which was fleet tested by the armed services. Operations, however, were sporadic. The plant was hindered by metal erosion and mechanical difficulties. Nonetheless, the 78-octane unleaded coal-derived gasoline it produced was found equal to conventional petroleum-based gasoline. The synthetic gasoline fueled the motor vehicles used by the plant.

In 1948, the move toward an American synthetic fuels industry looked particularly farsighted, especially since crude oil prices that year were more than double the 1945 level. In 1948, for the first time, the United States imported more crude oil and products than it exported. Americans began hearing the word "foreign oil."

Some politicians declared that the country was in the midst of an energy crisis; others accused the major oil companies of conspiring to drive up prices. On March 15, 1948, in the midst of a series of hearings over the state of the nation's fuel supply, Congress amended the Synthetic Liquid Fuels Act, extending the work to eight years and doubling the funding to $60 million.

With the new money, the Bureau immediately contracted with the Koppers Corporation for a second coal-to-liquids facility at Louisiana, MO, this one to test a different process for liquefying coal called "Fischer-Tropsch." Like the Bergius hydrogenation process, the Fischer-Tropsch chemistry had also originated with German inventors and had been used in the Nazi war effort, although to a much lesser extent. Rather than dissolving coal directly into a liquid as in the Bergius process, the Fischer-Tropsch method first transformed coal into a gas, then chemically rearranged the gaseous molecules into liquid fuels and chemicals.

The second plant at Louisiana, MO, was completed in 1950 and began full operation in 1951. Almost from day one, however, the 80-barrel per day test facility was plagued by disintegration of the chemical catalysts used to convert the coal gas into liquid fuels. Only 40,000 gallons of liquid products were produced by the $5 million plant.

Although World War II was over, America's petroleum appetite showed no signs of abating, and interest in synthetic fuels continued. On September 22, 1950, Congress approved a second amendment to the Synthetic Liquid Fuels Act, adding another three years and another $17.6 million – bringing the total to $87.6 million.

A New Federal Research Laboratory Opens in Morgantown, WV

The 1950 Amendment specified that $2.6 million of the funding "shall be used for the construction and equipment of an experiment station in or near Morgantown, West Virginia, for research and investigation in the mining, preparation, and utilization of coal, petroleum, natural gas peat, and other minerals."

The Bureau decided to use the funding for the Morgantown facility to probe more deeply into the mysteries of converting coal to gas – the first step in the Fischer-Tropsch process.

Prior to World War II, there had been a thriving "water gas" industry in the eastern United States. Hundreds of small plants produced a low-grade gas by blowing air and steam, alternately, through a bed of coke which could be made from coal. The processes, however, were crude and inefficient, and the gas utility industry was already discarding them in favor of piping in higher quality natural gas from Texas and Oklahoma. In 1947, for example, the "Big Inch" and the "Little Inch" – the pipelines built in wartime to transport oil from the Southwest to the Northeast – had been sold to the Texas Eastern Transmission Company and turned into natural gas pipelines. The era of "water gas" – or as it is sometimes called "town gas" – was on its way out.

Still, with gas from coal offering a new chemical pathway to synthetic oil, Bureau scientists began studying better ways to gasify coal. They had estimated that the cost of making clean, compressed gas would amount to 50-80 percent of the cost of making gasoline from coal. Consequently, to bring down the cost of synthetic gasoline, there was a need for better, lower cost gasification processes.

The Bureau had been studying the gasification of coal and purification of the coal gas at Morgantown in space made available in West Virginia University buildings. A pilot scale gasifier capable of processing 500 pounds per hour of coal had been constructed in 1948. Now, the Bureau began drawing the blueprints for a new research facility to be designated the Appalachian Experiment Station. The first buildings were erected between 1952 and 1954.

With the move to their new facilities, the Bureau's gasification scientists terminated much of the earlier work on low-pressure gasification processes and began to concentrate on more effective – and hopefully, lower cost – high pressure techniques. Morgantown engineers began to work on ways to feed coal into the pressurized gasifier and on more durable materials for refractory linings that could withstand the harsh conditions inside the gasifier. They also began to study a concept offered by the Atomic Energy Commission in which heat for the gasification reaction would be supplied by a nuclear reactor.

By the early 1950s, with the benefit of lessons learned in the first experimental units, the Bureau revised its cost projections for coal-based liquid fuels to a more cautious 11 cents a gallon (conventional gasoline cost about 10.6 cents at that time). The National Petroleum Council – an industry advisory committee to the Interior Department – disagreed, citing 41.4 cents per gallon as the likely cost. Ebasco Services, a private consultant, published a more middle-of-the-road estimate: 28.1 cents a gallon.

The same three organizations revised their estimates in 1952-53. The Bureau upped its projection to 19.1 cents a gallon, while Ebasco's was 21.8 cents a gallon. The National Petroleum Council came down slightly, to 34.8 cents a gallon. Still, the revised estimates were 8.5 to 24.2 cents a gallon above the cost of gasoline from crude oil.

America's energy sights were also beginning to shift toward giant oil fields that had been found in the Middle East. American companies were striking deals with Persian Gulf oil sheiks for the rights to drill and produce the massive discoveries. The geopolitical center of America's oil supply was beginning to shift, and so too was its politics.

In 1952, Americans elected Dwight D. Eisenhower as the 34th President of the United States. Carrying 39 states and winning the electoral vote 442 to 89, Eisenhower brought "modern Republicanism" into the conduct of domestic affairs. He called for reduced taxes, balanced budgets, a return of certain responsibilities to the states (including title to valuable tideland oil reserves), and a decrease in government control over the economy. The Republican Party also won control of Congress by a slim margin.

Industry Builds Its First Coal-to-Oil Plant

The same year, the nation's first privately built and operated coal hydrogenation plant began operating at Institute, West Virginia. Constructed by the Carbide and Carbon Chemical Company (later to become Union Carbide), the Institute plant could process 300 tons of coal daily. From 1952 to 1956, the plant produced chemicals from coal, and hence its hydrogenation conditions were milder than those used in the Bureau's plants. Nonetheless, the Institute plant was a symbol to many in the Eisenhower Administration and the Congress that large-scale synthetic fuels plants should now become the responsibility of the private sector.

In March 1953 when the Republican-led House Appropriations Committee opened its budget hearings, its first official act was to kill funds for the Louisiana, MO, synthetic fuel plants. The cost of synthetic fuels was too high for the government to bear, the Committee stated. Estes Kefauver, then out of Congress but later elected to the U.S. Senate, claimed that the nation's oil companies had been behind the Committee's action because they did not want the competition from coal. A short time later, the Committee voted to cease funding for all the programs authorized under the Synthetic Fuels Act.

Within 90 days, the Missouri plants were closed and turned back to the Department of the Army. The coal hydrogenation plant returned to making ammonia.

For the remainder of the 1950s and into the 1960s, the Bureau of Mines coal and synthetic fuels research was relegated to low-priority fundamental studies. The Bruceton research facility stayed in operation, conducting small-scale, fundamental studies on coal-to-oil processes, but emphasizing its original mission of mine training and safety. The Morgantown site also remained open largely because other Interior Department research programs in petroleum and natural gas and a federal coal mine health and safety inspections group were added to supplement the facility's coal gasification mission.

The nation's first high profile program in synthetic fuels research was over but, largely unnoticed by the public, federal scientists at Pittsburgh and Morgantown continued to study the basic properties of coal. The knowledge they gained during this period would prove extremely valuable when West Virginia Senator Robert C. Byrd decided in 1961 to rejuvenate the nation's coal research program by pushing through legislation to create a new Office of Coal Research in the U.S. Department of the Interior.