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EMD-81-142 1 (1981-09-10)

handle is hein.gao/gaobabclk0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 RELEASED 04MGY AM MINALS September 10, 1981 DIVISlON B-204651 -a oa The Honorable James J. Blanchard Chairman, Subcommittee on Economic Stab ilization Committee on Banking, Finance, and Urban Affairs House of Representatives 116438 Dear Mr. Chairman: Subject: The Oil Shale Corporation Loan Guarantee Contract (EMD-81-142) Your letter dated August 7, 1981, requested that we examine various aspects of the recently signed loan guarantee contract between The Oil Shale Corporation (hereafter referred to as Oil Shale) and the Department of Energy (DOE). (See enc. III.) Specifically, you asked us to determine (1) whether all relevant provisions of the Defense Production Act of 1950, as amended (DPA), which authorizes the loan guarantee, were adhered to, (2) whether the act's mandate for the President to take immediate action to achieve synthetic fuels production was fully imple- mented, and (3) whether, in light of the findings above, we would recommend approval of this loan guarantee. Enclosures I and II contain the details of our findings. As you know, on August 6, 1981, DOE signed a $1.112- billion loan guarantee contract with Oil Shale, a wholly owned subsidiary of TOSCO Corporation. This loan guarantee covers 75 percent of Oil Shale's estimated costs. It allows Oil Shale to participate on a 40-percent basis with Exxon Corporation in the design, construction, and operation of a 43,500-barrel- a-day commercial oil shale plant (commonly referred to as the Colony project). The plant, to be located in Garfield County, Colorado, is estimated to start producing about 24,150 barrels a day by late 1985 and reach full production in late 1987. In addition to the loan guarantee, DOE and Oil Shale signed a purchase commitment. The basic commitment is for Oil Shale to supply the Department of Defense (DOD) 10,000 barrels a day of fuel for 10 years starting in October 1986. The fuel supplied for military use will be one-fifth jet fuel and four-fifths (306281)

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