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Show Tosco claims to be paying a fee or for its oil shale loan guarantee By Ilclene C. Monberg Washington-Tosco, the Los-Angeles based oil company which received a $1.1 billion loan guarantee from the Department of Energy (DOE) on Aug. 5, claims to be paying an annual fee for its loan guarantee. In information which Tosco released to the press following the DOE approval ap-proval of the Tosco loan guarantee contract. Tosco explained the details of its loan guarantee. Similar information is not available yet from DOE, as the Tosco contract is in four separate bulky documents, and only four copies were printed up at the time of the DOE approval, ap-proval, a DOE spokesman told this correspondent on August 7. The copies included one for President Reagan, who had to approve the loan guarantee before Energy Secretary James B. Edwards could sign it, one for Edwards, one for Tosco and one for the task force that negotiated the agreement. The loan guarantee will pay for 75 percent of Tosco's 40 percent share of construction expenses of the Colony oil shale project under which 48,300 barrels of shale oil and other products will be produced west of the town of Rifle in Garfield County, Colo. Exxon, the world's largest oil company, wili fund the remaining 60 percent of the joint venture from its own funds. Exxon Is not in any way involved in the Tosco loan guarantee, altho it will be the project manager for the Colony project. Exxon's share of Colony is 60 percent! "Under the terms of the loan guarantee commitement, Tosco will fund 25 percent of its share of the project construction cost ($440 million) from its own revenues and will borrow the remaining 75 percent ($1.1 billion) in theprivalesection." With the federal government guaranteeing repayment of the $1.1 billion. Tosco plans to repay the loans which it obtains thru the private sector from nntlcipnted revenues from the Colony project. "Tosco will pay the federal government an annual guarantee fee. To secure the guarantee covering 75 percent of its share to project costs. Tosco has pledged 100 percent of its interest in the project to the government," govern-ment," Tosco said. In addition to the loan guarantee. Tosco obtained from the Department of Defense (DOD) a contract to provide 10,000 barrels of aviation fuel and diesel fuel daily under specifications spelled out by DOD and at prevailing market prices. This is different from the contract that DOD has with Union Oil , Co. of California approved by DOE on July 29. That contract also provides for Union to supply 10,000 barrels of aviation fuel and dicsel fuel daily to DOD, but under a price guarantee so that Union will get the difference between the market price and the cost of producing oil from shale. The government will not have to rwv a subsidy to Union if the cast of producing the syncrude is less than the world price. But it will have to pav a subsidy up to a total of $100 million if the cost is above the world price. Roth the Union and the Wo contract con-tract w.th the military run for 10 years mill on barrels of oil. It can U svn-crude, svn-crude, a mixture of symmdo and crude or so ely cn.de. I, is cxpw the o, supplied under both co, tract w.nbeab.end.Union'splan.tobebul fit Parachute Creek In Western plant, after the second stage is built J-t stage wil, s;:;,at,onger,ou,i,l, ,,,,!,;;!;:;;;; reM,uno7u;dm,,,OKy1,,vH'''-,'- i ''nslt, agreements to .,, :t The Tosco agreement pn? ; m the issuance of U.S. gfvi" t guaranteed synthetic fuel s bonds. They will be issued : ly Shale Corporation which is a s.. of Tosco, but they carry P". 3 payment by the U.S. govern i will be sold to the private iiv . markets thru normal bank h nels. They will be repays' ' f period of 20 years beginnin f: completion of the project. ; The bonds will be issued as finance construction of tK Is, project, w hich is expectc(1 10 year life. In addition to produ " I a oil, the Colony complex ' C produce liquified petroleum g K. ammonia and coke, aceor hi formation that Tosco filed ; t the time it submitted its apr! n a loan guarantee some nior'- He ty, In that material ma ' DOE. Tosco claimed it W1. guarantee from the fc'1 ' nu-nt "because it tTosoo' ; small to assure that it can Oil Shale Corp.'s share of P ( and conventional sccurN ' financing is not available w : project of this scale. The loan guarantee sb volve any cash rM" C( government, and success'11 . and demonstration of project sliould enable ful " t? projects to be in"nf. rf government assistance. Ti lUackvuMlsaidtlievrrn. bo liable (or $11 billion of j ! (, $: 4 billion cost if lb' 1 ' fail.MandifTascowenl W' " unlikely events. Tow" ) ' , k ( process to separate "oil fc one of tlo best known In ' Jfy Kxxon Is sn cxperie . . tn.'umgcr Kxxon the Tosco hvn iiofli 1 K r Many itbm the Adntin"r ( Hum o was no need (of M to T.vm-o Nvmise l'Av,lY('! the rot ire Colony proje' |
