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What does the buyer have to lose?

The short form is (of course): Money. If you have bought the future commodity, you have already paid your money. Your potential gain is that you have paid less for the commodity than the going price at that time.

Two things can go wrong. First, if the 'seller' of the future commodity (notionally, in this case, the exploiter/producer of a coal gas process) defaults, then you're out your money entirely (less whatever you can get back by suing the failed provider). Second, if the price falls then you may have bought your commodity at a higher price than prevails when the contract comes due. Thus, you still lose money, though not all of it. If the current producers decide to undercut the new method by selling their product at less than the futures price as a way of stifling competition, then you have made a bad choice to 'buy' the future commodity at coal-gas prices.

Its not an untested product. Its oil. You are selling oil for delivery on a futures market.

There are many different grades of oil.. different oil requires different forms of refining. Whoever is at the other end of the futures contract would need to know with good certainty the characteristics i.e. density, sulpher content, etc.

What does the buyer have to lose? They will only pay if there is product to take possession of?

Let's say this is a conventional oil and my above problem does not exist. The coal-to-oil produce enters into a futures contract to sell some amount, let's say 1 million barrels on 6/30/2010 to somebody who needs 1 million barrels on 6/30/2010. That somebody is going to use the oil to produce a chemical... this chemical venture is profitable for oil at $70/barrel, but rapidly loses profitability as oil goes above $70. The bank that is financing the chemical venture thus demands that in order to get the financing, the chemcial venture must lock in its oil cost at $70 or below in the futures market.

The chemical venture enters into the futures contract. On 6/30/2010, oil is $140 dollars a barrel. The coal-to-oil company can't deliver because hey, well, it was an untested product and we ran into production difficulties. Chemical company goes out of business, bank loses its loan.

Actually, this doesn't happen because the company doesn't enter into the futures contract with someone with questionable ability to deliver in the first place.