Information on the 1949-54 Bureau of Mines Coal Liquefaction Pilot Plants

GAO reviewed Department of Energy correspondence, Bureau of Mines reports, and the Congressional Record and contacted industry officials to respond to a request for information about the Bureau of Mines coal liquefaction pilot plant in Louisiana, Missouri, which operated from 1949 to 1954. The project was abandoned in 1954 because the direct liquefaction process was considered to be uneconomical and noncompetitive with crude-oil based products. Since 1954, industry and the Government have been doing research to develop improved liquefaction processes in terms of trouble-free operation, safety, environmental acceptability, and cost competitiveness. The Department of Energy currently supports the advanced development of four direct coal liquefaction processes. The Energy Security Act establishes a Synthetic Fuels Corporation to provide financial incentives for the development of domestic substitutes for imported oil and sets national goals for synthetic fuel production.

Even though the current direct liquefaction processes under development are much improved, they are not ready for the commercial marketplace. These processes have only been operated on a small scale and have technical and environmental problems to be resolved. The Department of Energy plans to address these issues through its direct liquefaction research, development, and demonstration program. Assuming a successful operation of the program's pilot and demonstration plants, it foresees no insurmountable constraints to eventual commercialization of the process. Three indirect liquefaction processes are commercially available now. However, industry officials believe that commercial plants have not been built in the United States because of the financial risk involved in building first-of-a-kind plants. Some companies are ready to commit resources to build commercial indirect liquefaction plants, but would like their risk reduced by financial incentives from the Government. The Bureau of Mines pilot plant made contributions to the processes now under development, which are updated versions of the Louisiana, Missouri, direct and indirect liquefaction processes. It is unlikely that any commercial direct liquefaction plants will be operating in the 1980's. The bulk of the production is likely to come from the indirect process.