Status of the Great Plains Coal Gasification Project

GAO reported on the status of the Great Plains Gasification Associates' federally funded efforts to build the Nation's first commercial plant producing synthetic gas from coal.

GAO found that, due to a drop in forecasted energy prices, Great Plains projected that plant operations could result in large after-tax losses and negative cash flows for the first 10 or 12 years of operations. However, parent companies and sponsors of the project could realize a positive rate of return over the long term. Project income is expected to rise substantially in later years because of forecasted increases in gas prices which will restore the project's economic viability. Great Plains also has an operational startup plan to ensure that full gas production will begin as scheduled. Nevertheless, Great Plains notified the Department of Energy in September 1983 that it was considering terminating its participation in the project in the absence of additional federal assistance. In this regard, additional assistance in the form of price guarantees for the project's synthetic natural gas are being considered by the Synthetic Fuels Corporation.