Status of the Great Plains Coal Gasification Project--May 31, 1984

GAO presented its semiannual report on the federally guaranteed loan to the Great Plains Gasification Associates to build the nation's first commercial plant producing synthetic natural gas from coal. GAO reviewed the status of: (1) the project's construction and operational startup activities and costs during the 6-month period ended May 31, 1984; and (2) the U.S. Synthetic Fuels Corporation's (SFC) proposed price guarantee assistance.

GAO found that project construction is 99-percent complete, contract costs to date are $164 million less than projected estimates, and the project administrator expects to meet the full gas production date set out in the loan guarantee agreement. In 1983, Great Plains applied to SFC for price-guarantee assistance to alleviate concerns that the project would incur large losses in its first years of operations and that sponsors would be required to invest higher sums of money to keep the project solvent. GAO noted that SFC had not acted on the proposed assistance agreement as of August 1984, and that a number of legislative proposals were pending which, if enacted, would sharply curtail SFC funds and activities. Since the proposed SFC assistance would restructure the project's financial terms and conditions, GAO plans to evaluate Department of Energy analyses of the project during the next 6-month review.