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

Pursuant to the Department of Energy Act, GAO reviewed the Great Plains Coal Gasification Project, including: (1) the project's construction status; (2) disbursements of loan guarantee funds; (3) operational activities; (4) the status of proposed price-guarantee assistance to be provided by the United States Synthetic Fuels Corporation (SFC); and (5) the project's financial viability.

GAO found that: (1) construction of the project was completed on schedule; (2) while the project is producing synthetic natural gas, testing disclosed certain technical problems that have prevented it from producing at the expected level of 96 million cubic feet of gas per day; (3) the Department of Energy (DOE) expects commercial operation to begin in June 1985; (4) the estimated final project costs will amount to $2.081 billion; and (5) SFC expects to finalize a contract with the project's investors that would provide price guarantees in exchange for accelerated loan repayments. In addition, GAO found that the project submitted projections to DOE in May 1984 that showed that: (1) the project will lose $240 million through 1996, rather than realizing net income of $2.2 billion, as previously projected; (2) net income will total $1.4 billion through 2009; (3) disbursement of funds to investors will total $38 million through 1996 and $2.4 billion through 2009; and (3) additional capital totalling $811 million over 11 years will be needed to meet general cash requirements, rather than $86 million over 3 years, as previously projected.