Synthetic Fuels

In response to a congressional request, GAO provided information on the Great Plains Coal Gasification Project, including: (1) the loan and gas pricing formula; (2) legal matters and agreements; (3) the Department of Energy's (DOE) options and actions; and (4) Great Plains operations.

GAO found that: (1) although a gas purchase agreement pricing formula controlled the price of the gas, it became necessary to devise an alternative pricing formula because the Bureau of Labor Statistics ceased publication of the base price of fuel oil; (2) after the operating contractor defaulted on a loan, DOE believed it necessary to obtain title to the project before making any final decisions concerning the project's future; (3) DOE finalized a new agreement with another firm to continue to operate the project under DOE direction; (4) DOE will continue to evaluate its options for the project's future in terms of the potential value or costs to the federal government and socioeconomic impact on the state of North Dakota, and will continue plant operations as long as that does not expend additional taxpayer funds; (5) during 1985, the plant met production performance standards for commercial operations, but some technical problems remained, and it needed modifications to meet design specifications and environmental control agreements; and (6) DOE does not believe that operating the project during its transition period will result in further costs or economic risk to taxpayers, as long as revenues continue to exceed expenses.