Status of the Great Plains Coal Gasification Project:

August 1982

EMD-82-117: Published: Sep 14, 1982. Publicly Released: Sep 14, 1982.

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Pursuant to a legislative mandate, GAO reviewed the Great Plains Gasification Project. This second report contains information on all aspects of the project, including its status and the funds disbursed. The report also discusses: (1) the project's controls and management; (2) monitoring by the Department of Energy (DOE); and (3) the extent to which the DOE loan guarantee complies with applicable legislation. The project consists of the gasification plant, a coal mine, and a pipeline. Full-scale construction started in August 1981.

As of June 30, 1982, progress on the gasification plant was 4 to 6 weeks behind schedule. However, actions were initiated to get the project back on schedule with no anticipated long-term impacts. The mine was on schedule, and construction of the pipeline is expected to begin in April 1983. Cumulative project costs were lower than originally estimated. The project administrator has adopted extensive procedures to manage, direct, and oversee the construction and startup of the project. As part of these procedures, several internal audit groups have been established to assist management and oversee contractors at the project site. The computerized management information system, which produces most of the data on the project, has some weaknesses and needs further testing to ensure its integrity and reliability. DOE has established and implemented procedures for reviewing all aspects of the project, identifying problems, and initiating corrective actions. It expects to spend about $2.5 million each fiscal year to monitor project construction and to ensure appropriate release and use of guaranteed debt funds. However, it has not audited costs incurred to determine whether expenditures have been made in accordance with the limitations in the loan guarantee agreement. The review indicated that DOE has complied with the requirements of the applicable legislation.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Energy should audit the costs incurred by Great Plains on a continuous basis throughout the construction period. Such audits should begin as soon as possible, because the longer DOE delays in initiating them, the more difficult it will be to verify and validate the costs on a current basis.

    Agency Affected: Department of Energy

 

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