This report describes activities for the second quarter of work performed under this agreement. Kick off meetings with MEFOS, Kvarner and Siemens Westinghouse were held during the reporting period. MEFOS and Kvaerner have completed initial computational simulations. MEFOS has drafted a detailed experimental test plan and is making preparations for atmospheric testing, scheduled to begin on June 5.

This report describes activities for the sixth quarter of work performed under this agreement. MEFOS conducted a third round of atmospheric testing as scheduled on December 9 through December 12, 2003. We reported experimental activities of this testing last quarter. We report process calculations and results this quarter. The test results demonstrated a much-improved rate of carbon dissolution with gas yields close to thermodynamic equilibrium at nearly doubled feed rates of September testing and a commercially viable feed and oxygen injection technique. Additional super-atmospheric testing to perform the last task in the MEFOS experimental program is scheduled for the last quarter of 2004.

This report describes activities for the eighth quarter of work performed under this agreement. We await approval from the Swedish pressure vessel board to allow us to proceed with the procurement of the vessel for super atmospheric testing.

Phase I of the work to be done under this agreement consisted of conducting atmospheric gasification of coal using the HyMelt technology to produce separate hydrogen rich and carbon monoxide rich product streams. In addition smaller quantities of petroleum coke and a low value refinery stream were gasified. Phase II of the work to be done under this agreement, consists of gasification of the above-mentioned feeds at a gasifier pressure of approximately 5 bar. The results of this work will be used to evaluate the technical and economic aspects of producing ultra-clean transportation fuels using the HyMelt technology in existing and proposed refinery configurations. This report describes activities for the thirteenth quarter of work performed under this agreement. MEFOS, the gasification testing subcontractor, reported to EnviRes that they were having difficulty with refractory vendors meeting specifications for the lining of the pressure vessel. EnviRes is working to resolve this issue.