Abstract An economic analysis oj a project to "skim" pyrolysis tars from thermal coal at the Calgary Power Keephills station by the Lurgi-Ruhrgas process has been performed. Upgrading to 886.7 kg/m3 (28 °API) synthetic crude oil by hydrotreating with the necessary hydrogen produced from natural gas yields a DCF rate of return of 21.2% based on the production of 2360 m3/d (14,844 bpsd) valued at $145.23/m3 ($23:09/bbl) from a plant costing $362 million, both in 1980 dollars. The evaluation, although not optimized in terms of plant size, indicates a high potential for contemporary implementation. Better yield data for Highvale subbituminous B coal are required. Introduction Background Coal must ultimately play an important role in Alberta's energy future because of the quality and the abundance of this Resource(1,2,3). Enormous coal reserves" coupled with an impending shortage of crude oil, raise important questions regarding the most applicable coal liquefaction process, the most likely timing if such processes are to be used and the resulting economics. The current status of coal liquefaction technology has been adequately reviewed by a number of authors(4,5,6,7,8), and only a brief review is undertaken to justify the selection of a process and situation which are deemed most favourable in an Alberta context. In this discussion, the term "synthetic crude oil" will refer to a highly aromatic and napthenic, ash-free product of no more than 921.3 kg/m3 (>22 ° API) containing approximately 0.1% sulphur by weight and appreciable quantities of oxygen and nitrogen. The objective of coal liquefaction processes is to obtain a liquid product with a higher H/C ratio and lower average molecular weight than the parent coal. The coal molecule, with an empirical formula of C135H97O9NS(9), is a complex three dimensional, heterocyclic structure with aromatic rings joined by aliphatic, oxygen and sulphur bridges: Over 70% of the carbon atoms are in aromatic rings and the structure is so tightly condensed that many carbon atoms have no hydrogen attached to them. Figure 1 illustrates three main routes by which coal liquids may be obtained: pyrolysis, which improves the H/C ratio by carbon rejection through the production of byproduct coke; hydrogenation, involving hydrogen addition; and synthesis, involving both the addition of hydrogen via partial oxidation to H2 and CO and rejection of carbon by CO2 removal prior to catalytic reaction of the synthesis gas. Comparison of Economics Economics have been published for many coal liquefaction processes, but meaningful comparisons of such figures may only be made if all evaluation parameters are consistent. Equivalent timing, location, type of product, scale of plant, financing parameters, feedstock cost and offsite facilities must all be considered. A method developed by Herring(10) has been used to bring these parameters to a consistent baseline for several of the more advanced liquefaction processes. A 15,900-m3/d (100,000-bbl/d) facility, located in the U.S., earning a 12% DCF ROR and producing a synthetic crude oil product from coal valued at $0.47/ GJ ($0.50/mmBtu) in 1980, has been considered.