The overall objectives of this program are to investigate potential technologies for the conversion of synthesis gas to oxygenated and hydrocarbon fuels and industrial chemicals, and to demonstrate the most promising technologies at DOE`s LaPorte, Texas, Slurry Phase Alternative Fuels Development Unit (AFDU). The program will involve a continuation of the work performed under the Alternative Fuels from Coal-Derived Synthesis Gas Program and will draw upon information and technologies generated in parallel current and future DOE-funded contracts. The paper reports the progress on the following tasks: engineering and modifications: AFDU shakedown, operations, deactivation and disposal; and research and development on new processes for DME, chemistry and catalyst development, and oxygenates via synthesis gas.