This report summarizes the status of this project for the quarter January 1, 1997 to March 31, 1997. Phase II has been started and Task 7, Develop Pilot Scale Test Work Plan has been completed. The operational portion of this phase, Task 8 has been initiated with several pieces of pilot equipment already on-site. The start up of the full process train will not occur until the next quarter. The project is slightly behind schedule. A no cost extension was requested and was granted. The anticipated completion date is December 31, 1997. The project is on budget.