"Underground coal gasification (UCG) to produce low Btu gas (LBG) has been tested successfully on numerous coal seams in several countries. Further tests will be useful in improving the technology and examining environmental effects. However what is most needed now is commercial demonstration of LBG production by UCG on a large scale. In this paper the economics and marketplace competitiveness of UCG are examined. The economics of LBG production are attractive based on conservative assumptions drawn from the Hanna test results. The required price for LBG produced by underground gasification of western subbituminous coal is estimated to be about $1.30 per million Btu. The principal unproved assumption in arriving at this price is that the Hanna results can be extended economically to gasification across a large array of wells. The most important use of LBG produced in sparsely populated western coalfields is the generation of electric power. Base-load electric power produced by firing strip-mined coal in the west is estimated to cost about 26 mills per kWh at the mine mouth. This is slightly more than the price of power from firing LBG produced by UCG. For much of the west both these prices are lower than prices required for nuclear power or oil-fired produced power. The key to the competitiveness of “mine-mouth” conventional or UCG-based power plants is the cost of power transmission. The cost of power transmission is dependent upon high capacity. For example, a typical cost of transmitting 5,000 megawatts of power is about 1 mill per 100 miles, but the cost of transmitting 500 megawatts is about 5 mills per 100 miles. These costs suggest that “in-situ power” generated in Wyoming may someday be competitive as far away as southern California."