Past experiments have shown underground coal gasification (UCG) to be technically feasible but not economically competitive. During these tests, stabilization of gas production rates and of gas heating value were not achieved for sustained periods. The Bureau of Mines began UCG experiments at Hanna, Wyoming, in November 1972. On January 19, 1975, this work was transferred to the U. S. Energy Research and Development Administration. The problems of past tests have been avoided and encouraging results have been obtained. No gas leakage from the reaction zone has been observed. Gas production rate and gas heating value were relatively stable for a 5/sup 1///sub 2/-month period. During this period approximately 20 tons of moisture-free coal were gasified per day, energy balance calculations showed 3.5 times more energy produced than consumed, and comparison with an air-blown surface gasifier showed similar energy recovery efficiencies. A second experiment to further define process feasibility is underway. If results from this experiment are favorable, design and construction of a 15- to 30-MWe pilot plant will follow. Successful pilot plant operation would lead to design of a commercial demonstration plant by 1980.