Conditioning of coal in steam is being explored for the purpose of improving the yield and quality of condensable product obtainable in the mild gasification of coal. Test plans for both Tasks 1 and 2 were prepared. The first was accepted by DOE, the second is being revised. A new steam conditioning reactor system was constructed using a fluid bed heater to improve temperature control and uniformity. This unit has been put into routine operation, and the test program to determine the effect of operating pressure on steam conditioning has been initiated. The semicontinuous pyrolysis reactor has been modified for steam operation at elevated pressure. Operation has proven satisfactory in runs at pressures up to 500 psia. A preliminary design for a fluidized-bed mild gasification test facility has been drawn up. 7 figs., 1 tab.