In addition, the operations require the use of steam in the gasification process and as a power source, and this adds 20 percent to the coal requirements. Thus gasification plants such as those proposed in New Mexico and Montana, using subbituminous coal require complementary coal operations with annual capacity of approximately 9 million tons to support a 250 MM cfd gasification plant, and 36 million tons to support four modules of gasification plants each with that capacity. At a cost of $5.17 a ton of annual capacity (the El Paso figure), the initial investment requirement for the four coal mines necessary to supply the four gas plants would total $186 million. It is unlikely that this investment would occur at one time. The Texas Eastern Transmission Co. proposal (with Utah International, Inc. supplying the coal) calls for an initial investment in a single 250 MM cfd gasification plant with the possibility of three additional plants at a later date. The Northern Natural Gas-Cities Service-Peabody proposed operation would find Peabody supplying coal for two 250 MM cfd plants initially with two others to follow later.

In either case—with the development of single or multiple gasification plants—the capital requirements for the supportive coal mines are substantial and create a sizeable entry barrier. The barriers appear even greater when compared with capital requirements traditionally needed for the coal industry. Any of the proposed coal mines needed to supply feedstock for the gasification plants discussed above would have a capacity greater than the 6.7 million tons produced in 1971 by Utah International, Inc.'s Navajo mine, the largest U.S. coal mine. In the same year the average output of the 5149 bituminous coal mines was approximately 107,000 tons. The fifty largest mines, accounting for 22.8 percent of total bituminous coal production in 1971, had an average output of 2,516,000 tons, 30-40 percent of the size required to supply a 250 MM cfd coal gasification plant.

There is an additional factor affecting entry into coal mining to support a gasification operation: the extensive coal reserves necessary to sustain the coal mine over the life of the operation. To amortize the gasification-coal complex requires a useful life of at least 25-30 years or coal reserves of 150-250 million tons, depending on coal quality. Utah International, Inc. has dedicated 249 million tons to the Texas Eastern Transmission Co. project; El Paso has set aside 225 million tons of its own coal reserves for its proposed plant. If the four Northern Natural Gas-Cities Service gasification plants materialize, Peabody Coal Co.—the coal supplier—will have to dedicate one billion tons of coal reserves to the project.