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The leading edge of railroad technology is being pushed toward a return to coal, an abundant fuel that was once discarded by the industry as too dirty and inefficient.

The nation`s two major locomotive builders are exploring the possibility of using the energy-rich mineral as a liquid fuel in conventional diesel engines.

And if the research is successful, experts predict the achievement will mark the greatest technological revolution in railroading since diesels started replacing steam locomotives in the 1930s.

Both the Electro-Motive Division of General Motors Corp. at McCook, Ill., and General Electric Co. of Schenectady, N.Y., are seeking ways to replace diesel oil with a mixture of finely ground coal and water called slurry in an effort to cut in half the American railroads` fuel bill of $3.5 billion to $4 billion a year.

Peter K. Hoglund, vice president and general manager of the Electro-Motive Division, said that if the research bears fruit, the firm might start production of slurry-powered diesel locomotives in the 1990s.

”The economics are so good that if we succeed, we`ll have a whole new tool, comparable to the dieselization of America`s railroads,” Hoglund said. ”It`s another opportunity for the railroad industry to achieve greater efficiency and for the supply industry to offer a better mouse trap. It should also create more jobs.”

That view is shared by Martin J. Hapeman, diesel engine and advanced technology manager of General Electric`s transportation system operations.

”Converting the railroads to domestically available coal-based fuels also would benefit the nation, especially when you consider the effect that lower freight costs could have on the price of goods that we all buy,”

Hapeman said. ”More than a third of all the freight in this country is hauled by rail.”

C. Kenneth Poindexter, advanced engineering manager at Electro-Motive, said that 1 million BTUs (British thermal units) of coal cost about $4 to $5 while it costs from $6 to $8 to generate a comparable amount of energy with diesel fuel, depending on the fluctuating price of oil.

”So you can see the incentive is there to explore,” Hoglund said. ”The American railroads now spend between $3.5 billion and $4 billion a year on diesel fuel at about 82 cents a gallon. This technology could cut that bill by about half.”

James J. Kotlin, Electro-Motive`s engineering director, said petroleum resources could become depleted or fall into short supply sometime in the 21st century, but that there are an estimated 300 years of coal reserves in the U.S.

Those deposits, according to the Energy Information Administration, contain the energy equivalent of about 2 trillion barrels of crude oil, a figure more than doubles the world`s known petroleum reserves.

”The motivation for this project is all that coal,” said Warren A. Fox, Electro-Motive`s director of sales and service. ”It`s a natural resource, and with it we can keep the money in this country and stop depending on the vagaries of the Organization of Petroleum Exporting Countries` oil prices.”

According to Fox, the company`s goal is to produce a slurry-powered locomotive that will operate at the same speeds and haul the same tonnage as conventional diesels, but with a greater operating range.

Company officials expect that developmental costs will eventually run into ”the hundreds of millions of dollars” by the time a prototype takes to the rails.

Electro-Motive engineers have based their savings estimates to customers on the sale of an entirely new fleet of locomotives rather than on an attempt to retrofit the 23,000 existing units to slurry fuel. Conversion would require ”dramatic modification,” Kotlin said.

The locomotives will require twice the 3,500 to 5,000 gallon fuel carrying capacity of conventional diesels because of the reduced amount of energy delivered per gallon of slurry mixture, Poindexter said.

The fuel probably will be carried both aboard the locomotive and in a tender or tank car from which engine reservoirs will be replenished. Otherwise, the locomotive`s external appearance would remain the same unless there are styling changes over the years.

Slurry is the technical name for the mixture of coal and water into which an additive must be introduced to keep the coal particles suspended. It is much thicker than of diesel fuel, a factor that could pose problems in freezing weather.

”We`re still exploring what should be the proper proportion for maximum combustion and operating efficiency,” Poindexter said.

Poindexter said Rudolf Diesel, inventor of the engine bearing his name, first tried burning powdered coal without a liquid as fuel, but that the engine ”blew up.”

Both locomotive makers started their slurry projects in 1985 with the help of matching grants from the U.S. Department of Energy.

General Electric is conducting its research into slurry burning diesel locomotives at Schenectady and Erie, Pa.

Electro-Motive is undertaking similar studies at its sprawling plant in McCook and under a contract with the Southwest Research Institute, a developmental testing firm in San Antonio, Tex. In addition, it is exploring the possibility of using the same fuel in a gas turbine engine.

Although every effort will be made to cleanse the coal of impurities, engineers believe there will still remain sufficient abrasive elements in the mixture to cause greater wear than diesel fuel on engine surfaces like pistons, piston rings, cylinders and valves.

”Our goal, of course, is to overcome that problem, but whether the use of coal slurry will approach the engine wear life of diesel fuel is problematical,” Poindexter said. ”The savings on fuel costs, however, will more than outweight the loss in wear.”

Engineers are investigating developments in technology and new materials as a possible solution to the problem. One avenue might be making the parts out of ceramics or coating them with the material.

”That technology, however, is still in its infancy,” Hoglund said.

Engineers, he said, are confident that they can develop a fuel that will be clean burning and comply with all environmental regulations.

Poindexter said much of the technology required for a turbine engine already exists. Such power plants are used in aircraft, helicopters and in such marine applications as hydrofoils.

The estimated savings for a slurry-burning turbine are about the same as those projected for the mixture in a conventional diesel power plant, he said.