In 1978, field and laboratory studies were initiated to assess the technical feasibility of underground coal gasification in the fruitland coal field located in northwest New Mexico. Participants in the project include University of New Mexico, Public Service Company of New Mexico, Los Alamos Scientific Laboratory and Science Applications, Inc. A site has been selected and preliminary characterization has begun. Field activities include coring, logging, hydrologic testing and water sampling. Laboratory studies have been initiated to measure the distribution overburden, under burden and coal ion exchange constants for selected ions. The results from these activities are reported along with the laboratory analysis of water samples from both the underground coal conversion site and throughout the region. Extensive hydrologic studies of the entire region are being performed by the Bureau of Land management and the U.S. Geological Survey to assess the nature and availability of water in this region to aid energy development. These regional findings will also be discussed and their impact on underground coal conversion assessed.