BILLINGS, Mont. - Cowboy Coal, a company using an experimental method of removing moisture from coal to make is easier and more profitable to ship, is ready for its next big test.

A company in Louisville, Ky., will take the process first tested in Wyoming to the next level.

Inventor Don Dunlop has awarded Carrier Vibrating Equipment Inc. a contract to take his process and test it in a reactor 20 times larger than the Wyoming tests.

"If all goes well, we'll start with Montana coal currently worth about $10 a ton and increase its value to more than $35 a ton," Dunlop said. "So, that's the advantage to Montana is that one of its major products will have its value more than tripled."

Dunlop and Dianne Wyss, his daughter and administrative officer, have raised $700,000 for the three-month Kentucky test.

Carrier Coal will take the method - successfully tested at a smaller scale for seven years at the Western Research Institute in Laramie - and try to ramp it up to a more commercial size.

The process theoretically could remove up to 30 percent, or most of the water in coal, which is a particular problem for the plentiful, but low-quality, Powder River Basin coal. The process oxidizes a portion of the coal, which then provides heat for the drying process.

Under this process, the serious problem of coal catching fire during drying is eliminated, Dunlop said.

Finally, he said his patented process can remove 65 percent to 90 percent of the mercury in coal, which is a serious environmental problem with coal-fired power generation.

Cowboy Coal's formal name is Fuels Management Inc.

Under the contract, Carrier will design and build a pilot system in Louisville that will process 25 tons of coal.

"Carrier is so confident in the potential for this process that it plans to work closely with Fuels Management, as it proceeds to commercial production," said Senior Project Engineer Jim Kinder.

The system should be completed in June, with testing scheduled for July.

If the larger-scale tests are successful and other development hurdles are met, Fuels Management plans on building a commercial plant in Montana. No site has been selected for the plant potentially capable of processing 220,000 tons per year.

News about the Kentucky test should not be interpreted as having any connection to the company's future sale of stock. That would be contrary to U.S. Securities and Exchange Commission rules.

Dunlop, who is chief executive of Cowboy Coal, lives half time in Red Lodge with his wife, Maxine, and half time in Miami. He holds a doctorate in chemical engineering and has 50 years experience in the energy business.