Energy and water are two precious natural resources with which demand will continue to grow with increased population growth. Coal provides a cheap and abundant source of energy but with important environmental effects on air and water. An analysis of the current coal production in Texas, one of the leading providers of energy in the United States, will be discussed along with the possibility of creating a coal-to-liquids market in Texas from existing and future coal mining operations. An in-depth discussion into the water requirements for traditional coal production and coal-to-liquids will assist in analyzing its possible production and sustainability. / text