Describes process and equipment for the production of synthesis gas and fuel gas from subbituminous coal or other noncaking carbonaceous materials in a vertically ranging externally heated annular retort. A comminuted noncaking, subbituminous coal containing about 22% moisture is charged into the top of the apparatus and directed downward by gravity through annular preheating and reaction zones. Steam (0.2-2 lb. per lb. of coal) is mixed with the coal, and reaction begins at progressively increasing temperature 700°-2,000° F. Products of reaction are removed from the interior of the annular reaction zone while giving up a substantial portion of their sensible heat to incoming reactants. Solid materials not combined with reactants in the upper zone are then directed downward where they contact cooling gases which transfer heat from the solids back toward the center of the system, and the spent solids are discarded at low temperature. In the continuous process described, 1 ton of natural subbituminous coal containing 22% H2O and having a heating value of only 9,300 B. t. u. per lb., is gasified continuously to produce 45,000 ct. ft. of net synthesis gas in a single-stage, automatic process. The process is also applicable to the distillation of oil shales.