A process for the production of transportation fuels from heavy hydrocarbonaceous feedstocks comprises a two-stage, close-coupled process, wherein the first stage comprises a hydrothermal zone into which is introduced a mixture comprising the feedstock and finely ground hydroprocessing catalyst particles having coke-suppressing and demetalizing activity, and hydrogen; and the second, close-coupled stage comprises a catalytic reaction zone into which substantially all the effluent from the first stage is rapidly and directly passed without pressure drop and processed under lower temperature hydroprocessing conditions. The first-stage ground catalyst may be spent catalyst from which most metals have been removed.
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