A fluid-fuelled steam locomotive would generate temperature and pressure from burning fluids like oil instead of items like coal.

In comparison to a diesel, it would be less fuel efficient, but also able to use any fuel a diesel can in addition to a wide variety of less refined fluids like crude oil, seed oil, ethanol, or possibly even lava. As an idea of what fuels to enable by default, they ought to burn anything that can be ignited in Immersive Engineering's chemthrower or burned in Thermal Expansion's compression dynamo. Which fuels are usable as well as their different efficiencies should be changeable in a config file.

All fluid-fuelled locomotives should automatically draw fuel from their tenders. The tenders built for such locomotives should have an additional fluid storage for fuel instead of an item storage. The locomotives themselves should hold no more than a very tiny amount of fuel, (unless it's a tank engine) reflecting on how fuel oil is atomized and burned as soon as it enters the firebox, but have an option to switch off fuel from the tender in case of low water.