Coal-gasification plant will be built in state

Indiana Gasification LLC's investors are considering several sites in the southwestern corner of the state for the plant, which Daniels said would put Indiana in the forefront of clean energy development.

Construction would begin in 2008, with the plant tentatively scheduled to be on line by 2011, he said. It would create about 1,000 temporary construction jobs and 300 permanent mining jobs to feed coal to the plant, which would employ 125 workers.

Daniels said the development would advance Indiana's goal of becoming a leader in clean energy development by building on its efforts to attract ethanol and biodiesel production.

"We said Indiana would become a leader in homegrown clean energy, but not even I thought we'd get there so fast," the governor said in a statement.

The plant would produce 40 billion cubic feet of pipeline-quality substitute natural gas each year. It would be the first coal-gasification plant in the nation to make pipeline-quality natural gas from Eastern coal, he said.

During the gas-extraction process, sulfur, mercury and particulate matter are removed, significantly reducing the plant's emissions, Daniels said.

The plant will mix coal with oxygen and water to create a slurry that's treated with heat and pressure to extract the gas.

About two-thirds of the gas produced by the plant would be purchased by Indiana's three largest gas utilities, Vectren Corp., Northern Indiana Public Service Co. and Citizens Gas, according to a letter of intent for 30-year supply contracts that the utilities signed.

Daniels spokeswoman Jane Jankowski said the project's developers are negotiating with several coal producers for a long-term contract for Indiana coal. The project must receive regulatory approval, she said.

"There are still a number of steps to be taken before this project reaches planned groundbreaking in 2008, and the governor will be working with federal and state officials to move the project forward," Jankowski said.