Peabody Energy and ConocoPhillips announced that Kentucky is selected as the site for a new coal gasification plant. The companies are conducting a $60 million feasibility study. If it is completed, it’s expected to cost approximately $3 billion. Kentucky was selected over Indiana and Illinois. Consideration was given to the $250 million in tax incentives that the states Economic Development Finance Authority awarded to Kentucky Syngas, a Peabody subsidiary. Five counties in Kentucky are being considered: Henderson, Ohio, Webster, Union and Muhlenberg.

Rick Bowen, Peabody Energy executive, made the announcement on the campus of the University of Louisville engineering school. He said that if the project moves forward it will be operational in 2012. The project will benefit the environment by applying carbon capture technology to remove more than 90% of the carbon (CO2) emissions.

The project would convert 2.5 million tons of Kentucky coal per year and provide about 1,200 construction jobs and more than 500 full-time jobs. Kentucky is one of the poorest states in the U.S. with plentiful coal supplies. Currently, more than three-fourths of all the coal mined in Kentucky is shipped out of state. The proposed coal gasification plant in the state will add value to the local economy.