DYLAN T. LOVAN

The Associated Press

CENTERTOWN, Ky. (AP) - A five-minute drive from this community's lone gas station leads to a gateway to untapped riches: A bed of coal twice the size of Lake Michigan.

Earth-movers are peeling back layers of dirt and limestone here at the Midway mine and at other once-abandoned mining sites around the Illinois Basin, a coal-rich region that reaches into Illinois, southwestern Indiana and northwestern Kentucky.

The mechanical rumbling means the return of lucrative mining jobs to a territory crippled by the exodus of coal mining companies that began more than 30 years ago.

"I guess we can call it the rebirth of coal," said David Jones, a former miner in his first term as judge-executive of Ohio County, Ky., where the unemployment rate hovers around 9 percent.

The resurgence has breathed life into communities the industry nearly killed when it left. And it's all possible thanks to technological strides that make burning such coal less harmful, improvements that resulted, ironically, from pressure by the environmental movement.

Coal companies see a bright future in the Illinois Basin, after a steady retreat from the region beginning in the 1970s. Federal air restrictions during that decade made it tougher to market the basin's coal, because it emitted more sulfur dioxide when burned compared to coal from Appalachia and western states.

Environmentalists worry that scraping out the basin's reserves will simply encourage the energy industry to prop up its aging coal-fired power plants when the country should be shifting to alternative sources. The Illinois Basin is close to the country's densest cluster of coal-fired power plants, which are nestled along the Ohio River and pump power onto a grid that supplies millions far beyond the Midwest.

In a country where half the generated electricity comes from coal, the Illinois Basin's vast reserves are attracting new mine openings, including plans in Indiana for the largest surface mine east of the Mississippi River.

Total U.S. coal production was down nearly 6 percent so far in 2009 due to slowing demand, but in Illinois, Indiana and western Kentucky it's up from 1 to 5 percent, according to the Department of Energy. Western Kentucky's production was up 6.4 percent over a 52-week period ending last month.

The surface mine near Centertown, 90 miles southwest of Louisville, sat abandoned just a couple of years ago, before newly formed Armstrong Coal Co. bought the reserves and several others in the area.

The St. Louis-based firm, started by pharmaceuticals entrepreneur J. Hord Armstrong, exemplifies the region's resurgence. The company began buying coal reserves from Peabody Energy Corp. a few years ago and opened its fourth western Kentucky mine in June.

Armstrong's 430 workers, mostly from nearby communities, make about $50,000 a year or more, plus health insurance and a 401k plan.

"It's kind of amazing that we've got so many factories that are laying people off, and we have Armstrong come here about two years ago and they're adding jobs and giving this county some hope again," said Jones, whose county didn't have a single mine in operation when he took office in early 2007.

Jeff Lutz, a career miner who has worked for five coal companies over three decades, puts in 58-hour weeks for Armstrong, mostly running a road grader. Before the resurgence, he said, new mines would spring up, then go out of business as suddenly as they appeared.

"It wasn't very feasible, and it wasn't a very good idea to leave a good steady job to go back to the mines because you never knew if it was going to be there the next month," Lutz said. "I've worked for five different coal companies (in the Illinois Basin) and I am more secure in this job right here than I've been in any of the other four."

Activity at Armstrong's Midway surface mine was buzzing this spring. Heavy machine and vehicle operators were busy pushing and peeling layers of earth and blasting rock to get at a coal seam down around 40 feet.

A massive dragline excavator - it looks like a house on a swivel, with a crane arm - scoops out hunks of earth with a bucket big enough to fill 20 pickup trucks. This one is a dinosaur, possibly the last one operating in Kentucky, said Kenny Allen, Armstrong's vice president of operations.

"During the '70s and '80s, western Kentucky was full of draglines," Allen said. A 17 million-pound machine with a bucket twice the capacity of the one at Midway operated just a few miles from here in the Illinois Basin's heyday, when coal production peaked at 56.4 million tons in 1975.

The basin's decline began in the '70s when restrictions on sulfur dioxide forced utilities to choose between installing expensive emissions equipment and finding lower-sulfur coal, said Bill Caylor, president of the Kentucky Coal Association.

"Utilities chose the cheaper route, so they went to Appalachia and Wyoming" for their coal, Caylor said.

Further restrictions on sulfur dioxide emissions in an amendment to the Clean Air Act in 1990 meant that older coal-fired plants would be required to install technology, called scrubbers, to meet the even stricter standards. The equipment made it feasible to use the basin's coal again.

Luke Popovich, a spokesman for the National Mining Association, said no other mining region in the U.S. saw a greater benefit from the scrubbing regulations.

The boom in the Illinois Coal Basin is sure to extend the life of the Midwest's aging coal-fired power plants for decades, said John Blair, who heads Valley Watch, an Evansville, Ind.-based environmental group. Despite cleaner emissions, the plants will continue to emit hundreds of millions of tons of carbon dioxide in the three states, he said.

"What we're doing is adding all this life to these power plants, so that a 50-year-old plant will be 80 or 90 before it's ever retired," Blair said.

The Illinois Basin is attracting interest from other major coal companies, including Richmond, Va.-based Massey Energy, Alliance Resource Partners of Tulsa, Okla., and St. Louis-based Peabody Energy, which is opening the massive Bear Run Mine in Sullivan County, Ind., about 100 miles southwest of Indianapolis. Peabody says it will spend up to $400 million to get the mine running at peak capacity, which would produce 8 million tons a year and employ 350.

Sullivan County, about two hours southwest of Indianapolis, was once was once a mining-rich area, with up to 30 mines in the early 1900s, said Jim Boes, a Sullivan County commissioner.

Now coal is coming back. Boes said a recent mine opening in nearby Knox County drew more than 4,000 applicants for 400 jobs. He said Bear Run mine could attract even more attention.

"This is going to be the largest mine east of the Mississippi, so you know we're not talking peanuts here," Boes said. "You're talking some big bucks."