The commission voted 3 to 0, with two members abstaining, to endorse a controversial project strongly supported by Republican Governor Mitch Daniels.

“This decision will make possible hundreds of new jobs while ensuring a long-term supply of reasonably priced natural gas which we will buy from Hoosiers, not foreign governments or someone elsewhere,” Daniels said in a statement. Indiana Gasification is part of the two-term governor’s “home grown” energy initiative launched several years ago.

The project is expected to create a demand for up to 4 million tons of high-sulfur coal annually, although it is unclear if all of the coal would be mined in Indiana. “This is a project the Indiana Coal Council supported since they originally announced they would pursue it,” J. Nathan Noland, president of the coal council, said about New York-based Leucadia National Corp., the lead developer. “We’re pleased and excited to have this type of technology come to Indiana.”

The Indiana Finance Authority agreed earlier this year to buy most of the SNG from the plant to be located about 40 miles east of Evansville, Ind. The state would sell the gas on the open market. Leucadia is negotiating an off-take agreement with Denbury Resources for the sale of carbon dioxide that would be produced during the coal gasification process. Denbury, headquartered in Plano, Texas, is considering building a 700-mile-long pipeline from the Midwest to carry CO2 to the Gulf Coast for use in enhanced oil extraction.

The project has had a polarizing effect. Backers, like Daniels, say Indiana Gasification will save the state’s gas customers money over the three decades. Depending on the market price for natural gas, Indiana customers either would pay a bill surcharge or receive a credit. Opponents like the Indianapolis-based Citizens Action Coalition consumer/environmental advocacy group predict customers will pay a surcharge most of the time. Citing burgeoning shale gas development in neighboring Ohio, Pennsylvania and other states, they say cheaper options exist for gas customers.

William Rosenberg, president of E3 Gasification, a project partner, said the project also would generate a small amount of electricity for sale on the wholesale market. Most of the power produced by the project would be used in-house.

Additional environmental and zoning approvals still are needed by Indiana Gasification. Rosenberg, however, said a final permit is expected soon from the Indiana Department of Environmental Management.

The developers still are planning to have the plant up and running in the 2015-2016 timeframe.