Kentucky produced 91.4 million tons last year, its lowest total since 1965. Coal production peaked in the state at 131 million tons in 1990.

Eastern Kentucky’s sharp downturn was blamed on a variety of factors, including diminishing reserves, high labor costs, and heightened regulatory concerns over mountaintop removal mining that has come under strong opposition from environmentalists. New mines and rising production at some existing operations in the western part of the state, in particular Alliance Resource Partners’ River View underground steam coal mine in Union County, helped to narrow what once was a wide production gap between the state’s two coal regions.

Along with lower production, coal mining jobs also declined, according to the report released in April by the Kentucky Energy and Environment Cabinet. The state lost 4,028 mining jobs last year, most of them in eastern Kentucky. Thanks to the 22% drop, Kentucky had 14,083 mining jobs at the end of 2012.

Bill Bissett, president of the Kentucky Coal Association, said the disappointing news is not over for the industry. In 2013, “We will see some more job losses and production losses in eastern Kentucky,” he said. “We know we’re going to have a little bit more bad news, but we think that will stop.”

If Bissett is correct, 2014 should be a better year for the state’s coal industry, with more improvements to come in 2015.

“Export markets will provide opportunities for Central App but there continues to be hurdles getting coal to Bangalore (India) or wherever,” Bissett said. “Our exports did double last year.” Also, “There is the belief that the market for U.S. steam coal will increase…we’re kind of waiting to see how that plays out.”

Rising natural gas prices also bode well for the thermal coal that is a staple in both eastern and western Kentucky. A year ago, gas prices dipped to a historic low of about $2/MMBtu. Prices have been creeping up since, currently hovering over $4/MMBtu. Many electric utilities say coal becomes a cheaper fuel option than gas when gas prices reach about $3.25 to $3.50/MMBtu, so some coal-burning power plants that switched to gas last year are moving back to coal.

The Energy and Environment Cabinet report provides a stark illustration of how far coal output has fallen in eastern Kentucky. Pike County, for years the state’s leading coal producing county, relinquished its crown last year to Union County. The 12.9 million tons mined in Pike County last year represented a 17.9% decrease from 2011.  Union County, meanwhile, turned out 13.4 million tons in 2012, a huge 30.5% gain over the previous year.

Production and corresponding declines for other traditional coal counties in eastern Kentucky in 2012 included: Perry County, 9.2 million tons, 30.1%; Harlan County, 7 million tons, 28.1%; Martin County, 3.5 million tons, 36%; Leslie County, 3 million tons, 30.7%; Letcher County, 2.9 million tons, 36.1%; Knott County, 2.6 million tons, 45.1%; Floyd County, 2.3 million tons, 18.1%; Magoffin County, 2 million tons, 31.9%; Bell County, 1.1 million tons, 26%; and Knox County, 565,000 tons, 45.5%.

In addition to Union County, two other western Kentucky counties showed production increases last year—Hopkins County, 8.9 million tons, 1.8%; and Ohio County, 7.2 million tons, 30.5%. Muhlenberg County, another traditional coal producer in the west, checked in with 4.8 million tons, a 14.9% decrease.