SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC 20549

                                SCHEDULE 13D

                 UNDER THE SECURITIES EXCHANGE ACT OF 1934

                             (AMENDMENT No. 3)

                             Ashland Coal, Inc.
                              (Name of issuer)

                                Common Stock
                       (Title of class of securities)

                                 043906 10 6
                               (CUSIP number)

                            James G. Stephenson
                            Vice President - Law
                                Ashland Inc.
                             1000 Ashland Drive
                             Russell, KY 41169
                               (606) 329-3333
               (Name, address and telephone number of person
             authorized to receive notices and communications)

                              January 2, 1997
          (Date of event which requires filing of this statement)


         If the filing person has previously  filed a statement on Schedule
13G to report the  acquisition  which is the subject of this  Schedule 13D,
and is filing this schedule  because of Rule  13d-1(b)(3) or (4), check the
following box ____.

         Check the following box if a fee is being paid with the statement.
____  (A fee is not  required  only  if the  reporting  person:  (1)  has a
previous statement on file reporting beneficial ownership of more than five
percent of the class of  securities  described in Item 1; and (2) has filed
no amendment  subsequent  thereto  reporting  beneficial  ownership of five
percent or less of such class.) (See Rule 13d-7.)




                                                    Page 2 of 7 pages
CUSIP No.  043906 10 6     13D


1        NAME OF REPORTING PERSONS       Ashland Inc.
         S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
                  61-0122250

2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP     (a)
                  N/A                                         (b)

3        SEC USE ONLY

4        SOURCE OF FUNDS   00       (See Item 3)

5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO 
         ITEM 2(d) or 2(e)

6        CITIZENSHIP OR PLACE OF ORGANIZATION
                  Kentucky

       NUMBER OF               7    SOLE VOTING POWER
        SHARES                      10,233,190 shares of Common Stock*
      BENEFICIALLY                 (See Items 1 and 5)
       OWNED BY
         EACH                  8    SHARED VOTING POWER
       REPORTING                        0
     PERSON WITH
                               9    SOLE DISPOSITIVE POWER
                                    10,233,190 shares of Common Stock*
                                    (See Items 1 and 5)

                              10    SHARED DISPOSITIVE POWER
                                        0

11       AGGREGATE AMOUNT  BENEFICIALLY OWNED BY EACH REPORTING PERSON
              10,233,190 shares of Common Stock* (See Items 1 and 5)

12       CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES


13       PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
              56.5% of the shares of Common Stock*   (See Items 1 and 5)


                                                    Page 3 of 7 pages

14       TYPE OF REPORTING PERSON
              CO





* Includes shares of Common Stock obtainable  through the conversion of the
Class B Preferred Stock into Common Stock before August 18, 1998.


                                                    Page 4 of 7 pages

                     Securities and Exchange Commission
                           Washington, D.C. 20549
                                Schedule 13D

Item 1.  Security and Issuer
         Ashland Inc. ("Ashland") currently owns 7,481,290 shares of Common
Stock ("Common  Stock"),  par value $.01 per share,  of Ashland Coal,  Inc.
("Ashland  Coal"),  an  increase  of 206,681  shares of Common  Stock since
Amendment  No. 2 to Form 13-D was  filed.  Ashland  also owns 150 shares of
Class B Preferred Stock of Ashland Coal. Each share of Class B Preferred is
presently  convertible into 18,346 shares of Common Stock.  This conversion
rate  increases to 19,596  shares of Common Stock on August 18, 1998 and to
20,846  shares of Common Stock on August 18, 2003.  Carboex  International,
Inc.  ("Carboex")  owns 100 shares of Class C Preferred Stock which has the
same conversion rights as Class B Preferred Stock.
         Ashland  Coal  is  a  Delaware   corporation  with  its  principal
executive  offices  located at 2205 Fifth  Street  Road,  Huntington,  West
Virginia 25771.

Item 2.  Identity and Background
         (a),  (b) and (c)  Ashland  is a  Kentucky  corporation  with  its
principal  executive  offices  located at 1000 Ashland Drive,  Russell,  KY
41169.  Ashland is a large U.S.  independent  refiner and independent crude
oil  gatherer  and  marketer;  a regional  retail  marketer of gasoline and
merchandise;  and a motor oil and automotive  chemical marketer in the U.S.
and  other  countries.  In  addition,  Ashland  is a large  distributor  of
chemicals and plastics in North America; a supplier of specialty  chemicals
worldwide;  a large U.S. highway contractor;  and a producer of natural gas
and crude oil.  Ashland also has equity  positions in Ashland Coal and Arch
Mineral Corporation ("Arch Mineral"), both U.S. coal producers.
         The  executive   officers  and  directors  of  Ashland  and  their
principal  occupations  are shown on the attached  Schedule I. The business
address of each executive  officer is shown on Schedule I. Each  director's
business address is Ashland Inc., c/o Office of the Secretary, 1000 Ashland
Drive, Russell, KY 41169.


                                                    Page 5 of 7 pages
         (d-e) During the last five years,  neither  Ashland nor any of the
persons  listed in Schedule I hereto,  has been (i) convicted in a criminal
proceeding  (excluding traffic violations and similar misdemeanors) or (ii)
a party to a civil  proceeding  of a  judicial  or  administrative  body of
competent jurisdiction and as a result of such proceeding was or is subject
to a judgment,  decree or final order  enjoining  future  violations of, or
prohibiting or mandating activities subject to, Federal or state securities
laws or finding any violation with respect to such laws.
         (f)      Each executive officer and director is a U.S. citizen.

Item 3.  Source and Amount of Funds or Other Consideration
         Ashland has its shares of Common Stock and Class B Preferred Stock
enrolled in Ashland Coal's Dividend  Reinvestment Plan ("DRIP").  Under the
DRIP, the dividends  Ashland  receives on its Ashland Coal Common Stock and
Class B Preferred  are used to purchase  additional  shares of Ashland Coal
Common Stock in open market  purchases.  Since Amendment No. 2 to Form 13-D
was filed, Ashland has acquired 206,681 shares of Ashland Coal Common Stock
through the DRIP.

Item 4.  Purpose of Transaction
         Ashland  acquired  the  additional  Common  Stock  for  investment
purposes.  Currently, Ashland has elected five of its executive officers to
Ashland Coal's Board of Directors and has sufficient  voting power to elect
at least one additional director to Ashland Coal's Board.
         Ashland  Coal and Arch  Mineral  have  announced  that  they  have
resumed   discussions  of  options  for  combining  their   businesses  and
operations.  Ashland has announced  that it will continue to encourage such
discussions.  However,  there can be no assurances  that these  discussions
will  result  in  a  combination  of  the   companies.   Outside  of  these
discussions,  Ashland has no current plans or proposals  which relate to or
would  result in: (a) an  extraordinary  corporate  transaction,  such as a
merger,  reorganization or liquidation involving Ashland Coal or any of its
subsidiaries;  (b) a sale or  transfer  of a  material  amount of assets of
Ashland  Coal or any of its  subsidiaries;  (c) 


                                                    Page 6 of 7 pages

any change in the present  Board of Directors or Management of Ashland Coal
other than as  described  above;  (d) any  material  change in the  present
capitalization  or dividend  policy of Ashland Coal; (e) any other material
change in Ashland Coal's  business or corporate  structure;  (f) changes in
Ashland Coal's  charter,  by-laws or instruments  corresponding  thereto or
other actions which may impede the  acquisition  of control of Ashland Coal
by any person;  (g)  causing a class of  securities  of Ashland  Coal to be
delisted from a national  securities  exchange or to cease to be authorized
to be quoted in an inter-dealer  quotation system of a registered  national
securities  association;  (h) a class of equity  securities of Ashland Coal
becoming  eligible  for  termination  of  registration  pursuant to Section
12(g)(4) of the Securities  Exchange Act of 1934; or (i) any action similar
to any of those enumerated  above.  Ashland  currently  anticipates that it
will  continue to acquire  shares of Ashland Coal Common Stock  through the
Ashland  Coal DRIP and may,  if it  believes  favorable  circumstances  are
presented,  purchase  other shares of Common  Stock or  Preferred  Stock of
Ashland Coal from time to time.

Item 5.  Interest in Securities of the Issuer
         Ashland  currently  owns  7,481,290  shares of Common  Stock which
constitutes  41.3% of the voting power of Ashland  Coal.  Ashland also owns
150 shares of Class B Preferred  Stock which is  currently  convertible  to
2,751,900 shares of Common Stock.  Assuming such conversion,  Ashland would
be deemed to own a total of  10,233,190  shares of Common Stock which would
constitute  a total of 56.5% of the voting power of Ashland  Coal.  Ashland
has sole voting and  disposition  power over its shares of Common Stock and
Class B Preferred Stock.
         During the past 60 days, Ashland purchased 43,962 shares of Common
Stock through Ashland Coal's DRIP.  Other than this  transaction,  no other
transaction in Ashland Coal Common Stock was undertaken by Ashland.



                                                    Page 7 of 7 pages

Item 6.  Contracts, Arrangements or Understandings with Respect to Securities 
         of the Issuer
         Pursuant to a Restated  Shareholders  Agreement (the "Shareholders
Agreement")  among Ashland,  Carboex  International,  Inc.  ("Carboex") and
Ashland  Coal,  Carboex  has a right of first  refusal to  purchase  any of
Ashland's  shares of Ashland Common Stock or Class B Preferred  Stock which
Ashland  proposes to sell to a third-party in response to a bona fide offer
and  Ashland  has a right of first  refusal to  purchase  any of  Carboex's
shares of Common Stock or Class C Preferred Stock which Carboex proposes to
sell to a third-party in response to a bona fide offer. In addition, if the
right  of  first  refusal  is not  exercised,  the  Shareholders  Agreement
nevertheless  requires  Carboex's  consent  for  Ashland to sell its Common
Stock or Class B Preferred Stock and Ashland's  consent for Carboex to sell
its Common Stock or Class C Preferred  Stock,  which consent in either case
can not be unreasonably withheld.

Item 7.  Material to be Filed as Exhibits
         None





                                 SIGNATURE
         After  reasonable  inquiry  and to the  best of my  knowledge  and
belief, I certify that the information set forth in this statement is true,
complete and correct.

                                                January 2, 1997
                                       --------------------------------
                                                     (Date)

                                       /s/ James G. Stephenson
                                       --------------------------------
                                       James G. Stephenson
                                       Vice President - Law of Ashland Inc.


                                Schedule I


                     DIRECTORS AND EXECUTIVE OFFICERS
                                    OF
                               ASHLAND INC.
               PRINCIPAL OCCUPATIONS AND BUSINESS ADDRESSES



    DIRECTORS                                   PRINCIPAL OCCUPATION*

Jack S. Blanton            Chairman of the Board of Houston Endowment, Inc., 
                           and  Director  and  President  of Eddy  Refining
                           Company, Houston, Texas

Thomas E. Bolger           Chairman of the Executive Committee of the Board 
                           of  Bell  Atlantic  Corporation,   Philadelphia,
                           Pennsylvania

Samuel C. Butler           Partner of Cravath, Swaine & Moore, Attorneys, 
                           New York, New York

Frank C. Carlucci          Chairman of the Board of the Carlyle Group, 
                           Washington, D.C.

Paul W. Chellgren          Chief Executive Officer and President of 
                           Ashland Inc., Ashland, Kentucky

James B. Farley            Retired Chairman and Current Trustee of 
                           Mutual of New York, New York

Edmund B. Fitzgerald       Managing Director of Woodmont Associates, 
                           Nashville, Tennessee

Ralph E. Gomory            President of the Alfred P. Sloan Foundation, 
                           New York, New York

John R. Hall               Chairman of  the Board of Ashland Inc., 
                           Ashland, Kentucky

Mannie L. Jackson          Majority owner and Chairman of the Harlem 
                           Globetrotters, International



    DIRECTORS                                   PRINCIPAL OCCUPATION*


Patrick F. Noonan          Chairman of the Board of The Conservation 
                           Fund, Arlington, Virginia

Jane C. Pfeiffer           Management Consultant, Greenwich, Connecticut

James R. Rinehart          Business and Labor Consultant, Hiram, Ohio

Michael D. Rose            Chairman of the Board of Promus Hotel 
                           Corporation, Memphis, Tennessee

William L. Rouse, Jr.      Investments, Naples, Florida

Dr. Robert B. Stobaugh     Professor, Harvard Business School, 
                           Boston, Massachusetts




*  For business addresses, see Item 2.






EXECUTIVE OFFICERS BUSINESS ADDRESS PRINCIPAL OCCUPATION - ------------------ ---------------- -------------------- John R. Hall P.O. Box 391 Chairman of the Board Ashland, KY 41114 Paul W. Chellgren P. O. Box 391 Chief Executive Officer and Ashland, KY 41114 President James R. Boyd P. O. Box 391 Senior Vice President and Ashland, KY 41114 Group Operating Officer John A. Brothers Ashland Chemical Company, Senior Vice President and a Division of Ashland Inc. Group Operating Officer P.O. Box 2219 Columbus, OH 43216 J. Marvin Quin P. O. Box 391 Senior Vice President and Ashland, KY 41114 Chief Financial Officer Thomas L. Feazell P. O. Box 391 Senior Vice President, Ashland, KY 41114 General Counsel and Secretary Robert E. Yancey, Jr. P. O. Box 391 Senior Vice President and Ashland, KY 41114 President, Ashland Petroleum Company, a Division of Ashland Inc. Harry M. Zachem P. O. Box 391 Senior Vice President, Ashland, KY 41114 External Affairs David J. D'Antoni Ashland Chemical Company, Senior Vice President; a Division of Ashland Inc. President, Ashland P. O. Box 2219 Chemical Company, a Columbus, OH 43216 Division of Ashland Inc. John F. Pettus P. O. Box 14000 Senior Vice President; Lexington, KY 40512 President, SuperAmerica Group, a Division of Ashland Inc. EXECUTIVE OFFICERS BUSINESS ADDRESS PRINCIPAL OCCUPATION - ------------------ ---------------- -------------------- Charles F. Potts APAC, Inc. Senior Vice President; 3340 Peachtree Rd., NE President, APAC, Inc. Tower Place Atlanta, GA 30326 G. Thomas Wilkinson 14701 St. Mary's Lane Senior Vice President; Houston, TX 77079 President, Ashland Exploration, Inc. James J. O'Brien P.O. Box 1400 Vice President; President, Lexington, KY 40512 The Valvoline Company, a Division of Ashland Inc. John W. Dansby P. O. Box 391 Administrative Vice Ashland, KY 41114 President; Treasurer Kenneth L. Aulen P. O. Box 391 Administrative Vice Ashland, KY 41114 President; Controller Philip W. Block P. O. Box 391 Administrative Vice Ashland, KY 41114 President Fred E. Lutzeier P. O. Box 391 Auditor Ashland, KY 41114