Marquis Energy LLC in Hennepin, Ill., and Babcock & Brown, a global investment and advisory firm, announced in April they had signed a memorandum of understanding to construct, manage and provide investment financing for a two-phase, 200 MMgy fuel-grade ethanol facility near Hennepin.

The plant design includes initial construction of Phase I, a 100 MMgy plant with construction set to begin in July. The plant would be operational by December 2007. Phase II would include expanding plant capacity to 200 MMgy by adding on to the existing facility, said Mark Marquis, president of Marquis Energy.

The second phase of construction would also convert the plant from natural gas energy to coal energy, which would reduce the plant's energy expense by up to 70 percent, according to Marquis Energy. The plant would be built near the Illinois River, which would allow the company to barge coal that originated from either Illinois or Wyoming. "The economics are a little different," Marquis told EPM. "Wyoming Powder River Basin coal is lower in sulfur and lower in emissions, but also lower in Btus per pound. Illinois coal is higher in Btus per pound but more expensive. It would [come down to] a matter of emissions."

The recently proposed rule changes by the U.S. EPA that will lower ethanol plant emissions requirements to match those of human-consumption corn-milling plants would be a benefit to this proposed project, according to Marquis. The permitting approval and the Phase II construction timetable could move faster than the current rules allow. The proposed ruling is still in a public comment period (see "EPA examines ethanol emissions standards" Web Exclusive).

Besides the river, which will also transport the plant's corn and distillers grains, the site offers several other infrastructure benefits. "We're near a mainline railroad that covers the East Coast markets," Marquis said. "We're near three interstates. We've got [access to] 250 million bushels of corn in an eight-county area. There's an electric plant a mile away, and two natural gas pipelines adjacent to our property. This site is hard to beat in terms of infrastructure."

When both phases are complete, the plant will use 72 million bushels of locally grown corn and increase revenues to the local economy by $260 million per year, according to Marquis. Upon the completion of Phase II, the Hennepin plant would be one of the largest dry-mill plants in the United States.

On April 19, Marquis said his company and Babcock & Brown expect to sign final documents that would solidify the final business agreement "in the next few days."