Three local investors, including former radio talk-show host Arlene Violet, have proposed building a $135-million ethanol refinery at the Quonset Business Park in North Kingstown.

They have formed a company, Atlantic Ethanol, which would build a plant capable of producing 55 million to 60 million gallons of ethanol annually. The facility would take corn, grown locally or brought in from other parts of the country by rail or barge, and convert it to ethanol, a petroleum-fuel additive. The plant will be able to process 20 million bushels of corn each year.

The ethanol would then be shipped by barge to various “blending terminals” in New England, where it would be mixed with gasoline for shipment to local gasoline stations.

Early yesterday evening, the Quonset Development Corporation’s board of directors gave the project preliminary approval, said Dyana Koelsch, a spokeswoman for the QDC, the agency that manages the state-owned industrial park. That approval, which was unanimous, will allow the company to move forward with the permitting process and with getting its financing in place, Koelsch said.

“From my perspective, this is an opportunity really to get a great energy project while also producing jobs,” said Violet, in a telephone interview yesterday.

Violet, of Barrington, is a former state attorney general and a lawyer in private practice. She said she has represented a number of environmental groups as an attorney, but this is her first time joining a “green” company as an investor.

The other two principals are John D. Hamilton Sr., of Charlestown, and Herb Sirois, of Richmond. Hamilton, who is the company president and chief executive officer, was a South Kingstown state representative from 1980 to 1984. Sirois is a mechanical engineer.

Hamilton declined to say how much money the three will invest in the project.

Demand for ethanol has been growing dramatically over the past few years, mainly because of state and federal clean-air regulations. Ethanol is used as an additive to gasoline in order to make it burn cleaner and has largely replaced MTBE, or methyl tertiary butyl ether, which has been found to pollute ground water.

Total ethanol production in the United States last year was 4.9 billion gallons, up 24 percent from the previous year, according to the Renewable Fuels Association, an industry trade group.

As of April, there were 115 ethanol refineries in production, and 79 under construction in the United States, according to the association. Almost all of those refineries have been built in the Midwest, close to the farms that supply the facilities with corn. That means that ethanol must be transported great distances to markets where it will be mixed with gasoline. About 75 percent of ethanol produced in the United States is transported by rail.

The proposal to build an ethanol plant in Rhode Island is part of a new trend of locating ethanol facilities closer to the demand. These “destination” refineries could be more profitable because they have lower transportation costs, Hamilton said. It is cheaper, he said, to ship ethanol by barge to fuel terminals in Rhode Island, New York, Connecticut and Massachusetts, than it is to bring in ethanol from the Midwest by train.

“Our whole competitive advantage is being able to move [the ethanol] by barge,” Hamilton said. The transportation infrastructure, and the fact that this would be the first ethanol refinery anywhere along the East Coast, means that the ethanol produced here would be easily absorbed by gasoline sellers in this region, Hamilton said. “There’s a huge demand here,” he said.

Quonset is an ideal location for an ethanol refinery for several reasons, Hamilton said. First, its location on Narragansett Bay gives it easy access to barges. And the newly upgraded rail lines that extend into the business park can be used to bring in corn needed for processing.

Beyond that, Atlantic Ethanol would use water from the Quonset Business Park’s treatment system, rather than from a municipal source, to produce ethanol. The process will require about 250,000 gallons of water a day.

And, the carbon dioxide that is produced during the refining process would be captured and sold to other companies, Hamilton said. One potential customer is right in the Quonset Business Park: Toray Plastics, which now has its carbon dioxide shipped in by train, he said.

According to the proposal, the facility would be built on three parcels that total about 25 acres. Two of the lots are adjacent to each other off Roger Williams Way, bisected by Conway Avenue. The third parcel is at the end of Roger Williams Way, next to a pier where barges would be loaded with ethanol.

Violet said there might be two or three bargeloads of ethanol leaving the plant each month, which would have virtually no impact on other Bay traffic, she said.

Atlantic Ethanol and the Quonset Development Corporation have negotiated a 40-year lease in which the company would pay rent, initially at $20,000 per acre, or about $500,000 a year. That amount would increase yearly by about 3 percent, Hamilton said.

Atlantic Ethanol has hired Fieldstone Private Capital Group, of New York, to advise the company on financing for the project. Hamilton said the principals are anticipating that 40 percent of the project would be financed by shareholders and the remaining 60 percent would be borrowed.

Delta-T Corp. has been selected as the engineering firm that would design and build the plant. That company has completed 120 projects, Atlantic Ethanol said, adding that plants designed by that firm as known to be more environmentally friendly and more profitable because they use less water and energy.

Atlantic Ethanol said the new facility would create 300 to 400 temporary construction jobs that would last the 16 to 18 months required to build the plant. It would also create 55 to 65 permanent full-time jobs with an average salary of $50,000 a year.

The company hopes to move through the permitting process and close on its financing over the next year, it said. Under that schedule, the plant could be on line at the end of 2009.

The project needs the approval of the Quonset Development Corporation’s design and technical review committee, the town of North Kingstown, the Coastal Resources Management Council, the Department of Environmental Manage

tbarmann@projo.com