The refinery is in an industrial complex of smokestacks and storage tanks that creates a dramatic skyline for drivers crossing over it on I-75.
Marathon officials moved quickly after getting the news, beginning construction within minutes of learning it had received the permit to start.
"We're thrilled," said company spokeswoman Chris Fox.
The company had pile drivers in the ground at the site minutes after the Department of Environmental Quality announced it had approved its air pollution permit.
"We've had people on standby, waiting for weeks," Fox said.
The state issued the permit after Marathon made concessions to improve pollution controls and help the nearby community, including promises of preferential treatment for Detroit residents.
The company already held a job fair in Detroit to start hiring construction workers. The plant, which now has 480 workers, is to add another 135 permanent jobs when it's finished at the end of 2010.
The project has raised controversy in the city because it's in southwest Detroit, an area already loaded with steel plants, a sewage treatment plant, several small incinerators, a Ford plant and potentially, a new bridge plaza for cars and trucks heading to Canada.
Although the refinery's size, even after the addition, isn't remarkable (it'll be midsized among the nation's 143 refineries), the new addition will be geared for squeezing gasoline and diesel fuel from controversial Alberta tar sands -- unconventional heavy oil that has become more attractive as oil prices skyrocket.
Some Detroiters were dismayed.
"That's really disappointing," said Donele Wilkins, director of Detroiters Working for Environmental Justice.
Wilkins said the area already is the "toxic doughnut" of Detroit, an island of heavily polluted neighborhoods that bear the brunt of factories that provide jobs and products for the rest of the region. "The community already suffers disproportionately, but unfortunately, that's what the law allows."
DEQ spokesman Bob McCann said the agency takes into account other pollution sources in the area, but under the law, can only set standards for the individual company.
McCann praised Marathon's willingness to make changes.
So did Lisa Goldstein, director of Southwest Detroit Environmental Vision.
Marathon's changes since the project was proposed last fall lowered emission levels and added other benefits to the neighborhood.
"It won't lead to significant increases in emissions, and they have committed to projects they didn't have to," Goldstein said.
Last October, the City Council approved a generous package of tax incentives to get Marathon executives to expand in Detroit, rather than in Minnesota or Illinois. Marathon got a total of $186 million in tax exemptions and credits spread over 10 years.
Vince Helwig, air quality chief for the DEQ, said out of nine potential pollutants the plant will emit, the expansion will show increases in only three, compared with an average of the pollutants emitted at Marathon's existing refinery over the past five years.
The five-year comparison is misleading, said James Clift, policy director of the Michigan Environmental Council.
Clift said Marathon has made improvements in its pollution control equipment in the past couple of years, so a better comparison would be between today's emissions and those of the finished, expanded plant.
Still, Clift said Marathon stepped up to make changes, and its pollution controls are better than those proposed by BP at that company's refinery expansion in Indiana.
"BP hit a firestorm," he said. "Marathon built in more pollution controls than BP did; that's why they got a permit."
The process of making fuel from tar sands in Canada, which both Marathon and BP plan to refine, contributes heavily to global-warming gases, which the state does not regulate. Clift said the industry will have to deal with that issue sooner or later.
McCann of the DEQ said Marathon also agreed to buy particulate permits from defunct companies in the area, amounting to 80 pounds of particulates per year, and donate them to the state, instead of using them or selling them.
Companies can buy and sell such credits. That means those 80 pounds will be gone forever from the neighborhood, McCann said.
Michigan once had more than 150 refineries. Marathon said its expansion will help add supply to the Michigan market, but there is no guarantee it will drop fuel prices when the expansion comes online.
"I wish I could say it will," said company spokeswoman Fox.
No new refineries have been built in the United States for 30 years. That lack of refining capacity is a contributor to high oil prices, because it creates bottlenecks in supply, experts say.
Contact TINA LAM at 313-222-6421 or tlam@freepress.com.