Jim Lane Biofuels Digest — October 2, 2009
In Missouri, biobutanol made another significant advance in its path towards biofuels viability with the startup of a 1 Mgy pilot plant in St. Joseph. The town that served as the traditional jumping off point for the Oregon Trail of pioneer days, is home to another first: the conversion of a conventional ethanol plant for biobutanol production. Gevo launched the pilot plant in partnership with ICM, retrofitting the ICM pilot plant at St. Joe, which was originally constructed as a reduced scale replica of a dry-milled ethanol production process.
With the launch, Gevo has advanced on two fronts: first, towards demonstration of the viability of its fuel both as a gasoline replacement and as an intermediate, convertible into renewable green gasoline, green diesel and renewable jet fuel; second, towards the demonstration of the viability of conversion of existing ethanol infrastructure for advanced biofuels production using cellulosic biobutanol feedstocks.
Gevo’s biobutanol is produced via fermentation similar to ethanol and its process, and can utilize the bulk of the equipment in an ethanol plant. Gevo’s replaces the ethanol producing yeast with yeast that produces biobutanol, and employes a proprietary separation process technology for the economical recovery of the product. According to the company, the additional cost of this capital equipment is projected to be approximately 30 cents per gallon of installed ethanol capacity.
Biobutanol has higher energy content than ethanol and a lower Reid Vapor Pressure (RVP) – which means lower volatility and evaporative emissions. Standard automobile and small engines can run on biobutanol blended into gasoline at any ratio. It’s not yet clear how the Renewable Fuel Standard will apply to corn-based biobutanol — where it is produced at biorefineries constructed before 2008, there is an open question about whether the refinery will qualify under the corn ethanol grandfathering clauses in the RFS, or whether it will have to qualify as an advanced biofuel with a 50 percent GHG reduction requirement, including a proposed penalty for indirect land use change.
However, with the potential to produce a hydrocarbon or a biobutanol molecule that blends with gasoline without requiring changes in vehicle or distribution infrastructure, the ultimate barrier may well not be the Renewable Fuel Standard but simply market price. The oil price is not yet firmly established where biobutanol will compete head-to-head with conventional gasoline, but in Midwestern markets where support of biofuels is stronger, biobutanol represents a marketing break-out opportunity for biofuels because it does not require $50,000 per gas station retrofits, nor does it require flex-fuel technology.
The Gevo opportunity gives strapped ethanol producers another option to consider. The VeraSun portfolio of conventional ethanol plants was sold for less than 50 cents per dollar of construction cost, while Sunoco picked up the uncompleted Volney ethanol plant in New York for less than 10 cents on the dollar.
Retrofit facilities will have the flexibility to produce either ethanol or biobutanol.
In a related development, Gevo announced the formation of Gevo Development to develop a fleet of biorefineries based on converting existing ethanol plants to Gevo’s proprietary technology for biobutanol. The new company will be managed by Mike Slaney and David Black, who co-founded and raised over $430 million to capitalize ASABiofuels. In August, 2007, VeraSun Energy Corporation acquired ASAB, its three ethanol production facilities (totaling 300 million gallons per year of ethanol capacity) and three development sites for $725 million.
Gevo CEO Pat Gruber said that the “Gevo Development’s business model is open — it will include acquisitions, joint ventures and tolling arrangements providing flexibility to existing owners and lenders.”
In addition, Gevo and ICM have established an exclusive arrangement to provide engineering solutions (in North America) for conventional dry milling corn and sorghum plants.
Immediate opportunities remain undisclosed, but the owners of the Cascade Grain ethanol plant in Clatskanie, Oregon may wish to take note. The $200 million project filed for Chapter 11 bankruptcy last January and creditors voted this month to convert to a Chapter 7 liquidation. The plant shut down over concerns about contamination of the ethanol produced at the plant.