Switching to ethanol production a luxury for Gevo's Luverne plant

By Holly Jessen | September 25, 2012

Gevo Inc. announced that it would take advantage of a design feature to switch back to ethanol production after 17 weeks of isobutanol production. The company was going through typical startup growing pains, had identified some technological issues that need to be corrected and planned to produce ethanol in the interim, said CEO Patrick Gruber during a Sept. 24 conference call. “You should in no way hear or understand that by switching to ethanol we are signaling a lack of confidence in our ability to get profitable isobutanol production,” he said. “This is all about being smart and preserving cash—doing the right things for our business and shareholders.”

Gevo retrofitted Agri-Energy LLC, a 22 MMgy ethanol plant in Luverne, Minn., to produce 18 MMgy isobutanol. Production of isobutanol began in May. Although the company had said it planned to achieve full production rates by the end of 2012, it is now anticipating it will happen in 2013. “We haven’t been able to achieve the consistency of operations I would like to see,” he said. “The constancy of quality and quantity is what this game is all about. It’s the only way to become a reliable supplier.”

Switching back to ethanol production is a luxury that will allow the company to maximize cash flow. It allows the company to demonstrate the versatility of its design as well as proving to its partners that switching from one fuel to the other is actually possible, as was promised. “I’m glad we designed this option,” he said.

Gruber was careful not to say how long it would produce ethanol at the Luverne plant before resuming isobutanol production. However, he did hint that it would be short term, possibly months. I intend to pleasantly surprise you,” he said, adding that when the company begins producing isobutanol again, it will be profitable.

It’s important to note, he added, that Gevo is years ahead of its competition. The company has successfully produced and shipped rail car qualities of isobutanol. “That is a big, big deal, especially at this scale,” he said.

In order to get there, the company has had to “sort out a whole host of issues typical of fermentation technology plant startups.” The team has already fixed a lot of technical issues, he said, but the job is not yet done. The issues that need to be resolved are isolated aspects of the technical operation, he said, declining to say more for competitive reasons. “You have heard me say that startups suck, I’ve said that over and over,” he said. “There’s always issues that pop up. I am thankful to know where our process needs to be tweaked this early in the game. [It’s] way better than being surprised later.”

The company has also signed a joint development agreement with Redfield Energy LLC, a 50 MMgy ethanol plant in Redfield, S.D. Work on that project will start when Gevo has accomplished its goals at the Agri-Energy plant, Gruber said.