Gevo, Butamax ink patent, settlement agreements

Gevo and Butamax are no longer expending energy on their patent dispute, leaving both companies with a clearer path to commercialization. This article appears in the April issue of EPM with the headline, "Licence to grow."
By Holly Jessen | March 09, 2016

Once adversaries in the fight to commercialize bio-based isobutanol by retrofitting ethanol plants, Gevo Inc. and Butamax Advanced Biofuels LLC now stand stronger, together, thanks to the worldwide patent and settlement agreements announced in late August.

“It was years of pain and agony,” says Patrick Gruber, Gevo’s CEO. “I think the pain and agony got to such a point on both sides, where finally we said, ‘“This is just really stupid. Can we stop?’”

As things stand now, Gevo and Butanol present a much higher barrier to other companies looking to enter the isobutanol development space, Gruber told Ethanol Producer Magazine. The agreement, which he calls balanced and fair, gives the two companies room to develop their own distinct technologies while allowing the two companies to cross license each other’s patented intellectual property. 

In fact, in the months following the announcement of the agreement, Gevo entered into two separate a licensing agreements. Praj Industries Limited agreed to adapt Gevo’s technology to retrofit sugarcane and molasses ethanol plants, enabling Praj’s global ethanol plant customers to license Gevo’s technology. The vision, Gruber says is to build out to about 250 MMgy isobutanol production in about 10 years, although the first retrofit project won’t likely happen for another year or two. The second agreement is with Porta Hnos S.A. to construct multiple corn-based isobutanol plants in Argentina to supply the petrochemical market.

Stuart Thomas, CEO of Butamax, also had good things to say about the agreement. “Butamax sees the settlement agreement as being beneficial to both parties,” he told EPM. “Reaction from existing and potential commercial partners has been consistently positive.”

Butamax, a joint venture between BP and DuPont, first formed an Early Adoptors Group in 2011. Today, the group is made up of seven ethanol production companies representing 10 facilities. Ray Defenbaugh, president, CEO and chairman of Big River Resources LLC, told EPM the company has met recently with Butamax. “We’re continuing dialogue on it,” he says. Big River joined the Early Adoptors Group in 2012, meaning the company is considering a retrofit to isobutanol production.

The goal of the group, Thomas told EPM, was to get more information about the needs of the industry and potential early licencees of the technology. “These conversations have proved invaluable in developing and refining our commercialization plans,” Thomas says. “All of this has led us to the place where today we have completed the development of our technology, are developing the design of our first commercial plant and have made great strides in developing the value proposition we can offer to both licensees and biobutanol buyers.”

Highwater Ethanol, the first company to join Butamax’s Early Adoptors Group, installed the company’s corn oil separation technology in 2013. It can be installed independently or as a first phase in retrofitting a plant to isobutanol production. When asked about the company’s timeline for retrofitting plants, Thomas says the company is “currently in detailed discussions regarding this,” and adds that the hope is Butamax will have an update in the near future.

Gevo, on the other hand, purchased a 22 MMgy ethanol plant near Luverne, Minnesota, in 2010 and first produced isobutnaol there in 2012. At press time in February, the company was in the midst of construction on a $5 million update, which will allow for 1.5 MMgy isobutanol production side-by-side with ethanol production. “That gets us in the realm where we can make money on isobutanol, at least a contribution margin,” Gruber says, adding that the company anticipates margins of 50 cents to $1, once the plant is operating at full scale, and low production cost.

Until now, Gevo has produced isobutanol intermittently during campaign runs to prove out its technology. “It was brutal to run isobutanol in a dry mill, because it’s such a large scale fermentation system,” he says. “You can’t do it in the lab, you have to do it in real life and figure out the issues and solve them. And we did that.”

The construction project, which is expected to be completed this spring, will add distillation equipment so the isobutanol no longer has to be sent off site for that step. Additional fermentation equipment is also being put in place to allow for the scale up in production.

Gruber has a few words for the critics.  “I hear people say, ‘Oh, Gevo can’t run the isobutanol process. They are having trouble with the fermentation.’ That’s just not true. That’s crap,” he says. “In the past we did not have the equipment installed in the plant to be able to do that economically.”

In reality, the company is knows what to do and is simply working toward getting there. “We’re in the phase where it’s not technology risk,” he says. “It’s not even scale up risk. It’s just implementation.”

The next step is to decide if the Luverne facility will continue to produce ethanol and isobutanol, or if the company wants to covert completely to isobutanol production. Another option is building a colocated jet fuel processing facility, which would further process isobutanol to jet fuel. “With ethanol margins way they are, I think getting out of ethanol is not a bad thing,” Gruber says, although he clarified that he is not anti-ethanol. “Ethanol has a place,” he says.

Author: Holly Jessen
Managing Editor,
Ethanol Producer Magazine