We are a renewable chemicals and next generation biofuels company. We have
developed proprietary technology that uses a combination of synthetic biology,
metabolic engineering, chemistry and chemical engineering to focus primarily
on the production of renewable isobutanol as well as related products from renewable
feedstocks. Isobutanol is a four-carbon alcohol that can be sold directly for
use as a specialty chemical in the production of solvents, paints and coatings
or as a value-added gasoline blendstock. Isobutanol can also be converted into
butenes using dehydration chemistry deployed in the refining and petrochemicals
industries today. The convertibility of isobutanol into butenes is important
because butenes are primary hydrocarbon building blocks used in the production
of hydrocarbon fuels, including isooctane, isooctene and alcohol-to-jet-fuel
(“ATJ”), as well as lubricants, polyester, rubber, plastics, fibers
and other polymers. We believe that the products derived from isobutanol have
potential applications in substantially all of the global hydrocarbon fuels
markets and in approximately 40% of the global petrochemicals markets.
In order to produce and sell isobutanol made from renewable sources, we have
developed the Gevo Integrated Fermentation Technology® (“GIFT®”),
an integrated technology platform for the efficient production and separation
of renewable isobutanol. GIFT® consists of two components, proprietary biocatalysts
that convert sugars derived from multiple renewable feedstocks into isobutanol
through fermentation, and a proprietary separation unit that is designed to
continuously separate isobutanol during the fermentation process. We developed
our technology platform to be compatible with the existing approximately 25
billion gallons per year (“BGPY”) of global operating ethanol production
capacity, as estimated by the Renewable Fuels Association.
GIFT® is designed to permit (i) the retrofit of existing ethanol capacity
to produce isobutanol, ethanol or both products simultaneously or (ii) the addition
of renewable isobutanol or ethanol production capabilities to a facility’s
existing ethanol production by adding additional fermentation capacity side-by-side
with the facility’s existing ethanol fermentation capacity (collectively
referred to as “Retrofit”). Having the flexibility to switch between
the production of isobutanol and ethanol, or produce both products simultaneously,
should allow us to optimize asset utilization and cash flows at a facility by
taking advantage of fluctuations in market conditions. GIFT® is also designed
to allow relatively low capital expenditure Retrofits of existing ethanol facilities,
enabling a relatively rapid route to isobutanol production from the fermentation
of renewable feedstocks. Alternatively, GIFT® can be deployed at a greenfield
or brownfield site to produce isobutanol only. We believe that our production
route will be cost-efficient, will enable relatively rapid deployment of our
technology platform and allow our isobutanol and related renewable products
to be economically competitive with many of the petroleum-based products used
in the chemicals and fuels markets today.
We plan to commercialize our isobutanol primarily through a strategy of Retrofitting
existing ethanol production facilities to produce isobutanol and related renewable
products and have developed our technology platform to be compatible with the
existing approximately 25 BGPY of global operating ethanol production capacity.
We believe that our design will enable a switch between the production of isobutanol
and ethanol, or the ability to produce both products simultaneously, which will
allow optimization of asset utilization and cash flows at a facility by taking
advantage of fluctuations in market conditions.
The Retrofit approach allows us to project potentially lower capital outlays
and a faster commercial deployment schedule than the construction of new plants.
We believe the ability of GIFT® to convert sugars from multiple renewable
feedstocks into isobutanol will enable us to leverage the abundant domestic
sources of historically low cost grain feedstocks (e.g., corn) currently used
for ethanol production and will potentially enable the expansion of our production
capacity into international markets that use sugar cane or other feedstocks
that are prevalent outside of the U.S.
We plan to secure access to existing ethanol production facilities through joint
ventures, licensing arrangements, tolling partnerships and direct acquisitions.
We then plan to work with design, engineering, and construction partners to
deploy GIFT® through Retrofits of these production facilities.
In September 2010, we acquired a 22 million gallon per year (“MGPY”)
ethanol production facility in Luverne, Minnesota (the “Agri-Energy Facility”).
The Agri-Energy Facility is a traditional dry-mill facility, which means that
it uses dry-milled corn as a feedstock. In partnership with ICM, Inc. (“ICM”),
we developed a detailed Retrofit design for this facility and began the Retrofit
in 2011. In May 2012, we commenced initial startup operations for the production
of isobutanol at the Agri-Energy Facility. In September 2012, as a result of
a lower than planned production rate of isobutanol, we made the strategic decision
to pause isobutanol production at the Agri-Energy Facility at the conclusion
of startup operations to focus on optimizing specific parts of the process to
further enhance isobutanol production rates.
In 2013, we made modifications to our Agri-Energy Facility designed to increase
the isobutanol production rate. In June 2013, we resumed the limited production
of isobutanol, operating one fermenter and one GIFT® separation system in
order to (i) verify that the modifications had significantly reduced the previously
identified infections, (ii) demonstrate that our biocatalyst performs in the
one million liter fermenters at the Agri-Energy Facility, and (iii) confirm
GIFT® efficacy at commercial scale at the Agri-Energy Facility. In August
2013, we expanded production capacity at the Agri-Energy Facility by adding
a second fermenter and second GIFT® system to further verify our results
with a second configuration of equipment. For these initial production runs,
we demonstrated fermentation operations at commercial scale combined with the
use of our GIFT® separation system using a dextrose (sugar) feedstock. Based
on the results of these initial production runs, in October 2013 we began commissioning
the Agri-Energy Facility on corn mash to test isobutanol production run rates
and to optimize biocatalyst production, fermentation separation and water management
systems.
In March 2014, we decided to leverage the flexibility of our GIFT® technology
and further modify the Agri-Energy Facility in order to enable the simultaneous
production of isobutanol and ethanol. In July 2014, we began more consistent
co-production of isobutanol and ethanol at the Agri-Energy Facility, with one
fermenter utilized for isobutanol production and three fermenters utilized for
ethanol production.
In September 2015, we began deploying additional capital at our Agri-Energy
Facility, primarily designed to decrease the cost of production for isobutanol
by bringing parts of the process to the facility that have previously been done
off-site by third parties. Key equipment installed at the plant included a distillation
system to purify isobutanol on site, an addition to our seed train to improve
our ability to grow our yeast on site and a stainless steel fermenter to replace
one of the existing carbon steel fermenters that had reached the end of its
useful life. Completed in 2016, the installation of this equipment enabled increased
isobutanol production volumes and decreased isobutanol production costs at our
Agri-Energy Facility.
Through December 31, 2016, we have incurred capital costs of approximately $70.8
million on the Retrofit of the Agri-Energy Facility. The Retrofit of the Agri-Energy
Facility includes a number of additional capital costs that are unique to the
design of the facility, including additional equipment that we believe will
allow us to switch between ethanol and isobutanol production, modifications
to increase the potential production capacity of GIFT® at this facility
and the establishment of an enhanced yeast seed train to accelerate the adoption
of improved yeast strains at this facility and at future plants. Capital expenditures
at the Agri-Energy Facility also include upfront design and engineering costs,
plant modifications identified as necessary during initial startup operations
for the production of isobutanol and capitalized interest.
Until May 2012, when we commenced initial Retrofit startup operations for the
production of isobutanol at the Agri-Energy Facility, we derived revenue only
from the sale of ethanol, distiller’s grains and other related products
produced as part of the ethanol production process at the Agri-Energy Facility.
Continued ethanol production during the Retrofit process allowed us to retain
local staff for the operation of the plant, maintain the equipment and generate
cash flow. Our Retrofit strategy includes the ability to switch between the
production of isobutanol and ethanol, or produce both products simultaneously,
with an emphasis on maximizing cash flows at a site. Historically, we have been
able to switch between the production of isobutanol and ethanol at the Agri-Energy
Facility. In the future, we believe that we will be able to continue to transition
between the production and sale of ethanol and related products at the Agri-Energy
Facility, in whole or in part, if we were to project positive cash flows from
ethanol operations versus maintaining the facility at idle or producing isobutanol,
including any costs related to the transition, but there is no guarantee that
this will be the case. As a result, the historical operating results of our
subsidiary, Agri-Energy, LLC (“Agri-Energy”), and the operating
results reported during the Retrofit to isobutanol production may not be indicative
of future operating results for Agri-Energy or Gevo’s consolidated results.
The future return on our invested capital depends on our ability to maximize
cash flows from the Retrofit of the Agri-Energy Facility.