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Breaking new ground: Agri-Energy's purchase by Gevo leads to innovation

Mike Stanley, operations manager, stands on a railing at the Agri-Energy ethanol plant in Luverne, with maintenance worker Pat Herman behind him. (KARI LUCIN/DAILY GLOBE)1 / 2
Agri-Energy, a Luverne ethanol plant, was purchased by Gevo, a Denverbased biofuels company, in September 2010. It will become the first commercial-scale facility in the world to use yeast to create isobutanol. (KARI LUCIN/DAILY GLOBE)2 / 2

LUVERNE -- Yeast and corn, two common kitchen ingredients, may help reduce dependence on fossil fuels through an innovative process being utilized commercially for the first time in a southwest Minnesota ethanol plant.

Agri-Energy in Luverne will become the first commercial-scale isobutanol facility using yeast to create the solvent and fuel additive isobutanol, after having been purchased by the Denverbased biofuels company Gevo in September 2010. Isobutanol and its product, butene, could be used to replace up to 40 percent of all petrochemicals.

"We've repositioned the plant to be at the forefront of technological leadership, so if anything, we've secured its place in the community," said David Glassner, executive vice president of technology for Gevo. "We're on the wave of the future, which is always a good place to be, because we know the world is constantly innovating. So it's always good to be on that innovation wave rather than watching it go by."


Gevo began in 2005 as a venture capital-funded company pursuing making methanol from methane, but after about a year of researching that option, the company decided butanol would be a better idea.

Gevo licensed some early work from the University of California, Los Angeles, and the California Institute of Technology and improved the isobutanol-making process, putting it into yeast. The initial pathway biocatalyst work was done in late 2006, the recovery process was put together in 2007, and since then the technology has been in the process of refinement.

"For this type of technology, it's been an extremely fast cycle of innovation," Glassner said.

The combined system -- biocatalyst, yeast and the recovery process Gevo invented -- is called the Gevo Integrated Fermentation Technology, or GIFT.

"Our main ingredient is the same one you use to make bread -- those nice little dried bakers' yeasts," Glassner said. "They do a good job."

The company developed the technology and found customers already using petrochemical products in order to build up a demand for the Gevo isobutanol.

"And then finally, we came to Luverne and purchased this plant to be our first commercial production facility," Glassner said. "And this plant was ideal for a number of reasons."

For one thing, Agri-Energy is a few years old. As such, it has a more modest production capacity than newer ethanol plants, making it suitable to become a test facility for Gevo's pilot conversion project. It also has a highly experienced operating crew, which reduces the risk of putting the new technology in place.

Gevo is already doing the engineering and hopes to begin converting the ethanol plant to produce isobutanol by the end of June, Glassner said.

"Obviously, there's the normal things that have to come together. We have to have our permits in place, and we have to have our detailed engineering, and we have to commit to the cost that it's going to be," Glassner said.

Creating isobutanol from the starch in corn is cheaper than obtaining it from petroleum, allowing Gevo to undercut the existing market.

The starch-and-yeast method is also greener. Greenhouse gas emissions from the entire product life cycle, including all the gases produced by the converted ethanol plant, are significantly reduced compared to the petrochemical product.

The only way to tell the starch-made isobutanol from the petrochemicallyprocessed isobutanol is with a Carbon-13 test for radioisotopes.

"Fossil resources were created from plants, albeit with a hundred million-year type of process," Glassner explained. "So what we're doing by taking starch and going to a product like this, or starch even to ethanol, is we're short-circuiting that process and making it something that the world can do on an annually-renewable basis.

"At some point in time, as fossil resources run out, we're going to need to know how to do that, because we aren't going to have any other choices," Glassner added.


Agri-Energy began as an idea meant to enhance economic development in Luverne. Initially, the ethanol plant included private investors as well as a farmers' cooperative, which in 2003 bought out the other investors.

Construction began on the plant in 1997, and corn-grinding and ethanol production began in August 1998.

The plant was designed to produce 12.5 million gallons a year, but currently produces 22 million gallons of ethanol a year.

"We did not do any major expansion," said Jay Sommers, general manager of Agri-Energy. "We would find a bottleneck ... we upsized a pump. At one time, it was a piece of equipment, the stripper tray -- we got a different hole design, so we went from having to shut down once a month to, once we got those different trays put in, we went six months without shutting the plant down. So we increased our production by eliminating downtime."

Sommers also attributed the increased production to his excellent workforce, about half having been at Agri-Energy since it began. If a problem occurs at the plant, employees can identify it and fix it quickly and efficiently.

Because of changes in the ethanol market and the increase in corn prices, the farmers involved with Agri-Energy found it to be an excellent time to sell the plant to Gevo, which was searching for a place to test out its new isobutanol-making process commercially.

When the Agri-Energy purchase went through in September 2010, it added 27 people to Gevo's existing workforce, nearly doubling it. Since then, the company has expanded to approximately 100 people, including those at Agri-Energy.

"The operations are the same, we have the same things going on day in and day out, the same challenges in the marketplace and the same producers that have been supplying us corn are supplying us corn today," Glassner said. "We're sticking with corn because the starch from the corn is the lowest-cost feed stock out there, and there's a huge amount of infrastructure that's converting starch to ethanol."

The plant is still producing ethanol and a high-protein animal feed and will continue to do so until the conversion process is complete. Gevo anticipates two to four weeks of downtime, during which the employees will likely do routine maintenance.

Gevo paid $20.7 million for Agri-Energy, and it will cost approximately $17 million to retrofit the plant to produce isobutanol. The total cost of the project was less than building a brand-new facility specifically to produce isobutanol.

"Our business model going forward is based on, rather than buying all the plants, actually doing joint ventures with the existing asset owners," Glassner said.

Under that model, an ethanol plant owner would use Gevo's technology to retrofit a plant and sell the isobutanol produced using Gevo's markets, allowing both entities to profit. Gevo has already signed a letter of intent with another, yetundisclosed ethanol facility to do just such a joint venture.

At Agri-Energy, isobutanol will be shipped out by rail, likely to Texas, for distribution. From there, the isobutanol will be used in paints and as a general-purpose solvent.

"It's a very fragmented market in that material at the end-user (point) typically gets distributed in drums," Glassner said.

Isobutanol can also be dehydrated and made into butene -- one of the fundamental building blocks of the petrochemical industry. From butene, more than 40 percent of all petrochemicals and 100 percent of all gasoline, jet and diesel fuels can be made.

Eventually, butene from isobutanol produced in Luverne will probably become butyl rubber in tires or part of a gasoline blend stock, or even clear plastic water and soda bottles.

The project will be beneficial to Luverne in the short term, while the conversion process generates local economic activity, and in the long term, as Agri-Energy becomes a showplace for Gevo's new isobutanol process.

Agri-Energy will produce 18 million gallons of isobutanol per year when the process is complete, along with a high-protein animal feed.