Gevo provides update of operations at Luverne facility

By Erin Voegele | November 15, 2016

On Nov. 14, Gevo Inc. released third quarter financial results, reporting the company produced approximately 145,000 gallons of isobutanol during the quarter, with approximately 240,000 gallons produced during the first nine months of the year. The company said it expects isobutanol production to reach approximately 500,000 gallons for the full year.

Also on Nov. 14, Gevo announced Alaka Airlines flew the first commercial flight with its cellulosic alcohol-to-jet (ATJ) fuel. Production of the fuel, which meets ASTM D7566, was first announced in October. To produce the fuel, Gevo adapted its technologies to produce isobutanol from wood waste-derived sugars. The cellulosic isobutanol was further processed into ATJ.

Earlier in November, Gevo announced gasoline blended with its corn starch-derived isobutanol is now being sold in the Houston, Texas, area for use in on-road vehicles. Musket Corp. is the company’s distribution partner in the Houston region.

Other events highlighted by Gevo include a September announcement that the company had entered into a heads of agreement with Deutsche Lufthansa AG to supply ATJ from its first commercial hydrocarbons facility, which is expected to be built in near its existing biorefinery in Luverne, Minnesota. Terms of the agreement contemplate Lufthansa purchasing up to 8 million gallons per year of the fuel, or up to 40 million gallons total over the 5-year life of the off-take agreement.

For the full year 2016, Gevo said it expects to decrease the variable cost of producing isobutanol at its Luverne, Minnesota, plant to a range of $3.00 to $3.50 per gallon, enabling isobutanol to be produced at a positive contribution margin, based on expected average selling prices of $3.50 to $4.50 per gallon.

The company indicated that for the remainder of 2016 and into 2017, it plans to continue to focus on optimization work to improve the Luverne plant, with a view towards expanding the facility. Gevo said it plans to optimize the plant’s production process with the intent of improving robustness and consistency of production, increasing production volumes and potentially producing specific grades of isobutanol tailor to specific applications.

By the end of this year, the Luverne plant is expected to have the capability to be at a production run rate equivalent to 1.5 million gallons per year. The facility, however, is expected to run below that rate as the company scales-up and tests new produces improvements to reduce costs and optimize production.

During an investor call, Pat Gruber, CEO of Gevo, said the company continues to make progress at the Luverne facility, and is pleased with the isobutanol fermentation in terms of yields and rates. The fermentation cycle times have been reduced from seven days to the targeted five days per batch, he said, noting the company aims to be able to run an isobutanol batch every five days back-to-back during the fourth quarter.

Regarding sales, Gruber said Gevo continues to see growing market demand. Reception has been good in the marine market, he said, noting the company is now marketing its isobutanol for on-road use in Texas. He also spoke about potential market for ATJ.

Gevo reported third quarter revenues of $6.9 million, down from $8 million during the same period of 2015. Revenues derived from the Luverne plant were $6.4 million, down $1.2 million from the same quarter of last year. The decrease is primarily attributed to lower ethanol production, ethanol prices and distillers grains prices. Hydrocarbon revenues reached $500,000, $300,000 higher than the third quarter of 2015. Gross loss was $2.7 million. Loss from operations was $6.1 million, compared to $9.3 million during the same quarter of last year. The net loss was $9.8 million, compared to $6.5 million during the same quarter of 2015. The non-CAAP adjusted net loss was $8.2 million, compared with $11.4 million during the third quarter of 2015.