Gevo discusses plans for hydrocarbon, RNG production

Gevo Inc. released second quarter financial results Aug. 14. During an earnings call, Gevo CEO Patrick Gruber discussed the company’s future plans for aviation fuel production and announced plans to launch a renewable natural gas (RNG) division.

Gruber opened the call by discussing progress the company has made with its commercial off-take agreements, referencing an announcement made Aug. 13 that Gevo and Air Total International SA have entered into a partnership agreement to produce and supply sustainable aviation fuel for use and distribution in France in other parts of Europe.

“We are engaged with more energy companies and airlines than ever before,” Gruber said, noting the company has approximately 100 million gallons of jet and isooctane under discussion for contracts. He said the company only has to contract for about 5 million more gallons in order to justify building out its proposed renewable hydrocarbon plant in Luverne, Minnesota. According to Gruber, he hopes the company will be able to build a facility bigger than its initially proposed 10-12 MMgy capacity.

Gruber also spoke about efforts to lower the carbon footprint of its operations. He said Gevo’s technology produces high-protein coproduct—about 10 pounds per gallon of jet fuel. That protein is used as an animal feed. Gruber said Gevo is working on setting up a subsidiary that would produce renewable natural gas (RNG) from manure produced by livestock that eat that feed. That RNG could either be used to fuel Gevo’s plants or sold into the natural gas pipeline. “We are well along in getting this established, and we expect to finalize the deal soon,” Gruber said. The RNG subsidiary is expected to be called Gevo Energy.  

In addition, Gruber said Gevo is working to reduce its electrical load by working with Joule Energy to establish wind power. He said the wind project is “very far along” and noted the company is waiting on the final documents.

Later in the call, Gruber discussed plans for jet fuel and isooctane production at Gevo’s existing Luverne site. In stage one, the company plans to add 1 MMgy of renewable hydrocarbon production capacity. “We plan on building the 1 million gallon hydrocarbon plant at Luverne once we get financing,” Gruber said. “We expect that it will be deployed in 12 months or less because it would be skid mounted and delivered mostly built.” In phase two, the company would add the proposed 10-12 MMgy hydrocarbon facility.

Gevo reported revenues of $5.1 million for the second quarter, down from $9.4 million during the same period of last year. Revenues related to ethanol sales and related products were $4.97 million, down from $8.81 million. The decrease is primarily attributed to reduced ethanol and coproduct revenues due to planned lower production volumes in response to a decline in ethanol sales prices. Hydrocarbon revenues were approximately $100,000, down from $600,000. The decrease in hydrocarbon revenues was attributed to a delay in shipments of finished products from the company’s demonstration plant in Silsbee, Texas.

Gevo reported a gross loss of $3.4 million for the second quarter, compared to a gross loss of $1.3 million during the same period of 2018. Loss from operations was $6.5 million, compared to a $4.4 million loss during the second quarter of last year. The company reported a net loss of $7.1 million for the quarter, compared to a net loss of $11.5 million during the same period of 2018.