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Gevo Shifting From Isobutanol to Ethanol at Minnesota Plant

Sept. 24 (Bloomberg) -- Gevo Inc., a U.S. biotechnology company backed by French oil company Total SA and specialty-chemicals maker Lanxess AG, will shift to ethanol at its Luverne, Minnesota, plant and stop producing isobutanol, the more complex product the facility has been making since May.

The company is working on “certain specific parts of our technology” to boost isobutanol production rates, Englewood, Colorado-based Gevo said today in a statement.

The company doesn’t expect the Luverne plant to reach “our desired year-end run rate” until next year, according to the statement. Gevo said in May it would be producing about a million gallons a month before the end of 2012.

“Our throughput, the rate of production in the plant, is not on a track I like,” Chief Executive Officer Patrick Gruber said today on a conference call. “It occurred to us that by temporarily running the plant in ethanol mode we could maximize cash flow versus trying to force isobutanol right now at these low production rates,” he said.

The plant initially produced ethanol. Gevo retrofitted the facility with systems that make either ethanol or isobutanol, a four-carbon alcohol that’s blended with gasoline or used to make plastics, fibers, paints, jet fuel and other products typically derived from petroleum.

“Scale-up of industrial biotech almost always entails a longer-than-expected process of optimization before production rates reach target levels,” Pavel Molchanov, an analyst with Raymond James & Associates Inc. in Houston, said today by e-mail. “This is by no means unique to Gevo.”

The plant adjustments may be completed and isobutanol production may resume “in the several month kind of time frame,” Gruber estimated on the call. “These really are growing pains that are typical of new fermentation type technologies,” he said.

The shares fell 3.9 percent to $3.18 as of 8:56 p.m. in New York after the close of regular trading.

To contact the reporter on this story: Andrew Herndon in San Francisco at aherndon2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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