Biofuels

In Colorado, Gevo (GEVO) and Alaska Airlines announced a strategic alliance to purchase Gevo’s renewable jet fuel and fly the first-ever commercial flight on alcohol-to-jet fuel (ATJ). The demonstration flight is expected to occur after Gevo receives ASTM International certification for its fuel, sometime in mid to late 2015. Gevo has been working through the rigorous ASTM process for six years, which includes extensive engine testing and data analysis by all of the major original equipment manufacturers to establish the specification for this drop in fuel. Once approved, this fuel can be seamlessly integrated into the existing distribution...

Jim Lane Proposed consent decree offers timelines for ethanol, advanced fuels through 2016, biobased diesel through 2017. In Washington, the EPA released a proposed consent decree in litigation brought against EPA by, the American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers (AFPM), that would establish the following schedule for issuing Renewable Fuel Standards for 2014 and 2015: •By June 1, the agency will propose volume requirements for 2015; •By November 30, EPA will finalize volume requirements for 2014 and 2015 and resolve a pending waiver petition for 2014. Outside the scope of the consent...

Jim Lane In Colorado, Gevo (GEVO) announced that Praj Industries Limited has signed a memorandum of understanding to become a Gevo licensee for producing renewable isobutanol at sugar-based ethanol plants. Under the MOU, Praj will undertake to license up to 250 million gallons of isobutanol capacity for sugar-based ethanol plants over the next ten years. Gevo will market the isobutanol produced by Praj’s sub-licensees. Praj will also contribute process engineering and equipment services to expand isobutanol capacity at Gevo’s plant in Luverne, Minn, as well as to improve yields and optimize energy consumption at the facility. “Praj has...

by Debra Fiakas CFA Gas-to-liquids is back on my radar screen after an article appearing in early March 2015 on Biofuels Digest described progress Emerging Fuels Technology (EFT) has made in perfecting the Fischer-Tropsch process to convert carbon-based feedstock to liquid fuel, otherwise called Gas-to-Liquids.  Fischer-Tropsch often referred to as FT for short is a series of chemical reactions to convert carbon monoxide and hydrogen into liquid hydrocarbons.  The reactions are triggered by a catalyst, usually cobalt or iron, and managed under high temperatures in a chamber or reactor.  Some might consider it a neat trick...

by Debra Fiakas CFA A long article appearing in early March 2014 on Biofuels Digest about Emerging Fuels Technology (EFT) gave me pause.  The article has since been removed from the site but it was an interesting primer on Oklahoma-based EFT’s use of the Fischer-Tropsch process to convert carbon-based feedstock to liquid fuel, otherwise called Gas-to-Liquids. While Emerging Fuels Technology has been listed in Crystal Equity Research’s Alternative Chemicals Group of the Beach Boys Index of companies trying to harness energy from the sun through biomas, I must admit the company had not been taken seriously.  ...

by Debra Fiakas CFA Last week Cosan Limited (CZZ:  NYSE) revealed a decision to delay the spin-off and recapitalization of its natural gas distribution network, COMGAS.  Management cited unfavorable capital market decisions.  Cosan has a mix of businesses, of which we have been most interested in its Raisen Energia sugar cane agriculture and ethanol production.  Raisen is a joint venture with Royal Dutch Shell that was initiated in 2011.  The operation squeezes over four million tons of sugar from cane grown in its fields and two billion liters of ethanol each year. The ethanol is sold through Shell’s...

Jim Lane Green Plains In Nebraska, Green Plains (GPRE) announced net income for the quarter was $42.2 million compared to net income of $25.5 million for the same period in 2013. Revenues were $829.9 million for the fourth quarter of 2014 compared to $712.9 million for the same period in 2013. Net income for the full year was $159.5 million compared to $43.4 million for the same period in 2013. Revenues were $3.2 billion for the full year of 2014 compared to $3.0 billion for the same period in 2013. Fourth quarter 2014 EBITDA was $90.7 million compared to...

by Debra Fiakas CFA Last week the president of renewable chemicals producer FutureFuel Corporation (FF:  NYSE) turned in his resignation.  Lee Mikles is around sixty and seems a bit young for retirement.  He had been with the company from day one and served as the chief executive officer through the end of 2012.  He owns 2.3 million shares of FutureFuel stock or about 5% of the outstanding shares.  Maybe Mikles is just looking for a better paycheck.  The last time the company disclosed compensation, Mikles was down for $36,000 in compensation as a director.  Along with...

Jim Lane Following just one day after a big win in the Supreme Court and a corporate update last week, Gevo (GEVO) announced that it intends to offer and sell, subject to market and other conditions, common stock units. Each common stock unit will consist of one share of common stock, Series A warrants to purchase a certain number of shares of common stock and Series B warrants to purchase a certain number of shares of common stock. The units are to be sold by Gevo subject to market and other conditions in an underwritten public offering. Update!...

Jim Lane In Washington, the U.S. Supreme Court ruled in Gevo’s (NASD: GEVO) favor and overturned an earlier Federal Circuit Court of Appeals ruling on the interpretation of key patent claims. On April 11, 2013, the Delaware District Court (District Court) entered a final judgment of non-infringement in Gevo’s favor following the acknowledgment by Butamax Advanced Biofuels LLC (Butamax) that Gevo does not infringe Butamax’s asserted patents under the District Court’s construction of a key claim term in Butamax’s Patent Nos. 7,851,188 and 7,993,889. At the time, Butamax appealed Gevo’s victory, and a US Court of Appeals in...

by Debra Fiakas CFA The last time renewable chemicals developer Gevo (GEVO:  Nasdaq) was featured in this forum in August 2014, the stock was looking quite oversold around $0.50 per share. The stock had recently taken a tumble after management sold 30 million shares of the company’s common stock at $0.60 a share at the end of July 2014.  The plan was to use the $19 million in new capital to upgrade a production plant in Minnesota to better produce renewable isobutanol along with ethanol fuel.  Isobutanol is a popular solvent used widely in industrial applications. ...

Jim Lane Boom times for two-product strategies? Can feed markets offer relief for the challenges on the fuel side? The energy industry continues to feel the impact of falling energy prices. In Wednesday’s Top Story, we noted that the industry conversation has shifted from long-term fundamentals to a form of “oil price watching” not even the short-term fundamentals, but the kind of paralyzed ticker watching, waiting for the bottom, that comes during stock market crashes. “Barron’s says oil is going to $35bbl,” writes a trusted Digesterati. “The same guy who predicted the...

Jim Lane US biodiesel leader heads for the EU – what’s up with used cooking oil, and what is REG’s path forward with the German-based biodiesel producer? In Iowa, Renewable Energy Group and IC Green Energy announced that REG will acquire ICG’s majority equity ownership position in German biodiesel producer Petrotec AG (XETRA: PT8). Closing of the transaction is expected before year end. REG CEO Dan Oh Last month, REG CEO Dan Oh told The Digest, “We’re not done growing, that’s for sure! We’ve done something of...

Jim Lane As if tough financing conditions and policy instability weren’t worrying enough for many observers, along comes a crash in global oil prices. One of the US-based Digesterati writes: “Most of the biofuels projects that I have worked on in the last 5 years have based their proformas on an $80/barrel oil price. With the recent dip and worldwide “power play,” I feel that investors as well as Boards of Directors will be really re-evaluating their business models, with most going overseas to markets that do not have the abundant reserves that we do. “If...

Jim Lane “On the way” forever, talked up by all, deployed by some – technologies that handle high free fatty acid feedstocks like used cooking oil are coming into their hey-day, via players like REG, Novozymes, Pacific Biodiesel, Blue Sun, Piedmont, COMAC and more. Christmas come early for advanced biofuels? One of the most alluring targets in advanced biofuels although cruelly mis-named is in the world of free fatty acids. Most of the oils currently used for biodiesel are sourced from soybeans, palm or rapeseed, and precisely because they contain less than 0.5%...

Jim Lane Plant to convert sugar cane and sweet sorghum to 20-25 million gallons per year of Isobutanol From Colorado, Gevo (GEVO) announced that Highlands EnviroFuels has signed a letter of intent to become a Gevo licensee to produce renewable isobutanol. Highlands will build a commercial-scale “Brazilian-style” syrup mill in Highlands County, Florida, which would have a production capacity of approximately 200,000 metric tons of fermentable sugar per year. The facility will process locally grown sugar cane and sweet sorghum to a high quality syrup as a clean sugar stream for fermentation and recovery of isobutanol....