As U.S. subsidies for ethanol continue to disappear, retrofit installations to produce butanol—touted as a superior fuel with superior financial incentives—are catching on at plants, says butanol technology provider Butamax, the joint venture between BP and DuPont Chemical.
Butamax CEO Paul Beckwith says his company already has signed eight ethanol producers—representing 900 million gallons per year of production capacity—to retrofit for butanol production. The company says it can perform the installation for 30% of a plant's initial construction costs. "Having these plants in our 'early adopters group' gives validity to the business going forward," Beckwith says.
The ethanol build-out spawned robust construction over the past decade. However, following the expiration of the industry tax credit and rising corn prices, at least eight plants have shut down since June. Today, ethanol companies are looking to new technologies to leverage existing assets, even if it means adding capital costs and new construction.
The Renewable Fuels Association, Washington, D.C., says there are 218 plants with more than 14 billion gallons of production capacity nationwide. Under the U.S. Renewable Fuel Standard (RFS-2), butanol is considered an "advanced biofuel." Corn-based ethanol is not, and it gets little support under RFS-2.
Because oil firms, known as "obligated parties," must present renewable identification numbers (RIN) to the EPA as credits for biofuel gallons purchased, butanol is a more desirable product, generating more RIN credits (1.3 credits) than corn-based ethanol (one credit).
Butanol is blended more easily with gasoline than ethanol, the fuel's backers claim, and it requires minimal modification to automotive engines.
The opportunity has triggered a lawsuit over intellectual property. Claiming patent infringement, Butamax is suing Gevo Inc., Englewood, Colo. Gevo is backed by France's Total SA and major chemical maker Lanxess.
The dispute split the two engineering and construction companies that built more than 60% of U.S. ethanol production capacity. ICM Inc., Colwich, Kan., is Gevo's design-build partner, while Fagen Inc., Granite Falls, Minn., is Butamax's primary source for engineering, procurement and construction. ICM and Fagen are betting big on butanol.
Fagen and ICM might be on different sides in court, but the firms find common ground in the marketplace. "The relationship between these two pioneers in the biofuels industry is strong," says Ryan Manthey, Fagen general counsel. "The mere fact that Fagen and ICM are working with different biofuel technology providers in no way impacts our long-term commitment to working together to build and sustain the ethanol industry."
Ethanol's struggles, however, have aided butanol and its potential impact. Contractors already are inquiring. "It's pretty public knowledge that we have a partnership with Red Field Energy, so companies are contacting them, the folks at ICM and myself" about the opportunities involved in retrofitting ethanol plants for butanol production, says Ron Borchardt, vice president of project engineering and construction at Gevo.
"We need every trade—carpenters, installers, ironworkers, instrumentation folks," Borchardt says. "ICM didn't self- perform much at [Gevo's first] plant in Luverne, Minn. They subbed a lot of it out, so there is an opportunity for contractors. United Mechanical Contractors and MSI did a lot of the mechanical work. Decker Electric did a lot of work there. Nelson Construction in Sioux City did a lot of the installations."
In addition, Borchardt says successfully bidding butanol retrofit work doesn't necessarily require previous ethanol experience. "It's good to have the experience—and we want a project done fast, too—but we probably go a little deeper [than many ethanol companies] when it comes to monitoring quality and the safety," he says. "They wanted a plant fast and didn't care how it was done."
Editor's Note: Butamax has eight producers in its Early Adopters Group, representing 11 operating plants—not eight as reported. Butamax says it can retrofit an ethanol plant to produce butanol for 30% of the original construction cost, not $1 per gallon, as previously stated. Capital costs for ethanol plants varied widely but many were built for approximately $2 per gallon, according to industry trade journal Ethanol Producer Magazine, which maintains a list of all ethanol plants operating and under construction in the United States.