Fuel Developer Gevo to Acquire Ethanol, CCS Assets for $210MM
Gevo, Inc. is acquiring Red Trail Energy’s ethanol plant and carbon capture assets in North Dakota for $210 million. The plant produces 65 million gallons of ethanol annually and sequesters 160,000 metric tons of carbon, with the potential to capture 1 million metric tons annually. Gevo plans to use this acquisition to bolster its sustainable aviation fuel (SAF) production and expand its carbon capture capabilities, aligning with its Net-Zero strategy. The deal is expected to close by Q1 2025, pending regulatory approvals.
Net zero fuel developer Gevo, Inc. is acquiring the ethanol production plant and carbon capture and sequestration (CCS) assets of Red Trail Energy, LLC in North Dakota for $210 million.
Red Trail’s ethanol facility has a capacity of 65 million gallons per year and is located on 500 acres with pore space lease agreements for 5,800 acres in the Broom Creek formation, which has pore space sufficient for 1 million metric tons of carbon capture and sequestration annually.
The permitted CCS well currently sequesters approximately 160,000 metric tons of carbon annually. In addition, the facility generates more than 200,000 tons annually of distiller grains and vegetable oil co-products, Gevo said in a news release.
The facility distributes its low-carbon ethanol across the USA and Canada, including low-carbon demand markets in Oregon, Washington, British Columbia, and Alberta. Gevo said it expects to retain all of the approximately 50 full-time employees currently operating the assets being acquired.
The transaction is expected to close by the first quarter of 2025, subject to receipt of regulatory approvals and the satisfaction of other customary closing conditions, including obtaining the approval of Red Trail Energy’s equity holders and the procurement of financing for the acquisition. Gevo expects to finance the transaction with a combination of asset level debt and cash from the balance sheet.
The acquisition is “consistent with Gevo’s strategy while providing an ideal Net-Zero site for future sustainable aviation fuel (SAF) production that is well positioned to serve the U.S. and Canadian markets,” the company said. The acquisition is also “synergistic” with Gevo’s Net-Zero 1 SAF project in Lake Preston, South Dakota, by providing access to a wholly owned CCS site and additional supply of low carbon intensity ethanol, it added.
Gevo CEO Patrick Gruber said, “We accomplish several things with this investment. It immediately puts us on a path to becoming self-sustaining and profitable as a company in advance of our Net-Zero 1 project’s commercial operation. Not only are we securing an excellent site for additional SAF asset deployment, but we also mitigate risk around carbon sequestration regarding our Net-Zero 1 plant site in South Dakota. This acquisition gives us the opportunity to build capability as a company and is a terrific training ground for our Net-Zero 1 project, as we inherit a trained cadre of employees who understand plant operations”.
“Carbon abatement for fuels and chemicals is core to our business. This acquisition enables immediate market development for sequestered carbon. We expect our ownership of these assets to generate significant near-term and long-term value for our shareholders, while adding new jobs and economic growth to rural communities in the region,” Gruber stated.
Red Trail Energy CEO Jodi Johnson said, “We are proud of what we have accomplished at Red Trail Energy and are excited about the future under Gevo’s leadership. Gevo’s vision for a sustainable future aligns with our philosophy of ‘our farms, our fuel, our future.’ We are confident this acquisition will drive positive change in the renewable energy sector”.
Gevo President and COO Chris Ryan said, “As Net-Zero 1 and other production facilities come online, the infrastructure and resources that we will have acquired in North Dakota offer tremendous flexibility for how we might operate in the area. We believe this site is ideal for [the] production of sustainable aviation fuel using Gevo’s integrated alcohol-to-jet technology and defossilized energy, combined with CCS. The CCS well gives us optionality for our Net-Zero 1 carbon sequestration needs. The regional synergies with Net-Zero 1, our development facility in Luverne, Minnesota, and our RNG [renewable natural gas] operations in Northwest Iowa, are fantastic”.
“These assets and their operating team have a strong track record of safe and reliable operations and financial performance. We plan to immediately begin optimizing the asset with partners through combined heat and power, which will further lower the carbon intensity and increase annual carbon sequestration. This not only decarbonizes the current ethanol production further, but also enables the site for net-zero SAF and chemical production,” Ryan remarked.
Colorado-based Gevo said its mission is to convert renewable energy and biogenic carbon into sustainable fuels and chemicals with a net-zero or better carbon footprint. The company stated that it currently runs one of the largest dairy-based RNG facilities in the USA.
Source Link : https://www.rigzone.com/news/fuel_developer_gevo_to_acquire_ethanol_ccs_assets_for_210mm-17-sep-2024-178136-article/
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