A South Dakota corn ethanol plant will soon begin producing a fuel additive with a wider variety of uses.
Tom Hitchcock, chief executive of Redfield Energy, said the 50 million gallon-per-year plant is teaming with Englewood, Colo.-based Gevo to convert the facility in Redfield to a 40 million gallon-per-year butanol plant using the same 18 million bushels of corn a year.
Hitchcock said each gallon of butanol contains more energy than a gallon of ethanol.
"You use the same amount of corn to get a more valuable product," he said.
South Dakota legislators this week approved extending a 20-cents-per-gallon tax incentive for ethanol plants to facilities that produce butanol, and the bill is expected to be signed by the governor. But because the statewide program is capped at $4 million, Hitchcock said, the benefit to the Redfield plant actually amounts to about a penny a gallon.
Gevo is also retrofitting a plant it owns in Luverne, Minn.
Butanol has traditionally been used as paint thinner, cleaner and adhesive, but as a fuel additive it contains more energy than ethanol and could be blended into existing cars at higher percentages. Hitchcock said he expects the plant to be more profitable selling fewer gallons of the new product.
The Redfield plant is a co-op owned by 650 members, and Hitchcock said Gevo is paying for the $30 million retrofit in exchange for an equity interest in the partnership.
He said the motivation for members to make the switch was that the demand for butanol goes well beyond its role as a fuel additive.
Biobutanol is used widely in paints and other chemical products and can be converted into plastics and solvents. And with some additional processing steps, it can even be converted to jet fuel, diesel or gasoline, Hitchcock said.
"There's a much bigger, wider market for the product than ethanol," he said.
Hitchcock said Gevo expects to have to have the Luverne plant making butanol by June, and the goal is to have the Redfield plant producing the new product by the second quarter of 2013.
Another benefit of butanol is that it does not eat away at pipes, so a butanol pipeline is feasible, though Hitchcock said that possibility would be far down the line as more plants are brought into the system.
"I think you'll see all of our production and the Luverne production shipped out by rail," he said.