Gevo is set to enhance its net-zero fuel production capabilities with the signing of a definitive agreement to acquire Red Trail Energy's ethanol production plant and carbon capture and sequestration (CCS) assets for $210m.
This strategic move aligns with Gevo’s aim to convert renewable carbon into SAF and chemicals while reducing carbon emissions.
The deal not only complements Gevo’s existing Net-Zero 1 SAF project in South Dakota but also provides a wholly owned CCS site and additional low carbon-intensity ethanol supply.
The current CCS assets have a sequestration capacity of one million tonnes (t) per year, with 160,000t being utilised currently.
This acquisition is expected to bolster Gevo’s feedstock procurement, plant operations and carbon abatement business, crucial for Net-Zero 1 and future SAF projects.
Gevo’s expansion plans include leveraging the low-carbon ethanol from the acquired site, combined with de-fossilised energy, to produce net-zero SAF.
The company intends to continue operations at the Red Trail Energy facility, enhancing its efficiency and sustainability through the integration of Gevo’s proprietary technologies.
The Red Trail Energy facility, located on a 500-acre site with pore space lease agreements for an additional 5,800 acres, boasts a 65 million gallons per year capacity for low-carbon ethanol production.
With the CCS site operational since 2022, capturing 160,000t of carbon annually, Gevo also plans to retain the existing workforce post-acquisition.
The well-positioned CCS asset offers potential for significant expansion, with the capacity to increase sequestration to more than five-times the current levels by utilising the available pore space and wellhead capacity.
The acquisition is anticipated to close by the first quarter of 2025, pending regulatory approvals and other standard closing conditions.
Gevo CEO Patrick Gruber said: "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."
Red Trail Energy CEO Jodi Johnson: “We are confident this acquisition will drive positive change in the renewable energy sector.”
Ocean Park Securities is acting as sole financial advisor to Gevo with Faegre Drinker Biddle & Reath as legal advisor.
Earlier this month, Methanex agreed to acquire OCI’s international methanol business in a deal valued at $2.05bn.
