Gevo Buys Red Trail Ethanol Plant

LINCOLN, Neb. (DTN) -- Gevo Inc. is set to buy Red Trail Energy's ethanol plant and carbon capture and storage facility in Richardton, North Dakota, with plans to produce sustainable aviation fuel from ethanol in a $210 million deal with an ethanol company that's been in operation for 17 years.

The acquisition will give Gevo a total sequestration capacity of 1 million metric tons per year that includes 160,000 metric tons per year currently being used by Red Trail.

"This site could accommodate many future net-zero-type and related projects," Gevo said in a news release on Thursday.

"Gevo expects to expand the site to include net-zero SAF production, leveraging the low-carbon ethanol combined with de-fossilized energy."

The deal also includes Red Trail's 65-million-gallon ethanol plant that started production in 2007. The plant originally was built as one of the first coal-fired ethanol plants in the country and converted to natural gas in 2016.

In 2021, Gevo announced it had purchased 240 acres near Lake Preston, South Dakota, where it continues to develop what it calls a "net-zero" project to include SAF production.

The company said on Thursday the Red Trail acquisition will provide both ethanol and carbon storage to benefit the Lake Preston project and for "future sustainable aviation fuel production that is well-positioned" to serve the U.S. and Canadian markets.

"Gevo plans to continue operating the Red Trail Energy facility while integrating Gevo's proprietary solutions to further enhance the plant's efficiency, sustainability and further reduce the ethanol CI," Gevo said in a news release.

"The plant has a long track record of safe, reliable operations. Gevo plans to retain the employees currently operating the plant and CCS well."

Red Trail currently has 47 employees with an annual $4 million payroll, according to the company's website.

Gevo said the carbon capture and storage facility above the Broom Creek formation has the potential to expand sequestration by five times.

The carbon capture and storage site has been in operation since 2022 and currently captures about 160,000 metric tons of carbon annually.

Lynn Smull, Gevo chief financial officer, said during a news conference that the company expects to close the transaction by the first quarter of 2025.

Gevo CEO Patrick Gruber said in a statement that the acquisition helps his company to become "self-sustaining and profitable.

"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," he 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."

Gevo President and Chief Operating Officer Chris Ryan said during the news conference that Red Trail is appealing partly because the plant already produces ethanol that's 70% lower carbon than the rest of the ethanol industry.

Red Trail Energy CEO Jodi Johnson said her company believes the move will help farmers and their local communities.

"We are proud of what we have accomplished at Red Trail Energy and are excited about the future under Gevo's leadership," Johnson said in a statement.

"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 also operates a development facility in Luverne, Minnesota, as well as a renewable natural gas plant in northwest Iowa.

"These assets and their operating team have a strong track record of safe and reliable operations and financial performance," Ryan said.

"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."

The Red Trail plant also generates more than 200,000 tons annually of distiller grains and vegetable oil co-products.

Todd Neeley can be reached at todd.neeley@dtn.com

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