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Butamax: Portrait of a Biobutanol Strategic Investment by BP and Dupont

| April 27, 2010

Butamax's new plant under construction in Hull, UK

Butamax's new plant under construction in Hull, UK

As with our portrait yesterday of strategic investor Waste Management, BP and Dupont have been repeatedly the news with a series of investments in renewable energy technologies in the past 5 years.

Both companies have seemingly mastered the joint venture - reportedly so difficult that “nobody knows what doing a second one is like, because once you’ve done one you never want to do another,” according to one Digest-subscribing wag. Yet BP has JVs with Verenium for cellulosic ethanol and Dupont for the biobutanol venture known as Butamax, while Dupont has the additional JV with Danisco in Dupont Danisco Cellulosic Ethanol.

“Alliances are in our DNA,” former Dupont chairman Chad Holiday once told the Digest  — so how exactly do they work? How does a joint venture deliver value across the value chain.

Also, what exactly is up with biobutanol, perhaps the most important fuel you never heard of  — once that is gaining serious traction among bioenergy cognoscenti as a more perfect solution to the ethanol blend wall as well as a superior fuel for near-term deployment in the current automotive and distribution system.

The Digest spoke this past week with Tim Potter, CEO of Butamax, to gain a better perspective on the timelines and economics of biobutanol, as well as the way in which a JV operates when formed by two giants with formidable track records in biofuels development.

BD: Give us some basic background on Butamax.

BuMx: BP and Dupont have been in joint R&D for 7 years, and the last five focused on biobutanol. By July 2009 there was enough evidence of commercial viability to launch Butamax, and we’re just coming up on year one anniversary. As Butamax, we are accountable for and own all the tech and IP and commercialization associated with that R&D effort. We are the the mechanism by which the two parents will realize a ROI in technology they have invested heavily in. We’re focused on biobutanol from corn, cane, and wheat and, in a development not directly related to the Hull biobutanol project, to looking at macroalgae. As well, we are looking with Dupont at lignocellulosic processes, and we have a lab in Paulinia [Sao Paulo state] in Brazil that looks at other processes as well.

More about the Brazilian effort, here.

BD: Tell us about the near-term timelines.

BuMx: We are coming online this year. The UK demonstration plant commissions in Q3, and is designed to help us prove out the integrated technology. We’ll enter the US market and be commercially viable in late 2012 and early 2013, and at commercial scale. Our focus will be ethanol plants retrofitted to biobutanol , and the sales of licenses to other plants that can retrofit to biobutanol. We are also looking at entering Brazil on a commercially viable basis in 2013. Our focus there will be  exports to strategic markets, including US and Europe.

BD: What about the longer term?

BuMx: From 2013 we’ll move to wheat based production – also demonstrated and piloted at the Hull UK, and in the hopper, as I mentioned, we have macroalgae.

BD: Why biobutanol?

Butamax CEO Tim Potter

Butamax CEO Tim Potter

BuMx: In our skill set is a biobutanol process that is a complement to the advancement of ethanol producers – it’s another fuel molecule that gets deeper into the infrastructure. we see ourselves as bringing a technology that does not reinvent the wheel, in that we are still fermenting a fuel from sugar, and we see ourselves as working as a complement to ethanol, an enabler — not a competitor — bringing an opportunity for diversification.

BD: How does the retrofit work?

BuMx: We needed to have a technology that could be applied to an existing plant – it’s an add-on. There are two areas when you retrofit, one is in the fermentation, one is distillation. We have an advanced yeast technology, in that we have altered yeast to make other alcohols. The discovery that Dupont and BP have been working on is a yeast that can produce at commercial scale and cost.

BD: Will Butamax stay with biobutanol or look at other fuels?

BuMx: This JV is solely focused biobutanol, although what the parents can do is invite us to collaborate in other areas. Right now, we only ten months into this journey.

BD: You said that biobutanol is a  fuel molecule that gets deeper into the infrastructure. How deep?

BuMx: If you think about ethanol as an equivalent, currently that’s restricted by the current gasoline specs to a 10 percent blend for non flex-fuel engines. In that fuel spec, butanol can be blended at 16 percent right now.

BD: What happens if ethanol is approved for 15 percent blending?

BuMx: In that case, the expectation is that biobutanol would be approved for a 24 percent blend.

BD: How long does a conversion take for an existing ethanol plant?

BuMx: This is a true retrofit, generally without disrupting existing production. Only for a couple of weeks would there be no commercial production.

BD: What about the production economics?

BuMx: Using our process, a 100 MGy corn ethanol will make 80 Mgy of biobutanol, but every fuel molecule will have 25 percent more energy, so it’s a balance. Also, with 16 percent butanol, you are getting higher concentrations of a higher energy molecule, so you are getting real improvements in fuel economy and efficiency.

BD: What about biobutanol in terms of production cost?

BuMx: We are at a threshold where it’s time for us to seek out partners. demonstrate biobutanol at an energy equivalent basis – not volume – at parity with bioethanol – Discovery is still moving towards our commercialization target of having parity with ethanol on an energy equivalent basis [note: the same production cost per BTU of fuel energy] and by 2013 we will have that commercial viability.

BD: Parity in 2013 with ethanol- what about later?

BuMx: We’ll see continuous improvement, but it’s not a condition for commercialization.

BD: Not every JV is successful – far from it. In this case, what went right?

BuMx: You have two very mature, very seasoned companies, with complimentary skills but not similar. Dupont is a world leader in tech development with bioprocess design. BP knows fuel specs and fuel design and markets on a world-scale.

BD: What about the policy front? Will biobutanol have access to the same policy and tax supports as ethanol?

BuMx: The good news is that RFS2 and new regulations are starting to specifically comment on and identify biobutanol, and how it fits into the RIN profile.

BD: Last thoughts?

BuMx: Biobutanol is a complement to existing biofuels. We’re not looking at it as an us vs them in any category. We feel that we’re all on the same mission to advance total volume.

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