Butanol from microorganisms is a fairly new process. I made trace amounts in grad school from rumen and termite microorganisms, but nothing in commerical quantities. When I worked for Hoechst Celanese, I worked on butanol processes for many years, but we made it the traditional way from petrochemicals.

If the claims that are made at www.butanol.com are valid, then we should be shifting to butanol production as quickly as we can. The claim is that the per gallon yields from corn are almost the same for butanol as for ethanol, yet butanol has an energy density similar to gasoline, and the distillation process is much less energy intensive.

What about butanol synthesis from ethanol feedstock. If there is a good catalyst for it I'd think it would not add to the overall cost. The wike says it can be made from ethanol via electrolysis http://en.wikipedia.org/wiki/Butanol#Production But I suspect there is a catalytic route. I found one here http://www.sangi-co.com/e/index.html Butanol Synthesis from Ethanol Using a Hydroxyapatite Catalyst Everything I've read points to butanol being almost the perfect fuel as far as pollution and energy density goes.
I don't think you would want to synthesize it from ethanol. I think you would be deeply in the hole on the energy balance. Given that ethanol is already marginal, you are going to end up with a butanol product that definitely required more energy input than the final product contains. Far better to synthesize it directly.

Well I think you just answered the question about using ethanol for anything but high value needs. If its too expensive to use as a chemical feedstock then its proabably not worthwhile to burn it for general transportation.

If people don't feel its valuable as a feedstock then why the hell use it for transportation ?

Oil/Natural gass feedstocks don't suffer these problems. GTL for example is viable even CTL's.  

I think we do need to find a renewable reduced carbon source for future transportation needs mainly the airline industry and critical off grid transportation and for chemical feedstocks.

Ethanol does not solve this problem.

Would butanol need to be moved via truck, similar to ethanol, or could it be piped?
According to RR's post it might be able to be piped. It does not dissolve in water as readily as ethanol, in fact it separates spontaneously at concentrations above 7 %. Whether or not it can be piped depends on other factors, however. Does it absorb moisture from the atmosphere if exposed to it? Or could it be contaminated with water in other ways? If so, how much water does it eventually contain? How harmful would that water ratio be to a piping-based infrastructure? I've no idea if anyone knows the answer to those questions.
The claim is that it can be piped. It is not very hygroscopic. It will absorb some water, but is not completely soluble in water like ethanol, and therefore should be less corrosive. Even better options would be C5 or higher alcohols, because they are completely insoluble in water.

Interesting you mention that I was wondering why they don't do fermentation targeting a alcohol that's insoluble in water then the fermentation product separates and you don't poison your culture and you don't need distillation. Even with butanol if the fermentation culture can survive at its soluble concentration you would just have to decant the excess alcohol.

This seems the way to go to me since it solves lots of problems.

There is some discussion here.

http://www.greencarcongress.com/2006/08/dupont_bp_and_b.html

Butanol solubility is about 9ml/100ml or 9%v/v so if a culture can withstand that your looking at a residual of 9% of the production remaining in the culture which is not bad.

Butanol can be produced by fermentation of biomass. The process uses the bacterium Clostridium acetobutylicum, also known as the Weizmann organism. It was Chaim Weizmann who first used this bacteria for the production of acetone from starch (with the main use of acetone being the making of Cordite) in 1916. The butanol was a by-product of this fermentation (twice as much butanol was produced). The process also creates a recoverable amount of H2 and a number of other by-products: acetic, lactic and propionic acids, acetone, isopropanol and ethanol.
(So it is "new" like most of the chemical industry)
http://en.wikipedia.org/wiki/Butanol_fuel

The manipulation of the pH levels to shift the ABE reactions to buytol alcohol is what is new.  (Acetone, Butanol,Ethanol)

The manipulation of the pH levels to shift the ABE reactions to buytol alcohol is what is new.

Yes, I should have been more clear in my wording. Many chemicals have been made from biological processes long before they were made from purely chemical processes, but the claimed ability to make it in commercial quantities from biomass is new.

It was made commercially that way before the use of oil-derived hydrocarbons.

The new patent is based on keeping the biological portion in the butynol side of the reaction.

(I looked up their patent in the past....I don't want to spend the time looking it up again, so perhaps someone here will)

No need to look up the patent. They summarize the history of butanol, with links to additional information (and to the patent) at http://www.butanol.com/.