HUGOTON -- As state and Abengoa Bioenergy officials gathered Thursday to recognize both Hugoton's long history of being a natural gas energy supplier and its future as a supplier of sustainable energy, Stevens County Economic Development Director Neal Gillespie and others were looking to the event as one of the town's defining moments.

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Kansas Gov. Kathleen Sebelius speaks Thursday to a group gathered at Memorial Hall in Hugoton for the announcement of the first commercial-scale cellulosic ethanol plant in the United States. The facility is set to be located west of Hugoton, in Stevens County, and completed in late 2010.

Gillespie and other residents in Hugoton and Stevens County welcomed state officials, including Gov. Kathleen Sebelius, Senate President Steve Morris, R-Hugoton, and U.S. Rep. Jerry Moran, R-Hays, and representatives of Abengoa to Memorial Hall to announce the future construction in Stevens County of the first commercial-scale facility in the U.S. to produce cellulosic ethanol. The plant will allow production of renewable fuel from plant fiber, or biomass.

The proposed biomass biorefinery, set to occupy about 400 acres west of Hugoton on land north of Cargill and Seaboard Farms, is expected to produce about 13 million gallons of ethanol a year, using 930 tons per day of cellulosic crop residue from plants, including switch grass, corn stover, milo and wheat straw. The plant also will produce another 88 million gallons of ethanol using traditional grain processes.

Sebelius said the biorefinery not only could stand to serve a leading role in shaping U.S. energy policy on less reliance on foreign oil and more emphasis on alternative fuel, but also supply the immediate and outlying areas with 125 new jobs and a $5.5 million payroll.

"Mr. Mayor, this has to be a great day for Hugoton," Sebelius said, addressing recently appointed Hugoton Mayor Jack Rowden on the event. "This is really a cutting-edge project."

According to the Spain-based Abengoa, when the biorefinery, set for completion in late 2010, becomes operational, it will "represent a major technological milestone" in commercial-scale production of renewable fuels using plant fiber, or biomass.

And while it's not the first time cellulosic technology has been used, said Christopher Standlee, executive vice president for Abengoa, it's never been done on this scale.

Standlee said it could take a year to 18 months before anything's readily visible with construction for the biorefinery. He said Abengoa planned to pull feedstock for cellulosic ethanol production from a 50-mile radius and then source the needed 35 million bushels of grain within a 75-mile radius.

The project is being funded, in part, by a $77 million grant awarded this year to the company by the U.S. Department of Energy as part of President Bush's biofuels initiative -- the aim of the program is to reduce gasoline consumption by 20 percent in 10 years.

Sebelius said Hugoton would be home to additional jobs, as well as "to our new fuel supply" that the rest of the nation and world will be watching play out.

"This is a great day to celebrate," she said to the crowd.

There's been projects that, as the county's economic development director, Gillespie has seen come and go, with some of the projects that had fallen through leaving "kind of a black cloud there." But when Abengoa began looking at and then deciding on the town as the facility's location, he said the cloud's lining went from silver to gold.

"We couldn't ask for a better project than this," said Gillespie, the former Hugoton mayor. "It's good to see one come to fruition."

Gillespie said Hugoton was known as the natural gas capital in Kansas, and he now hoped it would become the energy capital. He said he thought when the town's residents looked back on Thursday's announcement, it would be one of the positive, defining moments for Hugoton and Stevens County.

"We're just really thrilled," he said.

The county wasn't at the top of Abengoa's list at first, Gillespie said, adding that Hugoton resident and local farmer Walter Beesley helped initially seek out the company after he heard of the energy department's grant. Beesley visited Abengoa's Colwich plant, trying to build interest in Hugoton among Abengoa officials.

To Beesley, the facility and town were a natural fit for one another, with Hugoton and the county having a good water supply.

"And we've got a lot of biomass in this area," he said. Abengoa Bioenergy has estimated it would use about 4 to 7 percent of available biomass to maintain the 930 tons a day -- leaving some of the crop residue on the land to maintain long-term soil health.

Beesley said the facility would give farmers another alternative to profit from corn and other area crops. And every community has to have something bringing in jobs, he said.

"And this is what this is doing," he said of the jobs, adding, "It's a big boost to the community."

Town residents also could attend an informational meeting by Abengoa on Thursday night to learn more on the proposed facility.

According to Abengoa, the technology company is Europe's largest ethanol producer, fifth largest in the U.S. and the only worldwide bioethanol manufacturer, having more than 264 million gallons/year in total installed capacity.

Abengoa maintains three production facilities with a capacity of more than 132 million gallons/year in Spain and also has an ethanol production plant in Colwich. The Kansas Department of Health and Environment approved an air emission source construction permit on April 24 for expansion of the Colwich plant.