Editor’s Note: This is the third in a series of stories featuring The Telegram’s Top 10 news stories for 2015.
The news earlier this month that international bio-energy company Abengoa had shut down its Hugoton plant and laid off dozens of workers a little more than a year after a much ballyhooed grand opening that featured high-level state and federal officials came as a surprise.
“We’re all kinda reeling a little bit right now,” Neal Gillespie, Stevens County Economic Development director, said in early December.
The story is The Telegram’s No. 8 new story for 2015. Abengoa’s opening was No. 6 on The Telegram’s top 10 stories of 2014.
The plant, built by a Spanish company with financing from the U.S. Department of Energy, was designed to produce clean-burning fuel from the leftover material from crops after harvest.
U.S. Energy Secretary Ernest Moniz, as well as Kansas Gov. Sam Brownback, former U.S. Secretary of the Interior Ken Salazar, former U.S. Secretary of Energy Bill Richardson, U.S. Sen. Pat Roberts, and Abengoa CEO Manuel Sanchez Ortega, were on hand Oct. 17, 2014, to launch the ceremonial start-up of the new plant near Hugoton.
At full capacity, the company anticipated hiring 79 full-time employees and processing 1,000 tons of biomass a day — or roughly 350,000 biomass bales a year — that could produce up to 25 million gallons of cellulosic ethanol and 21 megawatts of electricity.
Despite the initial fanfare, the plant never lived up to its billing. A March 2015 Kansas Health Institute news service story indicated the plant was undergoing final adjustments and readying to begin full-scale commercial production of ethanol, but another news story on July 6 indicated Abengoa officials were still working to get the plant fully functioning.
At opening, the plant was billed as the as the first commercial-scale, next-generation biofuel plant.
Construction of Abengoa’s bio-refinery finished in mid-August 2014. The plant was to use only “second generation” biomass feedstocks for ethanol production, meaning non-edible agricultural crop residues, such as stalks and leaves, that do not compete with food or feed grain.
The state-of-the-art facility also featured an electricity co-generation component allowing it to operate as a self-sufficient renewable energy producer.
By using residual biomass solids from the ethanol conversion process, the plant was designed to generate 21 megawatts of electricity — enough to power itself and provide excess clean renewable power to the local Stevens County community.
In late November 2015, Abengoa SA, the parent company of Abengoa Bioenergy, filed for creditor protection in Spain, prompting fears it might default on nearly $10 billion of debt. Then in December, the company shut down the Hugoton plant, as well as an ethanol plant in Colwich.
Abengoa received a $132.4 million loan guarantee and a $97 million grant through the Department of Energy to support construction of the Hugoton facility. According to the Department of Energy’s website, Abengoa fully paid back its loan guarantee in March.
According to a Dec. 3 online article in Biomass Magazine, a monthly industry trade publication tailored to companies and organizations involved in producing or using biomass products, an anonymous former Abengoa employee said the company cited financial difficulties for the layoffs at Hugoton, and not enough money to continue paying wages.
The source told the magazine the entire staff, save a few upper management positions, at Hugoton were laid off. The source also indicated the Hugoton plant was idled in late November but could possibly be reopened in the spring.
Gillespie agreed the layoffs will have a big impact for Hugoton but was hopeful things will improve.
“I think we have to see how this thing plays out. In the short run, of course, it’s a devastating blow. In the long run, I think there’s a lot of value in that plant out there, and I suspect that either they will get it up and going or someone else will get it up and going. There’s a lot of value out there,” he said in an earlier story.