International bio-energy company Abengoa has shut down its Hugoton plant and laid off dozens of workers, a little more than a year after a grand opening celebration that featured high-level state and federal officials.
“We’re all kinda reeling a little bit right now,” Neal Gillespie, Stevens County Economic Development director, said when contacted about the situation.
Gillespie said the community was caught by surprise when it learned last week that Abengoa had sought preliminary creditor protection, a precursor to filing bankruptcy.
“We didn’t know what that meant. But I understand they’ve laid off all but about six people at the local plant,” Gillespie said, estimating that about 50 employees lost jobs.
According to a Wichita Eagle story and other published reports, in late November, 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. In Kansas, Abengoa operates the Hugoton facility, as well as an ethanol plant in Colwich.
Hundreds of people, including several federal, state and local officials, turned up at the plant’s grand opening on Oct. 17, 2014. Billed as the first commercial-scale, next-generation biofuel plant, Abengoa Bioenergy’s grand opening included U.S. Secretary of Energy Dr. Ernest Moniz, 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.
Officials indicated about 65 full-time jobs would be created at full operation, and the plant would provide great economic benefit to southwest Kansas through production of cellulosic ethanol and the purchase of plant residue from farmers in a 50-mile radius of Hugoton.
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.
Several calls to Abengoa’s corporate office in Missouri were not returned, and the Hugoton facility’s phone number has been disconnected. Attempts to reach Hugoton Mayor Jack Rowden and Stevens County Commission chairman Pat Hall for comment were unsuccessful.
According to an Oct. 21 online article by the Daily Caller News Foundation, Abengoa spokesperson Chris Standlee indicated that the company has paid back its federal loans without selling any cellulosic ethanol.
“We have produced enough to sell, but have chosen not to sell any so far and have stored it at the facility,” Standlee was quoted as saying in the article.
According to the Department of Energy’s website, Abengoa fully paid back its loan guarantee in March. Standlee told the Daily Caller the company used revenue from other sources besides ethanol sales to pay back the loan.
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 are a big impact for Hugoton, but is holding out hope for a rebound.
“I think we have to see how this thing plays out. In the short run, of course, it’s a devastating blow,” he said. “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.”
As of Thursday afternoon, Gillespie said, the Kansas Department of Commerce’s Rapid Response office, which can provide assistance to displaced workers, had not been contacted.
“I mean, this is all happening suddenly and unexpectedly. We knew there were some issues, but I think even employees in the plant felt like they were going to get worked out,” Gillespie said.
Shelly Thompson, adult services coordinator for Rapid Response, said Friday that she would be contacting the rapid response coordinator in southwest Kansas to try to find out more, and also would be trying to contact Abengoa to offer its services to help their employees.
“Sometimes, we’re the last to know, which is unfortunate,” she said. “But there could be somebody in the (local) workforce center who heard something before we did.”
During last year’s grand opening, both Roberts and Brownback expressed pride for their work in the U.S. Senate in passing the 2005 and 2007 energy bills, and outreach to the Department of Energy, to put in motion economic and regulatory tools necessary for the plant’s opening.
“From a national perspective, this plant will move our nation toward a greater energy independence from the grip of OPEC and other energy cartels,” Roberts said last year.
Construction of Abengoa’s bio-refinery finished in mid-August 2014, and began producing cellulosic ethanol at the end of September. The plant had the capacity to produce up to 25 million gallons per year using 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.