Amid Financial Troubles, Company Closes Two Kansas Ethanol Plants

Dec 9, 2015

Financial problems at one of the world’s leading biofuels companies are causing ripples in the Kansas economy.

The Spanish company, Abengoa Bioenergy, opened a state-of-the-art ethanol plant in October 2014 near Hugoton. Gov. Sam Brownback greeted the grand opening as a shot in the arm for the Kansas economy.

“It does create jobs,” Brownback said at the time. “It creates opportunities, and right now we are seeing a rural renaissance in Kansas.”

But Abengoa’s role in that renaissance has not lived up to expectations. The company projected an annual payroll of more than $5 million at the southwest Kansas plant and estimated it would spend $17 million a year buying crop residue from area farmers for use as the raw material to produce ethanol fuels.

But a little more than a month ago, Abengoa officials said they were going to close the plant and reopen it in the spring, according to Neal Gillespie, Stevens County economic development director.

“They had produced ethanol, but no, it had never come up to full production,” he said. “I think they found some problems in the process and they were going to address those over the wintertime.”

Then, in late November, news broke that the parent company was considering bankruptcy protection.

All but half a dozen of the 50 employees in Hugoton have been laid off. Gillespie said some of them already may have moved away.

The $500 million ethanol plant was financed, in part, with a $132.4 million loan guarantee from the U.S. Department of Energy. A spokesperson for the energy department said the company repaid its loan in full in March.

In addition to the next-generation cellulosic ethanol plant in Hugoton, Abengoa shut down an older, traditional ethanol plant in Colwich.

Biomass Magazine recently quoted a former Abengoa employee as saying an executive told staffers the company didn’t have enough money to continue paying wages.

“We were told layoffs were worldwide and only about 30 people remain at the corporate office in St. Louis,” the employee said.

Abengoa did not respond to repeated requests, by phone and email, for comment.

That doesn’t surprise Gillespie, who thinks the company is trying to figure out what its next move should be. But he is optimistic that production will eventually resume at the Hugoton plant, whether by Abengoa or another company.

“I do think there’s a lot of value in that plant out there,” Gillespie said.

Bryan Thompson is a reporter for KHI News Service in Topeka, a partner in the Heartland Health Monitor team.