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Abengoa Shuts Down Hugoton, Colwich, St Louis HQ

Submitted by on December 4, 2015 – 10:26 amNo Comment

by Jim Lane (Biofuels Digest)  In Kansas, Abengoa has decided to suspend production at its new cellulosic ethanol plant in Hugoton as well as its corn-based ethanol plant in Colwich as part of the recent financial troubles the company is suffering from that may eventually lead to bankruptcy. The company also plans to shut down its Abengoa Bioenergy headquarters in the US, based in St. Louis, Mo. The US business represents about 10% of its global staff with 462 people.

Last week, we reported that despite Abengoa’s assurances that its ethanol plants are operating as normal, the market is concerned about the company’s ability to meet spot demand in addition to term contracts. This concern has helped to pushed up European ethanol prices beyond current two-year highs that have been sparked by a tight physicals market. Imports are expected in the new year while a few vessels have been chartered for December delivery, but it’s not enough to rein in the distressed market.

Import / export impact?

We added the EU may turn to potential imports to help fill the supply gap withdrawal of the major producer would leave, with the US seen as the main arbitrage opportunity.

It was only last week that NASDAQ shares in Abengoa SA plunged 49% in one day (Wednesday) after the embattled renewable energy developer said it would seek bankruptcy protection as it seeks to reorganize nearly $9.4 billion in debt.

The goal of the now-suspended Abengoa project in Hugoton, Kansas was “to design, build and operate a commercial scale bioethanol facility that uses sustainable biomass feedstock, drastically reduces green house gas emissions while achieving output production, yield and cost targets.” We took you on an 8-Slide Guide tour of the technology and the Hugoton project here.

But the Obama Administration crushed cellulosic ethanol this week with news that they would not aggressively set cellulosic targets or bump overall ethanol numbers — leaving cellulosic projects in the unenviable position of competing for market share with first-gen ethanol.

Observers pointed to the EPA’s 230 million gallon target for cellulosic biofuels for 2016 — almost double the 123 million target for 2015 — but biogas producers as of September had ratcheted up production sharply and had reached a 160 million gallon annual rate, leaving not much headroom for either liquid cellulosic biofuels of any flavor.

The fate of Hugoton?

Last word is that the technology is running, but not running continuously at the production rate Abengoa needs — so read this as “production suspended due to corporate financing woes” rather than “technology failure”.  READ MORE and MORE (790TalkNow) and MORE (Biomass Magazine) and MORE (Ethanol Producer Magazine)

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