BCAP helps Abengoa solve chicken-and-egg feedstock issue

By Kris Bevill | August 01, 2011

With help from the USDA Biomass Crop Assistance Program, Abengoa is on its way to establishing a significantly sized switchgrass plantation in parts of Kansas and Oklahoma surrounding the site of the company’s proposed 25 MMgy cellulosic ethanol plant in Hugoton, Kan. On July 26, Secretary of Agriculture Tom Vilsack announced four BCAP project areas focused on expanding the availability of non-food crops to be used for biofuel production. One of those projects plans to establish 20,000 acres of switchgrass for Abengoa. Sign-up for the program begins next week, according to Abengoa and, if the paperwork moves quickly, farmers could be planting switchgrass seed this fall.

Construction of the Hugoton plant has not yet begun, but Gerson Santos, executive vice president of Abengoa Bioenergy New Techologies, said a groundbreaking will be held later this year and the company is on track to begin producing cellulosic ethanol in late 2013. Establishing energy crop acres now through BCAP will help alleviate the chicken-and-egg problem confronting many producers who seek to utilize energy crops for their facilities, he said. “One big issue with using energy crops is that the establishment of those crops is significant,” he said. “With this grant, we will be able to include about 15-20 percent energy crops at the time of start-up or soon after.”

BCAP will reimburse up to 75 percent of the farmer’s cost to establish the energy crop and provide up to five years of maintenance payments for switchgrass. Santos is not sure how many area farmers will sign up for the program, but anticipates a good response. “It’s really hard to tell how many farmers, but in that region there are people who have a lot of land,” he said. “I would expect that you could get anywhere between 2,000 to 3,000 acres per farmer. Certainly there will be a lot of interest in that area.” Abengoa wants most of the switchgrass to be planted on former CRP (Conservation Reserve Program) land, but Santos said there are also a number of area farmers who grow non-irrigated crops who might also be interested in participating.

Santos said a dedicated feedstock system such as what will be established through BCAP fits with Abengoa’s vertical integration model already in use in Brazil. “In the case of Brazil, we’re planting and collecting and transporting the sugarcane ourselves,” he said. “That is a model we could probably try to implement here in the U.S., but it doesn’t have to be that way. There are other ways of achieving that vertical integration, through contracts or partnerships or joint ventures. There are a number of vehicles you could choose as long as you meet the intent, which is to have a dedicated system to the property.”  

Abengoa actually requested 50,000 acres for the switchgrass project, enough to supply half of the Hugoton plant’s feedstock needs, when it applied for BCAP funding last year, Santos said. Because of the mounting pressure to reduce government spending, Abengoa executives didn’t think their project would be approved at all, so they were “happily surprised” when they received word that the application would be partially approved. According to Santos, the USDA also expressed interest in approving the additional 30,000 acres in the near future if funding can be made available. It takes about three years for switchgrass to reach full maturity, so if it can be planted this fall, it should be ready for harvest just in time for the plant’s opening in late 2013. Twenty thousand acres should provide between 15 and 20 percent of the plant’s feedstock requirements, Santos said, but Abengoa has also previously entered into supply agreements with area producers for corn stover and wheat straw to fuel the plant’s needs and generate electricity.

As for the plant itself, Santos said progress continues to be made and construction is planned to begin as soon as the final air permit is approved. That approval is expected to be finalized by the end of September.