When Spanish-based Abengoa S.A. acquired the three High Plains Corporation facilities in 2002, U.S. ethanol prices were less than exceptional. A lackluster harvest drove corn prices up while demand for ethanol shifted when California's MTBE phaseout was postponed.

Grind margins became tight, but the company's newly acquired ethanol plants in Nebraska, Kansas and New Mexico performed above expectations and went a long way toward offsetting the adverse market.

For a company in the midst of a corporate transformation, it was an excellent display of operational efficiency.

"I believe that our production efficiencies and the expertise of our personnel were invaluable assets during that period," said Tim Newkirk, the company's chief operating officer. "Simply stated, our plants are high-efficiency, low-cost, high-yield producers of ethanol."

The U.S. facilities, now collectively known as Abengoa Bioenergy Corporation, are mature by ethanol industry standards, coming on line between 1982 and 1994. The company has a 56-mmgy dry mill in York, Neb., which is the newest of the three facilities, along with a 25-mmgy dry mill in Colwich, Kan., and a 15-mmgy dry mill in Portales, N.M. The smaller plants utilize a combination of corn and milo as production feedstocks, while the Nebraska plant uses corn exclusively.

Internal expansion has been a constant goal for the company.

The Colwich plant has been expanded from an initial 8 mmgy to its current 25 mmgy capacity. The York plant has expanded from 25 mmgy to 55 mmgy, and the Portales facility, originally 10 mmgy, is now being expanded to 24 mmgy.

"Our U.S. facilities are older than average and operating better than most," Newkirk said. "Keep in mind, however, that none of our plants are in their initial configuration. We have worked with various technology providers over the years … but most of the unique changes that we have incorporated into our facilities have come from in-house innovations. We have long-time, dedicated employees—folks like Danny Allison, Gordon Working and our three plant managers combine for more than 80 years of ethanol industry experience. This company simply has great talent and most of our innovation has come from within."

The Acquisition
Abengoa's acquisition of High Plains was finalized in early 2002, making the company part of a large international corporation under the wing of Abengoa Bioenergy, which holds the Spanish corporation's global bioenergy interests. Abengoa Bioenergy CEO and President Javier Salgado said that Abengoa's purchase of High Plains provided an entry into the American market and served as a springboard for the company's growth initiatives, both nationally and internationally.

On April 15, 2003, High Plains officially changed its name to Abengoa Bioenergy Corporation after operating under the former name for more than a year following the acquisition. The name change signaled the company's intent to leverage its international reputation in order to "enhance its competitive position" in the United States.

The name change was also reflected in the company's newly formed research and development subsidiary, Abengoa Bioenergy R&D Inc. The R&D arm of the corporation was initially formed to administer a cost-shared R&D project with the U.S. Department of Energy (DOE) carrying a price tag of over $36 million.

The company established the Abengoa Bioenergy business unit on a global scale and located its headquarters in the St. Louis, Mo., suburb of Chesterfield, where 32 employees now work. In all, the company has about 180 employees in the United States, including its R&D subsidiary and ethanol plant personnel.

"We chose St. Louis because the company was looking for a large city that was an international airline hub," said Chris Standlee, the company's executive vice president. "St. Louis is an ideal location for our headquarters because it is in the heart of Midwest ethanol country."

Abengoa invested considerable time and effort into implanting its corporate culture in the former High Plains operations.

"It's about applying principles of big business, strategic planning, growth initiatives and top-notch risk management," Newkirk said. "It's no longer about 'How do we survive tomorrow,' but 'How do we prosper long-term-and with high growth.' The ethanol industry of the past was too focused on short-term success. Abengoa looks far beyond that."

The company's ethanol plants also gained drastic information technology improvements.

"Our IT gains were incredible," Standlee said. "We instantly had access to a global communication network. Part of Abengoa's focus—one of its 'big four' areas—is, in fact, information technology."

The ethanol plants also gained a high level of quality assurance.

"We gained the recognition of being 'Abengoa,' a company with a worldwide presence," Standlee told EPM. "It's been a huge advantage. Abengoa is a major corporation with an internationally recognized name—owning more than 200 companies in 40 countries around the globe."

Abengoa Bioenergy is focused on improving its own operations, but also contributing to the growth and improvement of the entire ethanol industry.

Abengoa Bioenergy's tag line is "Science. Solutions. Service."

"The Science part has to do with the company's constant push to improve itself through technological innovations. Solutions and Service are based upon our global resources, our international market presence and our dedication to being a great partner with our customers," Standlee said.

The company is focused heavily on risk management operations, both in the United States and Europe. The objective of this strategy is to establish systematic actions in response to market trends.

"The company's risk management has simply changed," Newkirk said. "With a larger company, risk management is much more methodical and technical—there's no gambling. One of the many benefits of being part of Abengoa is having the resources to take market positions when we see the opportunity."

Expansions are part of the company's long term strategy for growth and success, and as Newkirk reminded EPM, "Gallons don't come free. It takes heavy investment."

Late this year, Portales will be expanded from 15 mmgy to 24 mmgy. A $15 million industrial revenue bond has been initially approved by the community of Portales to finance the project.

"We are in the detailed engineering phase of the project," said Newkirk, who added that the people of Portales have been supportive of the plant over the years.

The Portales facility, according to Newkirk, could be one of the "lowest cost" producers in the nation. According to Newkirk, the plant is one of the most energy efficient ethanol production facilities in the United States.

"It is certainly the most energy efficient plant in our family, and possibly one of the best in the nation," he said, not elaborating on the plant's efficiency secrets aside from saying, "It achieves efficiencies through operational practices."

Portales is also well located to supply the burgeoning California ethanol market, being the furthest Western (large-scale dry mill ethanol plant) facility in the United States.

Aside from existing production and planned expansions, Abengoa Bioenergy is also pursuing greenfield construction of new facilities. The company openly expresses a willingness to invest or partner in greenfield ethanol plant construction, should the right opportunity present itself.

"Absolutely we would consider building a new plant," Newkirk said. "In fact, we get approached with potential projects on a regular basis. Abengoa wants to double its production capacity in two to three years. To get there, we are looking at all types of investments, from internal expansions, to partnerships to share our operational management and marketing expertise, to new greenfield projects."

If Abengoa Bioenergy does build a new ethanol plant, Newkirk said the company would likely seek outside help on project development, engineering and construction. However, he said, the company would not purchase "off the shelf" process technology.

"We would likely take a dry mill process technology and adapt it to our own unique modifications," he said. "A plant built for Abengoa will incorporate the expertise that we have in this company. We have seen every technology—and every approach—over the years, and adding our own touch certainly gives us a leg up in terms of building the most efficient ethanol plant possible."

Two large-scale ethanol plants in Spain belong to the Abengoa Business Unit family, and a third plant is under construction. Abengoa was the first fuel ethanol producer in Europe and with the new facility on line in 2005 will have a combined capacity of 140 mmgy in Spain alone, reported Salgado. The company is focusing on Germany for future growth and should establish a physical presence there soon to supplement the ethanol that Abengoa currently exports from Spain. "We have a strategy of active presence and promotion in new emerging markets, and are committed today to the German market, stated Salgado."

The European Union's recently passed Biofuels Directive, which calls for 5.75 percent of all EU fuel to be represented by biofuels by 2010, will create significant opportunities for growth, Salgado said. "The EU biofuel market, currently at 800 million liters (211 million gallons) a year has the potential to reach 15 billion liters a year by 2010," he explained. "That's a huge amount of growth, and it will take a tremendous push."

Research and development
Abengoa Bioenergy R&D Inc. (ABRD) is a subsidiary of Abengoa Bioenergy Corporation and serves as the U.S. arm of Abengoa Bioenergia's global R&D operations. Gerson Santos, director of ABRD, said the company's "2003-2006 R&D Plan" is aimed at enhancing the economics of ethanol production and it is focused on both cereal grains and biomass.

The Residual Starch Conversion Pilot Plant, currently being completed at the site of the York ethanol plant, is the company's primary R&D focus in the United States this year. The pilot plant is due to go operational early this spring, according to Santos.

"We already have every day of operations scheduled," Newkirk added.

The stated goal of the project is to improve ethanol production yields from grain by 10 percent and significantly improve the process economics and competitiveness of the the ethanol production process. The R&D project falls under Abengoa's R&D Strategic Actions defined by the 2003-2006 R&D Plan. The project is entitled "Advanced Biorefining of Distillers Grains and Corn Stover Blends: Pre-commercialization of a Biomass-derived Process Technology."

The project has a $36.4 million budget and is supported by a cost-shared grant for 50 percent of those funds from the DOE. In addition, the pilot plant will also be financed by the "Biomass to Bioethanol via Enzymatic Hydrolysis R&D Project," which will reportedly share more than 40 percent of the budget. This is possible due to commonalities of both projects, according to a recent company report.

"Our goal is to achieve 95 percent of the maximum theoretical yield," Newkirk said. "We want to make the process as efficient as it can be."

The company had invested in U.S. ethanol R&D projects in the past. Even before buying High Plains, Abengoa invested in BCI, a cellulose-to-ethanol project, and ethanol industry startup Pure Energy.

Abengoa Bioenergy R&D is partnering with the National Renewable Energy Laboratory, as well as the ethanol industry's leading enzyme suppliers, as the project is carried out in three phases.

"We will develop some proprietary technology from the research," Santos said. "Our goal is to help the entire industry become even more competitive by increasing yields and capturing the value of coproducts. Eventually that could mean offering licensing agreements for the technology."

The company's long-term strategic plan includes continued research and development, increased production capacity and developing emerging technologies like fuel cells. In Europe, the company has already begun to develop a fuel cell, through its Greencell subsidiary, which utilizes a proprietary ethanol reformer to produce clean power.

"Abengoa's focus is to be a green company," Newkirk said. "Abengoa Bioenergy is a company that is focused on renewable fuel sources to improve the environment and enhance the quality of life."

Marketing
Last year, Abengoa Bioenergy decided to start marketing its own distillers grains for each of its ethanol plants (the Portales site had always marketed its own coproduct), and it chose Rick Emery as its feed merchandising manager to lead this effort.

"Colwich and York feed production joined with Portales in September 2003,when we ended our contract with our contract marketer," Emery said. "It was a natural outgrowth of our business strategy and the right time to make the change."

For years, the Colwich and Portales plants have been trailblazers in marketing milo and corn-based distillers grains throughout the lower Midwest.

"Milo has always been a great feedstock for production, as research has proven," Standlee told EPM. "In fact, the production process—and quality control—have a greater impact on distillers grains quality than the feedstock itself."

Emery added, "Down around the Texas Panhandle, they want distillers grains made from milo. Up north, everybody wants corn-based distillers grains. The industry is divided by what nutritionists in different parts of the country tell them. We are a nutritionist-polarized industry. But the truth is, there should be more focus on the process than the feedstock."

Distillers grains research and development is a high priority for Abengoa Bioenergy.

"The same attention that we have given to R&D will go into coproduct development," Newkirk said. "We see as much, if not more, fertile ground in that area of the business. In fact, Abengoa Bioenergy will be rolling out some new ideas—and possibly new capabilities—in the near future. The third phase of our pilot plant R&D project is focused on just that."

Abengoa Bioenergy markets its own ethanol and has expanded its reach since the High Plains era. David Weber is the company's ethanol sales director.

"High Plains was a strong regional player," Weber said. "But now we are part of a company with global assets. The gears have shifted. We have a focus on the overall market now. We are supplying fuel ethanol to all of the major petroleum companies in the United States and Europe."

Standlee agreed, saying, "The company is more methodical, more strategic, in our thinking and global in our reach. Those international relationships feed each other. What happens on the other side of the pond affects us here. It's a big advantage." EP

Learn more about Abengoa Bioenergy through its new Web site at www.abengoabioenergy.com.