Spain's Abengoa to build U.S. biomass ethanol plant

MADRID, Oct 15 (Reuters) - Spanish energy company Abengoa (ABG.MC) said on Monday it had signed a contract with the U.S. Department of Energy worth $38 million to develop a biomass ethanol plant in Hugoton, Kansas.

In a statement to the Spanish stock exchange regulator, Abengoa said the plant would eventually process 700 tonnes of biomass a day, producing 44 million litres of ethanol a year.

Next door will be a conventional plant, making 350 million liters of ethanol from grains a year. The total investment would come to more than $300 million, Abengoa said.

Abengoa, the fith biggest bioethanol producer in the United States, said the development deal was part of a $76 million contract it was awarded by the Department of Energy in February.

Abengoa also said its renewable energy subsidiary Abengoa Bioenergia had successfully produced ethanol from wood pulp at a pilot plant in York, Nebraska.

The pilot plant is part of a $35 million research and development contract signed with the U.S. Department of Energy in 2003.