CHEYENNE, Wyo. (AP) — Wyoming is a long way from places where sugar cane is grown, but a test plant in the northeast part of the state will soon be turning sugar cane waste into biofuel.

KL Energy Corp., based in Rapid City, S.D., and Brazil's state-run oil company Petrobras announced an agreement Tuesday to produce cellulosic ethanol from sugar cane bagasse, the waste created when sugar cane is processed into sugar.

Under the agreement, Petrobras will invest $11 million to adapt KL Energy's test plant in Upton, Wyo., to use the waste and other materials. The plant has been using pine tree waste to produce ethanol.

"I think this will enormously help us to commercialize our technology, not just for bagasse but also validate our process for other feedstocks as well," KL Energy Director Alan Rae said.

The two companies will work together to take the process developed at the Wyoming plant to a larger scale by integrating the technology at Petrobras sugar mills in Brazil.

Petrobras is one of the world's biggest oil companies. Brazil is the world's largest exporter of ethanol.

Miguel Rossetto, head of Petrobras' biofuels subsidiary, said in a statement the company hopes cellulosic ethanol technology will boost its ethanol production by 40 percent without increasing the number of sugar cane acres. Company officials could not be reached to determine how much ethanol Petrobras produces annually.

KL Energy will use sugar cane waste from Louisiana since it doesn't grow in Wyoming.

Sugar cane is grown in tropical areas as well as the southern reaches of the U.S. in Florida, Louisiana and Texas. Brazil is a leader in producing ethanol from the sugar taken from cane, but most of the waste from that process is burned for power generation and used in making paper products.

KL Energy's plant in Wyoming has been operating since 2008, making small batches of cellulosic ethanol from fallen and dead trees, brush and forest debris from Black Hills National Forest.

The company plans to build plants near the source of the material to be converted into ethanol and other byproducts that can be sold. The plants would be smaller in size and production than the huge plants envisioned by most in the fledgling biofuels industry. But the plants would be cheaper to build and would save on transportation costs by staying near the source material.

"We're looking to identify similar partners in other areas — the pulp and paper industry, the power industry where we believe this technology will be commercialized," Rae said.

Rae said KL Energy hopes to have its Upton plant ready to begin using sugar cane waste in several months.