Fertiliser company to drill for self-sufficiency in gas

Fertiliser company Ballance Agri-Nutrients says it will drill for natural gas in Taranaki to try to find replacement feedstock for its Kapuni urea manufacturing plant.

"Our interest in exploration is to give us access to long-term gas supplies, and one way we could achieve this is through a minority interest in a producing field," said Ballance marketing manager Peter Mourits.

"Earlier this year, we purchased the rights to an on-shore exploration permit... which covers 68sq km of north and central Taranaki," he said.

Ballance plans to transfer a 60 per cent working interest in the permit area to Texas-based Swift Energy Company, which would also become the operator of the permit and manage the permit on behalf of a newly formed Ballance Swift joint venture.

This would include the drilling of the Karaka-A1 well in early 2005, targeting the already productive Mt Messenger formation. The future of its urea plant and 105 jobs is in doubt because Ballance only has contracts for natural gas supply to the middle of 2006.

The fertiliser co-operative, 80 per cent owned by 17,800 farmers, warned earlier this year that increased gas prices could mean closure of it urea plant, but it later secured a gas supply from Contact Energy at "commercially viable prices".

Ballance chief executive Larry Bilodeau said the long-term future of the plant remained in doubt, even though the contract guaranteed a supply from mid-2005, when the current contract with Natural Gas Corporation runs out, to mid-2006.

Kapuni is a major user of natural gas, converting some 7 petajoules of natural gas a year into 260,000 tonnes of urea to supply New Zealand farmers with nitrogen fertiliser.

Mr Mourits said the company was putting less than $1 million into the project, to protect a manufacturing investment that contributed more than $90 million in urea sales to its annual turnover.

- NZPA