Ballance urea plant goes upstream with Swift in search of gas supply

Ballance has farmed out to Swift Energy a 60% interest and operatorship of the company’s newly-acquired PEP 38742 permit in north central Taranaki, which lies immediately onshore from the Pohokura gas-condensate field. The permit, previously held by Wellington-based Geosphere Exploration Ltd, is also immediately west of Todd Energy’s Mangahewa gas field. The PEP 38742 permit area is from Waitara to Motunui where the Pohokura onshore development wells will soon begin drilling.

Ballance said it expects to drill the Karaka-1 well in the permit in the first half of 2005, targeting the shallow Mt. Messenger formation.

Site manager for the ammonia-urea plant Len Houwers said the plant required 7PJ of gas a year as feedstock and it had been hard to secure more gas supplies. Recently Ballance acquired an additional 7PJ of gas from Contract Energy which would ensure supplies until May 2006.

Marketing manager for Ballance Peter Mourits said "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."

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, Mr Mourits said.

Ballance Agri-Nutrients Co-operative Ltd is one of New Zealand’s largest fertiliser companies with the one urea plant and three other plants plus numerous distribution outlets. It is 80% owned by New Zealand farmer shareholders and 20% by Norwegian-based Norsk Hydro, the world’s largest fertiliser company, which also has oil and gas interests in the North Sea.

Ballance is the latest of the downstream gas consumption companies to hold upstream interests as the gas market tightens with the major Maui gas field winding down over the next five or so years. NGC, Genesis Energy, Contact Energy and Methanex are all now investing in some way in exploration in Taranaki.