Last month Ballance - owner/operator of New Zealand’s only ammonia urea plant at Kapuni - took 100% equity in Geosphere Exploration’s PEP 38742 licence for an undisclosed sum.

Today Ballance released more details of its plans to secure future supplies of economically priced gas after its 7PJ-per-annum contract with Contact Energy expires in mid-2006.

Ballance chief executive Larry Bilodeau said the PEP 38742 initiative was one of a number the company was taking to potentially broaden future supplies of its feedstock gas. The plant produces 260,000 tonnes of urea per year, which is used to supply kiwi farmers with nitrogen fertiliser.

“In addition to being in on-going discussions with gas field owners regarding future supplies, we are in a modest way also looking at becoming partially self sufficient.”

The Ballance investment, of under NZ$1million, made good commercial sense when the company was seeking to protect a manufacturing investment that contributed over NZ$90 million in urea sales to annual turnover.

Bilodeau said that, subject to the Crown Minerals approval, Ballance would transfer a 60% working interest in PEP 38742 to Swift Energy NZ, which would then become permit operator and manager of the joint venture. Immediate exploration efforts included the drilling of Karaka–A1 in early 2005 targeting the Miocene-aged Mt Messenger formation.

“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. While the licence area is well researched, it has not been subject to exploratory drilling,” concluded Bilodeau.

There are also industry rumours that Methanex and Swift have recently agreed Methanex will take some Tawn (Tariki, Ahuroa, Waihapa and Ngaere) gas from Swift’s central Taranaki fields from next year, utilising the existing Waihapa-Omata and Motunui-Omata product pipelines.