Ballance – the owner/operator of this country’s sole ammonia urea plant at Kapuni – had been seeking new gas supplies for over two years and it looked likely the plant would have to close in mid-2005.

But two months ago it secured a 12-month gas supply contract with Contact Energy for about 7PJ of gas to ensure its continued operation until mid-2006.

Today Ballance site manager Len Houwers told EnergyReview.Net he was pleased his company had been able to take over Geosphere Exploration’s 100% equity in licence PEP 38742 – an interesting block south of the Pohokura gas field and adjacent to Todd Energy’s McKee and Mangahewa gas fields.

Other neighbouring operations include Tap Oil, Shell NZ and Todd in PEP 38744, Greymouth Petroleum in PEP 38762, and Bridge Petroleum and Westech Energy in PEP 38745.

“The reason we got into this licence was as part of our overall risk management strategy for securing further gas supplies for the plant,” Houwers said.

Ideally Ballance wanted security of gas supply for at least three years, although the Contact deal gave Ballance 18 months to drill at least one well targeting shallow gas and to bring any commercial discovery onstream.

Ballance was obliged to commit to a well by mid-January, with the drilling of a well targeting Miocene-aged Mt Messenger-Moki prospects by mid-2005, according to Houwers.

Geosphere, which has now completed its exit from active exploration, would continue to consult to Ballance regarding various technical and non-technical exploration matters. Details of the Geosphere deal were commercially sensitive, Houwers said.

New Zealand’s first Think Big energy project had previous gas supply contracts with Shell and Todd regarding Kapuni gas.

All of New Zealand’s big downstream gas players – Methanex, Contact, Genesis Energy, NGC and now Ballance – have now moved upstream.