Gas exploration ban may scupper $1 billion plant upgrade

Newsroom reports:

The ban on new offshore gas exploration is another spanner in the works for a major upgrade of New Zealand’s only ammonia-urea production plant.

Fertiliser cooperative Ballance Agri-Nutrients has been planning a $1 billion rebuild of its urea plant at Kapuni for several years, but has been stymied by cost increases, low urea prices and the withdrawal of a cornerstone investment partner. Now it says the government’s decision to end new offshore exploration permits is another risk factor for the project.

Natural gas from the nearby Maui gas field is a feedstock for the Kapuni plant, which produces about a third of New Zealand’s total urea needs. Urea is the most widely used fertiliser for dairy farms and is also used to produce resins for wood manufacturing. 

Knowing “how much gas is out there is important for our long-term investment decisions,” Kapuni site manager Glenn Johnson says. “When we start to look at 20- or 30-year investment type projects, [the ban] has made things a lot murkier.”

So the economic damage of this ban may be a $1 billion plant upgrade. Great going Government.

Johnson says building a new plant would cut emissions by 20-to-30 percent. Those are the “exact outcomes” required as New Zealand aims to be carbon neutral by 2050.

Producing urea at Ballance’s plant is also more efficient than importing it, “because I don’t have to transport it thousands of miles across the ocean to get it to New Zealand”, he says.

And the environmental damage is large also.

Labour’s exploration ban is bad for the economy and bad for the environment.