David Birkett: Federated Farmers Arable Chairperson on the gas shortage potentially temporarily shutting down Kapuni fertiliser plant

A hit for the Taranaki region, with dwindling gas supply forcing a potential short-term shutdown of a local fertiliser plant.  

Ballance Agri-Nutrients may have to cease operations at Kapuni for up to four months if it can't secure more gas before its contract expires next month.  

The company manufactures about a third of the country's urea fertiliser each year. 

Federated Farmers Arable Chairperson David Birkett told Kerre Woodham it’s been an ongoing issue that has just been getting worse and worse. 

He says that plants like that in Kapuni was built around the gas supplies nearby, and to convert it to another fuel source would be a huge and expensive process. 

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Kerrywood and Morning's podcast from News Talks, he'd.

Speaker 2 (00:10):
Be declining gas supplies mean Farmer and Grower co Op
Balance may have to shutter its Carpoony plant for up
to four months. Balance agri Nutrients manufactures about a third
of New Zealand's and nitrogen rich urea fertilizer every year.
Their chief executives says about forty one percent of our
agricultural exports exports rely on it. The current gas supply

(00:34):
agreement expires at the end of next month. He says.
If more isn't secured, the plant may have to close,
which would have a huge impact on employees' shareholders the
agricultural sector in Taranaki's economy New Zealand's economy. Federated Farmers
ARABLE chairperson David Burkett joins me, Now, very good morning
to you, yep hi, have it go good? Thank you?

(00:56):
How long has this been coming or did it come
as it sounds like it's come as a big shock
that the gas reserves we thought we had weren't there.

Speaker 3 (01:06):
Really started when Labor and the Greens decided to ban
the exploration of gas and ever since then, we've started
to see a decline in the availability of guess for contracts.
We had a problem last year with the group drying
of grain, which is also done by gas, and a

(01:26):
number of companies struggled to get contracts last year as well.
So it's been an ongoing issue which is just getting
worse and worse because we haven't had that period where
we've had investigations into new guest supprise and.

Speaker 2 (01:40):
Were the reserves not as great as first thought?

Speaker 3 (01:43):
Yeah? Look, I think the reserves as you say they
put they were bigger, and it looks like they are diminishing.
So it's getting scarcer, I guess. And there are a
number of companies like Balance whose sold supply of energy
is gas, and they all play an important part of

(02:04):
our economy. The Balance one is just an example, but
there's others as well who potentially will be if they
can't guarantee these guests supply contracts.

Speaker 2 (02:15):
So say I'm running Balance and in twenty eighteen Labor
puts a ban on gas exploration, oil and gas exploration.
It's now twenty twenty five. What have I done since?
Have I just thought to myself, well, the reserves should
see us through until we can transition to electricity or

(02:39):
to an alternate form of power.

Speaker 3 (02:44):
So some companies have looked at that. Some have converted
to different energy sources, some have gone to diesel, but
gas has always been one of the cheaper options. And
you know, likes of the Capuni plant for the balance,
it is built around the gas that's in Taranaki, close

(03:04):
to the gas supplies off sure, and naturally it's built
for that. So to convert that over to another fuel
source would be a huge and expensive process. So you know,
I guess what we're seeing there as those seven years
since twenty eighteen, we're now seeing those exploration abilities coming back.

(03:26):
But are those companies going to come back to New
Zealand given that, you know, we're seeing government put bands
in place. So you know, we we've lost seven years,
but we've also probably upset some of those international companies
who do come and explore for natural gas here.

Speaker 2 (03:44):
Yes, so there was an attempt to find an alternate
but it proved to be too expensive. It seems like
it does seem like and I mean you can't speak
for balance obviously, but it does seem like a kind
of hope and pray kind of strategy. For the past
few years.

Speaker 3 (04:05):
Yeah. Look, you the system there is built around the
gas and as I mentioned, you know, to change as
a massive We only became aware of the lack of
supply really last year. It was the first time that
it really popped its head up. So I guess balance
have only known about this maybe for a year now,

(04:26):
So I guess although I'm saying that, you know, once
later and the Greens had put the ban on expiration,
we knew that new supplies were not going to be
coming online. So it's been a longer time. But I
think we always thought, and we're always believed that there
were reasonably good supplies available to us. But now we're

(04:47):
finding out that those supplies aren't quite there as what
we thought. And these contracts are certainly getting harder to get,
but also more expensive as well.

Speaker 2 (04:57):
Exactly. Yeah, like even the power generators were taken by
surprise to it the lack of reserves. So gas can
be got, but can be got at a price that
is too much for the market to swallow.

Speaker 3 (05:14):
It's really hard to get the contracts. Even even to
get the contracts at a price is still difficult. We
saw this in the grain drying industry last year where
companies simply couldn't get a contract and so it didn't
matter what the price was. It's more around the availability
of the gas seems to be the issue. So you know,
I think it would be really good if we if

(05:35):
we as an economy understood exactly what those gas supplies
are like, and so you know, we can plan further
ahead into so that we have energy sources that are
cheap and are renewable going forward, because you know, at
the moment, where as you said earlier, I think there

(05:56):
is a little bit of hoping that there will be
supply available.

Speaker 2 (06:01):
And what's that going to mean for the farming community.

Speaker 3 (06:05):
Yeah, well, about fifty percent of the nitron fertilizer comes
out of Kipoony. It's a very good product. It's probably
better than what we import, so excuse me. So what
will happen is that we'll have to import the what
isn't produced from there, which obviously comes at a cost
to our economy as well. But there's also all the

(06:28):
jobs around Taranaki related to the Capony works. But I
think Carpoony is just probably one example that we're going
to find that is going to be affected by these
limited guest supplies.

Speaker 2 (06:42):
God, so we could see the price of butter go
up to twenty bucks.

Speaker 3 (06:47):
Yeah. Well, the there's a malting company which malts all
the grains for our beers and things, which is based
in Martin. It relies on guess, so there's a number
of other businesses that are quite reliant, and yeah, we
don't know where they are at with their contracts as well.

Speaker 2 (07:05):
Bloody hell, it just goes on and on, doesn't it.
The ripples just are it just goes on and on.
You're just that you're coming right and you're really really not.

Speaker 3 (07:17):
No, we need some really long term planning here. I
think this is what the country needs us. What are
our energy demands going to look like? And how are
we going to get them? You know, we can we
can do what we've done and ban the expiration, but
it means we're simply going to have to import energy
and it's probably not something that New Zealand should have
to do given sources we have.

Speaker 2 (07:40):
What's going to be hard to have a long term
plan when ministers will even you know, don't even get
replies to invitations to meet from their opposition counterparts.

Speaker 3 (07:51):
Exactly. So the thing is that there's some cross party
work needing to be done here around what does the
energy profile look like in the future and how are
we going to fulfill.

Speaker 2 (08:04):
I thank you for your time, David. It's uncertain times indeed.
David burkertt Federated Farmer's Arable Chairperson.

Speaker 1 (08:10):
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