Longtom-3 will be designed so it can be suspended as a future commercial gas producer that can be rapidly bought into production, the company said.

Mapping and engineering studies indicate the Longtom field has commercial quantities of gas with potential large reserves upside, according to Nexus.

“Current indications are that, based upon a successful Longtom-3 appraisal well, potential Proved + Probable recoverable gas volumes could be in excess of 300 Bcf, with potential Proved, Probable and Possible gas volumes of up to 500 Bcf,” the company said.

Nexus has revised the recoverable gas volume estimates based on geological data obtained from the Longtom-2 well, including the core data recovered from the sidetrack.

The permeabilities obtained from special core analysis indicate the upper sands of the Longtom-2 well could potentially produce gas at rates in excess of that recovered from the Lower sands which flowed at approximately 19 million cubic feet per day during Test-1.

Reservoir simulation studies completed by Nexus indicate that Longtom development wells will produce at commercial rates for up to 10 years without intervention.

Nexus is considering several different development options for the gas field including the possibility of a stand alone development similar to the nearby Patricia Baleen field.

Nexus has tabled this proposal to the operator, Apache.

“The company has been motivated by the large value potential at Longtom, the current rig availability and the possibility of gas sales as early as late 2006,” Nexus said.

“Under the Joint Venture agreement between Nexus and Apache, Apache has until mid April to decide whether it shall participate in the Longtom gas appraisal program. If Apache decides not to participate in the appraisal program, Nexus intends to proceed on a stand alone basis thereby gaining a 100% share of any production from Longtom.”

Nexus said Longtom was potentially a very substantial resource capable of delivering substantial long term cash flow and value for the company.

"Longtom is ideally located to underpin the development of an Eastern Gas hub which can provide gas into both Melbourne and Sydney via the Eastern Gas Pipeline,” the company said.

"Nexus has assembled an experienced technical team which has enabled the company to formulate an appraisal program which will enable rapid development of this asset."