Longtom Gas Project VIC/L29
The Longtom gas field is located in Production Licence VIC/L29 within the Gippsland Basin, offshore Victoria. Longtom was originally discovered by BHP in 1995 but was considered non-economic at the time. In 2006, Nexus and its partners drilled the Longtom-3 well which confirmed the commercial potential of the field when a flow rate of over 75 MMscf/d was recorded during a production test over several reservoir sections.
A gas sales agreement for Longtom was signed with Santos in December 2005. A final commitment to the development of the Longtom gas project was made in April 2007 following completion of commercial arrangements for financing the development. First production from the Longtom gas project commenced in October 2009.
The Longtom development involves the production of gas through two horizontal subsea wells tied-back to an upgraded Santos operated Orbost onshore gas plant. Gas is delivered into the eastern gas pipeline connecting the Melbourne and Sydney gas markets and condensate is trucked and sold to the Shell refinery in Geelong. Further upside volume potential within the production licence is recognised with the Grayling-1A gas discovery and the undrilled Gemfish prospect.
Nexus is the operator of the Longtom gas project and has managed the drilling of the offshore wells, with substantial horizontal sections; construction and design of all offshore facilities; and the gas sales and financing arrangements.
On 14 May 2013 Nexus announced that it had reached a binding agreement with Santos to amend the Longtom Gas Sales Agreement. These include Nexus obtaining funding for the required work program to satisfy the supply requirements and Santos confirmation of the capacity to accommodate Longtom-5 into the existing subsea infrastructure. Consistent with the amended production profile, Nexus plans to drill the Longtom-5 well in late 2014, with increased deliveries to Santos under an accelerated production profile from early 2015.