Oil and gas company Nexus Energy Ltd (ASX:NXS)
says gas production from the Longtom gas field has ceased after low levels of mercury were detected in test samples. The company says low levels of mercury have been detected in test samples from the Longtom-4 well with samples from Longtom-3 test results expected by the end of the week. Nexus says if the test results come back with acceptable levels of mercury in Longtom-3, it is expected that gas production will recommence later this week. The company says, in advance of the test results, it will work with Santos Ltd (ASX:STO)
, who operates the plant through which the gas is processed, to install a mercury guard bed at the plant. At this early stage Nexus says the estimated cost of implementing the guard bed will be around $2 million and will take at least two months to install. The oil and gas company says if the test results confirm unacceptable levels of mercury in Longtom-3, gas production will be deferred during this installation period. Nexus says it will work with Santos to cover any shortfall in gas supply as a result of the interruption of gas production. Nexus posted a loss of $50.42 million for fiscal 2009.