The Melbourne-based company said the sidetrack well is expected to take about 14 days to reach the zone of interest at a deviation angle of about 45 degrees.

The Crux-2 appraisal well targeted a potential northeastern extension of the Crux field where considerable resource upside was identified, but where the seismic character differed to that observed at Crux-1.

Nexus said Crux-2 was designed to evaluate this potential in order to determine the lateral extent of the Crux field.

Crux-2 confirmed a gross gas column of 70 m with a net 26m of good quality sandstones. But it did not intersect the required minimum thickness of reservoir sands needed to support the proposed liquids project’s gas injection rate.

Nexus said by sidetracking the well to a more optimal location the company plans to use the cased large-bore well as the first of up to six wells required for the prospective recycling project.

“While the Crux-2 sand intersection was insufficient for gas injection, it does importantly prove a significant sand body which may be expected to contribute to the field’s overall gas and condensate resources,” the company said.

“Crux-2 has also provided an important control point enabling Nexus to refine its predictive model for sand deposition within the Crux reservoirs.”

The company said there were distinct differences between the seismic character seen at Crux-1 and Crux-2.

The proposed Crux-2 ST1 sidetrack location will target an area towards Crux-1 beyond the point where a change in seismic character is observed.

“It is expected from the seismic that the reservoir characteristics at the sidetrack location will be similar to those for reservoir sands encountered at the Crux-1 well,” Nexus said.

If successful in encountering a significant gas column similar to Crux-1, the Crux-2 ST1 well will be cased and suspended as a future development well.

Nexus said such a well at the Crux-2 ST1 location could be used either as a gas injector for a liquids recycling project or a subsequent producer for an LNG project.

Nexus wholly owns Crux. But the company has sold the rights to the gas (excluding condensate) in the field to Shell for $US40 million ($A51.3 million).

The gas sales agreement gives Nexus the option to undertake a condensate recycling project until December 31, 2020, at which time Shell will take ownership of the permit and will be able to extract the gas and any remaining condensate.

Nexus has previously said it expected to sanction the project by mid-year, with first condensate being produced during the third quarter of 2009.