Why Transportation and Processing Agreements have been Finalised for Innamincka?

$ROG Why Transportation and Processing Agreements have been Finalised for Innamincka?

In a significant development for Red Sky Energy (ASX:ROG), transportation and processing agreements have been finalised for the Innamincka Gas Project in South Australia. These agreements have been reached with the South Australian Cooper Basin Joint Venture (SACBJV), facilitating the transport of Yarrow gas through the SACBJV pipeline network and its processing at the Moomba Plant.

Completion of Construction and Well

Red Sky Energy had previously announced the completion of the construction of an 18km pipeline and the tie-in to the network south of the Yarrow gas field, along with the successful completion of the Yarrow 3 well. These achievements set the stage for the recent agreements with SACBJV.

Key Highlights

The finalised agreements not only cover the transportation and processing of Yarrow gas but also include the sale of ethane, LPG, and condensate with SACBJV. As part of the tie-in agreement, a portion of the Yarrow flowline will be transferred to SACBJV, leading ... to Red Sky Energy being reimbursed for this transfer. This reimbursement will effectively offset a significant portion of the project's farm-in costs.

Integration and Expansion

With the integration of the Yarrow flowline and the completion of these agreements, the Yarrow-Flax-Juniper line (YFJ line) will span a total length of 14km. These achievements mark significant progress for Red Sky Energy and showcase their commitment to optimising operations at Yarrow.

Comment from Red Sky Managing Director

Red Sky Energy's Managing Director, Andrew Knox, expressed his satisfaction with the recent achievements. He highlighted the success of the Yarrow 3 well, the securing of the Final Investment Decision (FID), and the milestone of first gas production achieved within a relatively short time frame. Knox also emphasised the anticipation of forthcoming revenue streams and the company's active exploration of opportunities for the continued expansion of the Yarrow project.

Project Overview

The Yarrow field is estimated to have a substantial 2C contingent resource of up to 18 billion cubic feet (BCF). Additionally, there is the potential for 20BCF 2C associated gas at the Flax oil field located 8km southeast of Yarrow. Preliminary analysis of pressure data from the Yarrow 3 well indicates a connected volume of more than 1.7 BCF (EUR 1.3 BCF), with some residual water production. The peak rate achieved is approximately 5 million standard cubic feet per day (MMscfd) through a 36/64'' choke, with tubing head pressure of 780 pounds per square inch (psi).

Next Steps

Based on recommendations from Santos' Cooper Basin based team, there are plans to proceed with an 18km pipeline connection and the possibility of re-entering Yarrow 1 for testing and future production tied to the same pipeline. Yarrow 3, an appraisal gas well primarily targeting the Tirrawarra sandstone and the Patchawarra formation, has produced positive results, affirming the flow of gas to the surface.

In conclusion, the finalisation of transportation and processing agreements for the Innamincka Gas Project is a significant milestone for Red Sky Energy. These agreements pave the way for the efficient transportation of Yarrow gas and the subsequent processing at the Moomba Plant, enhancing the company's prospects for revenue generation and further expansion in the future.

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