Red Sky Energy will seek to turn a suspended 2008 exploration well into a new gas production point in South Australia, targeting 0.52 Bcf of gross incremental raw gas. The proposed work carries an estimated A$0.60 million net cost for Red Sky, but still requires joint venture approval and confirmation of the well’s downhole condition.
- Yarrow North 1 re-entry to target Tirrawarra Sandstone
- 0.52 Bcf gross best-estimate incremental raw gas
- Red Sky’s 20% share estimated at 0.10 Bcf
- A$0.60 million estimated net project cost
- First gas targeted for early 2027, subject to approvals
Suspended Well Creates New Yarrow Production Option
Red Sky Energy (ASX:ROG) is backing a relatively contained attempt to revive a well that has never produced gas, targeting first production from Yarrow North 1 in early 2027. The Santos-operated re-entry would use the existing wellbore to access the Tirrawarra Sandstone and create a new drainage point in the producing Yarrow gas field.
Yarrow North 1 was drilled, cased and suspended in March 2008. Red Sky says the location is separate from the Yarrow 4 and Yarrow 5 wells in the current drilling program, and is not expected to be accessed by existing or planned wells. That distinction is important: the project is intended to add gas rather than simply shift production between wells.
Gas Estimate Comes With Carbon Dioxide Discount
The operator’s best estimate is 0.52 Bcf of gross incremental raw gas, with an initial rate of 2.1 MMscf a day. Red Sky’s 20% working interest equates to approximately 0.10 Bcf of raw gas. The operator’s wider range runs from 0.24 Bcf to 0.89 Bcf, while the initial-rate range spans 0.9 MMscf/d to 3.2 MMscf/d.
Those figures are not sales-gas volumes. The raw gas is estimated to contain about 11% carbon dioxide, meaning the volume ultimately sold will be lower. The evaluation also assigns an 80% confidence that Yarrow North 1 is compartmentalised from Yarrow 1, although Red Sky is not booking the estimates as reserves at this stage.
A$0.60 Million Commitment Still Needs Approval
The gross project cost is estimated at approximately A$2.98 million, leaving Red Sky with a projected 20% share of about A$0.60 million. The work would include a pre-frac workover, well integrity checks, a cement bond log, pressure testing and a single-stage hydraulic stimulation, followed by a new metering skid and roughly 950 metres of flowline to the existing Yarrow 1 facilities.
That infrastructure may reduce the scope of new surface development, but the project is not yet approved. It remains outside the current joint venture budget and requires supplementary budget approval and a joint venture Authority for Expenditure vote. The well has been suspended for 18 years and its downhole condition is not fully confirmed, so the integrity checks come before any stimulation decision.
Execution Tied To Yarrow Drilling Schedule
Santos plans to execute the re-entry alongside the Yarrow 4 and Yarrow 5 wells. Red Sky holds a 20% interest in PRL 17, within the Santos-operated Innamincka Dome Joint Venture, where Yarrow 1 and Yarrow 3 have already produced from the same Tirrawarra Sandstone target. The proposed well life to economic limit is approximately 21 months.
For Red Sky, the immediate test is not the headline gas estimate but whether the old well passes its integrity checks and the joint venture approves the additional spending. A successful re-entry could add a modest, infrastructure-linked production stream; the next meaningful evidence will come from approval, workover results and the actual sales-gas rate after stimulation.
Bottom Line?
The opportunity is modest in scale but potentially efficient if the 2008 well remains fit for work. Approval, integrity testing and the gap between raw and sales gas will determine how much of the estimate becomes cash-generating production.
Questions in the middle?
- Will the joint venture approve the supplementary budget and AFE for Yarrow North 1?
- What will the pre-frac integrity checks reveal about a well suspended since 2008?
- How much sales gas will remain after carbon dioxide content and stimulation performance are measured?