Red Sky Energy (ASX:ROG) has wasted no time starting work to bring its Killanoola oil field in South Australia’s Penola Trough back into production after receiving approval from the state government.

The company will now ensure that rod components, key parts of the production equipment, at the Kilanoola-1 DW-1 well are fit for purposes before carrying out a short test run.

Should this test perform well, the pump will then be turned on for an extended production test that will allow Red Sky to ascertain more about the quality of the oil, the reservoir and test enhanced oil recovery solutions.

Enhanced oil recovery refers to any of a number of different processes that are aimed at improving production and/or extracting crude oil that cannot otherwise be produced.

Once testing is completed, the company will re-enter the well to perforate the newly identified 37m of potential pay along with 16m of potential pay identified at Killanoola Southeast-1.

Success will drastically increase production rates.

“The Red Sky team is very pleased to have received government approval to commence operations and test the rods at DW-1,” managing director Andrew Knox said.

“Further approvals will be required as we progress, but next steps post this testing in the short term are recommissioning the pump and acquiring topside equipment.

“We are pushing to extract full value from the resources at Killanoola as soon as possible.”

Killanoola oil project

Killanoola oilfield was discovered in 1998 by the Killanoola-1 well that was drilled to a depth of 850m.

Previous flow tests of the well recorded production of up to 300 barrels of waxy crude per day, proving the field’s ability to produce oil.

Since completing the acquisition of the field from Beach Energy (ASX:BPT), Red Sky has identified 37m of potential additional oil-bearing pay zones within the 149 metre thick Sawpit Sandstone while a petrophysical evaluation of Killanoola SE-1 identified 16m of net pay.

Kilanoola currently has best estimate (2C) contingent resources of 2.8 million barrels of oil and expects to book reserves following successful testing.