Red Sky Energy has secured approval to start production from the existing pay zone at the DW1 well in the Killanoola oil project in South Australia's onshore Otway Basin.

The South Australia’s Department for Energy and Mining has issued the approval.

The Australian oil and gas company now plans to begin production activities at the Killanoola DW1 well. It also plans to mobilise contractors to the site.

Red Sky managing director Andrew Knox said: “The Red Sky team is pleased to have received government approval to commence production at DW-1. We continue to push to extract full value from the resources at Killanoola as soon as possible.”

In August this year, Red Sky signed an agreement to sell all crude produced from the Killanoola oil field project to Viva Energy Australia. This deal is subject to quality specifications.

Viva Energy will receive the crude oil at its Geelong refinery, which is located to the southeast of the Killanoola Project.

Furthermore, the crude produced at the Killanoola Project is planned to be benchmarked against dated Brent for pricing, said the Australian company.

The Killanoola oilfield was acquired by Red Sky in February 2021 from Beach Energy.

In March last year, Red Sky completed the acquisition of the 3D seismic survey at Killanoola project.

Red Sky secured an additional associated activity license (AAL295), for activity adjoining the PRL13 licence, which holds the Killanoola project.

The seismic survey is expected to help unlock additional resources and planning for the full-field development of the Killanoola oil project.