Red Sky's power plant plan

Red Sky Energy is proposing a second gas-fired power station for the Northern Rivers, which CEO Rohan Gillespie says would be run on the huge conventional gas field they have just discovered between Casino and Grafton.

Red Sky is one of three companies with petroleum exploration licences for the Northern Rivers, along with Metgasco and Arrow Energy ( a wholly-owned subsidiary of Shell and PetroChina).

Metgasco has approval for the 30MW Richmond Valley Power Station, which will use conventional and coal seam gas and be situated near Casino.

Red Sky completed a two-hole test well drilling program in April, finding approximately 20 metres of gassy coals in each exploration well. Annvale #1 well is outside Casino and Talma #1 is halfway between Casino and Grafton.

Red Sky also discovered gassy sandstone – Kangaroo Creek sandstone – sitting above the coal seam, 300m below ground at the Talma well.

“Almost all coal, wherever you find it, has gas in it... In the Clarence-Moreton basin, where there is 300m of formation in which coal is prevalent, we drilled two wells and found 20m of thickness,” Mr Gillespie said. “That’s a good thickness, it works out to be a sizeable gas resource, which could be used for local power generation or, if large enough, has the potential to be converted to liquid natural gas (LNG).”

Red Sky is proposing to begin drilling a pilot well at Talma in June or July, which would operate for more than one year.

“With the Kangaroo Creek sandstone conventional gas, it doesn’t have any perceived issues of CSG – you don’t need to extract water to extract it and we’re not proposing fracking. It’s close to the electricity transmission network, and it’s our intention to use gas for local power generation,” Mr Gillespie said.

Mr Gillespie said there were numerous studies that had to be completed before they could begin construction of the proposed 27MW power station, which they are calling the Summerland Way Power

Project. The timeline they have suggested would see the final approval in mid 2013.

“We are still in the pre-feasibility stage, looking at the resource. We have to get more certificates, it will require further exploration and appraisal, and we are looking at finding the right site for the power station, looking at any environmental impacts and looking at what size and type of power station.”

Red Sky has no plans at the moment to use CSG for the power station.

“Our permits cover both, but, at the moment we’re saying it’s most economic to develop the Kangaroo Creek sandstone. What we do with coal seam gas will be determined at some later stage. Kangaroo Creek gas will address stakeholder concerns and we think it is probably the most economic and best-suited resource for development in the area,” Mr Gillespie said.