Xstate Advances Fluid Removal Plans to Unlock Diona-1 Gas Flow

Diona-1 Well Confirmed as Significant Gas Discovery

Xstate Resources (ASX:XST) has reaffirmed the Diona-1 well as a confirmed gas discovery in Queensland’s Surat-Bowen basin, with reservoir pressure building steadily to around 1,600 psi during flow testing. Despite consistent gas flow, the well remains shut in to address an inefficient removal of completion fluids hampering sustained production. The company emphasises the discovery extends the western boundary of the Taroom Trough unconventional play, potentially expanding resource upside beyond previous estimates.

Challenges in Removing Completion Fluids Delay Production

Initial attempts to clear the wellbore of completion fluids, using a method known as “rocking” combined with surfactants, have only removed approximately 46% of the fluid column. This partial unloading has slowed progress, with fluid heights fluctuating during testing and preventing optimal gas flow. Xstate’s board and technical advisors remain confident that once the fluids are fully cleared, the well can be connected to the nearby pipeline for long-term production testing, unlocking its full potential.

Technical Committee Explores Advanced Fluid Removal Methods

To accelerate fluid removal, Xstate has convened its Joint Venture Technical Committee to evaluate several industry-standard alternatives. These include installing capillary tubing to inject surfactants directly into the wellbore, nitrogen or foam lift techniques to aerate and lighten the fluid column, and siphon tubing to increase gas velocity for more effective liquid lift. Diagnostic tools are also under consideration to identify flow paths behind pipe, aiming to optimise the chosen approach. All methods are routine in oil and gas operations but represent a pivot from the initial strategy.

Managing Director Andrew Bald stressed the importance of clearing the fluid column to realise the well’s production capabilities, stating, “The gas is there, it’s flaring, we simply have to offload the fluids and reduce the column to the point where gas will flow unrestricted.”

Operational and Strategic Implications

The well has been shut in for over two weeks, primarily to allow pressure build-up and data gathering, which is standard during flow testing. However, the delay in fluid unloading introduces uncertainty around the timeline for pipeline connection and sustained production. This update follows earlier reports of strong transient gas flow and over-pressured reservoir conditions at Diona-1, which have bolstered expectations for the project’s commercial viability. The exploration of alternative fluid removal techniques marks a critical step in advancing the well’s development phase and realising value from the Taroom Trough play strong flow at Diona-1.

These operational challenges and solutions come on the back of recent capital raising efforts that have funded stimulation and extended testing programs at Diona-1, reflecting the company’s commitment to advancing the project despite technical hurdles Diona-1 Stimulation and Secures $1.69M Placement.