BEATING THE ODDS AT CASINO!—A SMALL AUSTRALIAN’S EXAMPLE OF RISK MANAGEMENT

Abstract

Strike Oil was a very small unlisted Australian company with a capitalisation of less than A$10 million when it decided to bid for block V98-4 (now VIC/P44) in the offshore Otway Basin in early 1999.

Block V98-4 met Strike Oil’s gas strategy of pursuing opportunities in basins close to infrastructure and markets in the eastern states of Australia.

Prior to making the bid Strike Oil identified the geological, financial and operational risks associated with exploring the permit, especially with regard to conducting a 3D seismic survey in the environmentally sensitive and sometimes hostile Bass Strait. This led to the implementation of, and adherence to, a comprehensive risk management plan.

The geological risks were addressed by acquiring 3D seismic and conducting an analysis of the amplitudes and AVO responses associated with nearby gas discoveries and dry holes.

Management of the financial risk centred firstly around not overbidding and secondly finding a farmee who could add value to the permit during both the exploration and exploitation phases.

The operational risks were all associated with conducting the Casino 3D seismic survey. Local environmental considerations, particularly in relation to migratory whale species and the seasonal activities of local fishermen, meant there was only a six weeks’ time window available for unhindered operations. This window also coincided with the spring gale season, when weather conditions can stop marine operations.

The use of experienced personnel, early stakeholder consultation, and the use of contingency plans, enabled Strike Oil to achieve its objectives under adverse conditions. The Casino 3D seismic survey, despite the odds, was completed on time, under budget, and with less than 7% infill, while still delivering high quality data.

The farmout, the acquisition and processing of the 3D seismic data, and the discovery and appraisal of the Casino gas field were all achieved within 14 months.