Energy giant TXU has already backed the success of the well by signing an agreement with the partners of VIC/P 44 for a long-term gas contract for the sale of natural gas.

The Casino-3 well will appraise the Casino gas field, which is located 29km southwest of Port Campbell and 24km west-southwest of the Minerva gas field.

The well will be drilled to the north of Casino-1 and Casino-2, which both intersected gas bearing Waarre Sandstone reservoirs.

Casino-3 is designed to confirm sufficient gas reserves in the structure to allow a development project to proceed and in case of a success, to collect reservoir information required for field development planning.

Under the conditional agreement TXU has agreed to purchase up to a total of 293 petajoules (PJ) of gas with an option to purchase, or an obligation to process, an additional 200 PJ.

The resulting contract quantity equals 493 PJ of gas beginning in 2006 and extending through to 2017.

This innovative contract caters for the monetisation of future discoveries in VIC/P 44 and is conditional on the results of the Casino-3 appraisal well, which is scheduled to begin drilling during October 2003.

"If the Casino-3 well is successful in adding to the known gas reserves in the field, the project may move quickly to a declaration of commercial viability," said AWE's managing director Bruce Phillips.

"The signing of the TXU contract is a major step towards the commercial development of the Casino gas field and its surrounding exploration prospects.

"It allows the VIC/P 44 joint venture to concentrate on the appraisal activity of the field and the scope for added discoveries within the permit area," said Phillips.

Participants in VIC/P 44 and the Casino-3 well are AWE) 25%, Santos Limited (operator) 50% and Mittwell Energy Resources (Mitsui) 25%.