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A number of large submarine canyons are present in the Gippsland Basin. These canyons cause seismic rays to be refracted in a complicated manner, such that in time-offset (t, y) space, events beneath the canyon do not have hyperbolic moveout. Using model seismic data constructed by ray-tracing over typical canyon profiles, CMP gathers are analyzed by considering three parameters measured in t2-y2 space: Vstack, T0 and the RMS error value. Vstack is calculated from the slope of the best-fit line, To is calculated from the intercept of the best-fit line, and the RMS error measures how badly the event picks are positioned with respect to this line. Reference values for Vstack and T0 are Vrms and the two-way normal incidence time respectively and are calculated from the zero-offset model data. Analyzing the errors in the three parameters reveals that the Vstack parameter is the most sensitive to the presence of these canyons with relative errors exceeding 60%. Conventional replacement statics do not remove all of these errors. In particular, errors in T0 are increased, while errors in Vstack> calculated with the water layer replaced, are only partially reduced when referenced to Vrms derived from the corresponding zero-offset, replaced model. A modified replacement static technique called "velocity re-datuming" when applied to the model seismic data, reduces the errors in Vstack beneath the canyon to about 5%. The method only requires a water bottom profile and is not computer intensive. It is used only to estimate velocities for post-stack migration. Field data are stacked without replacement statics to avoid the increased errors in T0. Velocities derived by velocity re-datuming are applied to post-stack data for better migration and depth conversion of stacked seismic data in the Gippsland Basin.