Hurricane announced what appears to be the largest undeveloped oil discovery on the UK continental shelf, just days before Theresa May triggered Brexit.

It probably won’t take much interrogation to figure out quite why write ups on Hurricane Energy Plc’s ( ) successes and discoveries in the waters to the west of the Shetland Islands find such traction among Scottish nationalists on social media.

It is fairly obvious for the issue of natural resources and reserves to be a key talking point in the debate on independence, which was fired back into the headlines amid last week’s start of the official Brexit process.

Calls for a second referendum represent a rapid turnaround from 2014’s supposed ‘once in a lifetime’ vote. But then an awful lot has changed since Scotland decided to remain part of the United Kingdom.

Plainly we now live in a different political world.

There were a number of decisive battlegrounds back in 2014 - including currency stability, access to EU membership and differing outlooks on the future for the offshore oil and gas industry.

David ’s promises of greater certainty and stability seemingly won over a public that had consistently backed a nationalist party in successive general elections.

The argument that the UK’s future is certain and stable would be much harder to stand-up now, and the fact that the vast majority of Scots voted in favour of ‘remain’ in last year’s EU referendum gives Nicola Sturgeon’s SNP an opportunity to try grab another crack at the independence whip.

If a new debate is to be had, then once again the UK’s oil and gas industry will no doubt find itself at the centre of economic arguments for and against – as it was in 2014.

Nationalist then put the sector as a cornerstone of the economic case for a standalone Scotland, whereas Westminster’s campaign essentially argued the oil is running out and would be insufficient to prop up the independent nation.

UK oil veteran Sir Ian Wood, who was quoted selectively by both sides of the debate in 2014, at that time described the North Sea as a mature offshore oil and gas basin with depleting reserves, and highlighted that even the best efforts to maximise recovery would still leave “very low levels” of oil output by 2050.

By his reckoning, it would be less than 250,000 barrels per day which would represent about 16% of the levels seen three years ago.

At that time, Wood determined that offshore oil and gas should not figure significantly in Scotland’s medium term economic calculations.

But what if there’s much more oil?

Meanwhile, also in 2014, then first minister Alec Salmond predictably presented a more buoyant future as he quoted figures suggesting there were some 45bn barrels of undiscovered oil resources in Scottish waters - though that report was disputed by some experts (and perhaps notably Wood was among them).

As many investors in exploration companies, of course, know that estimating ‘to be discovered hydrocarbons’ is a dicey proposition. Nonetheless, recent evidence reaffirms the fact that even at today’s reduced crude prices there’s still tangible interest in finding new sources of hydrocarbons in the region.

Only this month, the British industry regulator, the Oil & Gas Authority, confirmed it was offering new acreage for new projects.

New commitments and oil fields

For the first time in two decades the new acreage on offer comprised exclusively of frontier and under-explored areas. The OGA confirmed that it has offered a total of twenty-five new licences to seventeen operators.

Successful bids saw explorers pledge to carry out seismic programmes and in some cases firm commitments for new wells.

Norway’s Statoil is set to provide another example that companies are still committed to North Sea exploration as it is preparing this summer to drill the Verbier well – which was referred to by one analyst last week as being in Statoil’s ‘top four’ targets for 2017. This has provided a boon to AIM-quoted partner Jersey Oil & Gas ( ), which owns 18%.

Companies such as , meanwhile, press ahead with new field developments as well as consolidating mature operations being acquired from majors like BP.

Activity is perhaps on a different sort of scale and impact than in the basin’s halcyon days. But examples of growth are apparent if one takes the time to look.

There’s more than just the North Sea

It is probably timely to clarify one frequently overlooked point, there’s more than just the ‘North Sea’.

There’s the North Sea, which is part of the UK continental shelf (UKCS).

More often than not, the term North Sea is used as shorthand for ‘in the water up there, offshore Scotland somewhere’. But the UKCS is a much larger area than just the North Sea.

This North Sea is most definitely ‘mature’. Described simplistically, the North Sea’s production is in decline and partially due to the fall from US$100 a barrel crude the sector’s transition has been accelerating.

There’s undoubtedly a trend that sees oil majors are looking at the exit, with smaller independent producers and private equity investors picking up loose assets or maturing-but-still-revenue-generating fields.

A lot of the established oil fields no longer fit the profile required for many large oil majors, so naturally find themselves on the ‘to go’ list as the likes of BP pursue their mandated divestment programmes to ‘rebalance’ and adjust to the new oil market environment.

Similarly, the looming issues of field decommissioning (which will present capital cost obligations sooner or later) give the majors another reason to consider exits of older operations – and have opened up ‘innovative’ opportunities for smaller independents to pick up extra production.

West of Shetland is a different animal

The West of Shetland, meanwhile, is something separate; it is more of a frontier region and in the deeper, wilder waters there are brand new opportunities.

The scale of the Western of Shetland opportunity has been put in bold and underlined by fast growing AIM-quoted oiler Hurricane Energy.

Just last week, Hurricane’s latest well in the West of Shetland confirmed what appears to be the largest undeveloped oil discovery in the UKCS.

Significantly, the Halifax well confirmed a massive oil column, measuring at least 1,156 metres, and it supports Hurricane’s theory that the Lancaster field and the Halifax discovery are in fact part of the same single hydrocarbon accumulation.

This is a very big statement given that the Halifax well is located some 30 kilometres from the Lancaster field.

Before the Halifax well went down, Hurricane Energy chief executive Robert Trice explained that in terms of scale the project had the potential to be of a comparable size to BP’s Clair field, which is also located in the West of Shetland region and hosts some 8bn barrels of crude.

Hurricane and its investors don’t yet know exactly how big a prize it is sitting on.

A new assessment, focussing solely on the Lancaster early production system (EPS) area, is now due imminently whereas a broader recalculation of the Greater Lancaster Area (now also including Halifax and areas in between) is expected to come following further analysis.

It is planned that the Lancaster EPS will initially start producing some 17,000 barrels of oil per day (bopd) in 2019 from just one section of the field.

Hurricane will be advancing the project to this key milestone in the coming months, with funding efforts and planning streamlining towards a final investment decision in the second half of this year.

Its corporate activities are also ongoing and there’s a possibility that major oil firms could buy into the development via a farm-out partnership.

“The majors are there, they’re [active] in the West of Shetlands and as we’ve indicated in the past our data room has been open and it is open for interested parties – and I can say that we have attracted the interest of majors into that data room,” Trice told Proactive Investors last month.

“The West of Shetlands is a growth area.”

Trice, meanwhile, believes that over in the North Sea more deals are likely.

“We’re West of Shetland, we’ve got very different geology and very different economic constraints and drivers to the North Seam,” he said.

“But, as far as the North Sea goes, I think we’re just seeing the tip of the iceberg.

“There’ll be more rationalisation and the attraction of new money that wants to get on with projects. I would anticipate seeing more activity in the coming months.

“The bottom-line is there’s a lot of discovered oil yet to be put into production in the North Sea, and there is a willingness to get after that now we have a more stable oil price and there are signs of a real turnaround.”

Battle of Britain

There’s perhaps little subtlety in the irony that it’s the news of oil resources carrying the names of English market towns resonate so much with the Scottish nationalists on .

Also, there’s probably also something in the fact that these discoveries, which are actually named after World War II bombers, highlight a key issue in what could be the next political skirmishes between Holyrood and Westminster.

Whatever comes in this new battle for Britain (should the calls for a new indy ref get that far), Hurricane has undeniably proven an important fact – there’s an awful lot more oil up there, and that’s exciting.

* First published in March 31