HOPES of an oil and gas boom West of Shetland have been boosted by an expert report which found more than 500 million barrels could be recovered from just one giant find in the area.

The report on the Lancaster field is likely to stoke excitement about the potential of what is a relatively under-explored area following deep cuts in spending in much of the North Sea amid the crude price plunge.

The authors highlight the commercial appeal of a plan for an initial development of the field they reckon could be worth $500m (£388m) plus, even in a low oil price environment.

Their findings will focus attention on the work of the oil and gas junior behind the Lancaster find, Hurricane Energy. The Surrey-based company has made a series of discoveries off Shetland after focusing on an area that had received little attention from bigger fish.

Hurricane’s chief executive Robert Trice founded the firm in the belief the potential of the granite basements deep beneath the North Sea had been missed by an industry which focused on shallower sandstone areas.

The report by the RPS energy consultancy adds to the body of evidence that suggests Mr Trice was on to something.

London-based RPS has increased its estimate of the amount of oil that may be recoverable from Lancaster to 523 million barrels, from 200m in a report prepared in 2013. The revision takes account of the results of the latest three wells on Lancaster.

Mr Trice said the report provided welcome confirmation from experts that Hurricane’s excitement about the results of recent work on Lancaster had been justified.

“We are delighted to now have independent verification of the highly material uplift in the resources we have at Lancaster,” said Mr Trice.

He also noted that RPS felt the company would be justified in treating 37m barrels as reserves, meaning it looks like they could be brought into production profitably.

“It is also a landmark for Hurricane to have reserves assigned at the field,” noted Mr Trice.

The company expects to develop the barrels classed as reserves using a relatively low-cost early production system over an initial six year term. It is targeting first oil in 2019.

RPS calculated that such a development could generate returns worth $525m on a present value basis.

Aim-listed Hurricane believes the six year period should give it enough time to develop plans to produce the remaining 486m barrels, which are classed as contingent resources.

The report on Lancaster comes soon after the results of Hurricane’s drilling on the Halifax licence nearby generated huge excitement in the industry.

The well suggested Lancaster and Halifax were part of a giant field that could contain one billion barrels.

In December Hurricane also announced it had made a significant basement discovery with the Lincoln well West of Shetland.

Analysts at Hurricane’s house broker, Cenkos Securities, reckon Hurricane’s Shetland acreage may contain more than 1.4 billion barrels oil.

Stock market investors gave a muted reaction to the publication of the report yesterday, when shares in Hurricane closed down 3.25p at 60.75p on the Aim market.

There may have been some disappointment that the increase in RPS’s estimate was not greater.

Last month Hurricane’s directors told analysts they had trebled their estimates of the amount of recoverable resources in Lancaster to 593m barrels.

Cenkos noted that RPS assumed only 22.5 per cent of the oil would be recoverable, while management thought 25 per cent would be.

Analysts at the brokerage said the recovery factor was conservative.

They added: “It should be recognised that the Lancaster field alone is still the largest undeveloped discovery on the UKCS (United Kingdom Continental Shelf), with no other companies with a resource base of the quantum of that discovered by Hurricane.”

Shares in Hurricane have ballooned in value in recent months, leaving some investors sitting on hefty paper profits.

Hurricane won £44m investment from the Kerogen private equity operation in April last year, at 15p per share. The deal showed some financiers saw the potential to invest in North Sea assets at what they saw as attractive prices.