AS oil prices came under pressure last week amid growing fears of a second wave of the coronavirus analysts underlined how much the UK industry has had riding on the fortunes of a Shetland oil pioneer.

The Rystad Energy consultancy said hopes that production on the United Kingdom Continental Shelf (UKCS) would rise above 2 million barrels oil equivalent per day (boepd) had been dashed as a result of the setbacks experienced by the firm.

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It warned that output will reach a maximum of 1.7 million boepd in 2035 before “dwindling to nearly nothing by the middle of the century”. Production peaked at 4.3 million boepd in 1999.

The business whose experiences troubled Rystad, Hurricane Energy, played a hugely important role in stimulating industry in the West of Shetland area amid the last downturn after making a series of finds. These boosted longstanding hopes that the relatively under-explored West of Shetland area contained billions of barrels and could support a new generation of activity for the North Sea industry.

The finds were especially significant because they were made in a geological layer that had been effectively ignored. In the fifty-odd years of drilling in the North Sea the focus has been firmly on sandstone. Founded by geologist Robert Trice in a garden shed in Surrey, Hurricane focused on a lower layer of granite known as the fractured basement.

In the summer of last year Mr Trice was enjoying near celebrity status after Hurricane started production from the giant Lancaster field. But in the space of a few weeks this year the bubble burst.

In May, as the industry was battered by the plunge in oil and gas prices triggered by the coronavirus, Hurricane suspending its previous full-year production guidance of net 17,000 barrels of oil per day. It cited “interference” between the two wells in the early production system (EPS) at Lancaster.

What sounded like a technical glitch proved to be an indication that the nature of the Lancaster reservoir was very different to what earlier studies had suggested.

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In June Hurricane said it was parting company with Mr Trice, weeks before announcing that its acreage may contain much less oil and gas than had been thought.

Last month it slashed estimate of resources in the wider Lancaster field to 58m, from around 500m.

Rystad said the cut was “jaw dropping” and had serious implications.

“The entire UKCS long-term production forecast has been impacted quite significantly,” said upsteam analyst Olga Savenkova, adding: “We may never again see any significant upsurge in UKCS production.”

What happens next will be hugely important.

Ms Savenkova noted: “A possible game-changer could now only be a development of technical skills for producing from fractured basement reservoirs to increase the recovery factor.“ Hurricane’s acreage may contain fields that are less complicated than Lancaster.

But whether any firms would be prepared to take the risks involved in exploration drilling or in trying to develop existing finds made by Hurricane must be open to question.

Centrica has spent months trying to sell an oil and gas business that bought stakes in Hurricane’s acreage in 2018. The venture concerned, Spirit Energy, funded $180m drilling work that did not live up to expectations.

Firms that believe in the West of Shetland basement could make bargain bids for Hurricane, Spirit Energy or both. But even if they do there will likely be long delays before any more wells are drilled on its acreage.

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Experts at the Wood Mackenzie energy consultancy said recently that Hurricane’s reverses may not dent enthusiasm for the wider West of Shetland area. Industry body Oil & Gas UK said the area offers a “world class opportunity” for the industry.

However. work to maximise its potential will likely involve high risk exploration drilling and massive investment to develop finds that have already been made in the area. These include Rosebank, which was discovered in 2004.

In March Shell and Siccar Point Energy shelved a decision on whether to develop the 800 million barrel Cambo find citing the “unprecedented worldwide macroeconomic dislocation” resulting from the coronavirus.