AS a pioneer of exploration in the West of Shetland faces huge uncertainty bigger fish have provided a sign that there is still interest in the area in spite of the challenges posed by the pandemic.

Hurricane Energy helped generate great excitement about the West of Shetland area by making what looked like bumper finds in an under-explored later of rock.

The company saw its stock market valuation soar to more than £1 billion in 2019 after starting production from the Lancaster field.

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However, the company is now facing huge uncertainty following the outcome of a legal hearing regarding a plan that would have resulted in creditors taking control of the business, which has seen its valuation fall to around £40 million.

The dramatic fall in the valuation came after Hurricane suffered production reverses on Lancaster which raised big questions about previous estimates of the size of the find.

Hurricane subsequently slashed estimates of the size of Lancaster and other finds. The company’s challenges were then compounded by the oil market turmoil that was triggered by the coronavirus.

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After the High Court declined to approve a planned restructuring that directors have said offers the only realistic option open to the business, the company said yesterday that an insolvent liquidation could be in prospect. Mr Justice Zacaroli, however, noted that Hurricane is trading profitably.

West of Shetland was also in the news for another reason last week when environmentalists reacted with fury to the revelation that an independent was seeking official approval to develop a big find made years ago in the area.

Siccar Point Energy has applied to the Oil and Gas Authority for permission to develop the Cambo discovery, which is reckoned to contain 800 millions barrels. The field was found in 2002, since when the challenges involved in completing a big development in stormy waters around 75 miles north west of Shetland have deterred others from taking it on.

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Siccar Point reckons that a project that would involve using a floating production vessel rather than a fixed platform could be viable. It says Cambo could be in production for years.

News of the plan has outraged campaigners. Friends of the Earth Scotland said the climate impact from producing and burning the oil and gas from the Cambo field alone would be equivalent to 10 times Scotland’s annual emissions and that it would be completely indefensible for the UK Government to approve the development.

The move may have surprised people in the industry as well.

Royal Dutch Shell has a 30% stake in Cambo. In March Last year Siccar Point and Shell said they had decided to defer making a decision about whether to invest in developing Cambo because of the huge economic disruption caused by the coronavirus crisis.

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The Brent crude price has recovered from less than $20 per barrel in April last year to around $75/bbl amid hopes that the rollout of coronavirus vaccines will fuel a strong economic recovery. There remains huge uncertainty nonetheless about the prospects for the market.

Campaigners may be hoping that amid the growing public relations power of the green lobby the regulator will not want to risk the kind of backlash that could be triggered by a decision to approve Cambo. However, the OGA revamped its strategy last year in response to growing awareness of the threat of climate change and the UK Government’s adoption of the target to reduce carbon dioxide emissions to zero, net of amounts absorbed, by 2050.

In the revised strategy the OGA reiterated the requirement for licence holders to maximise the economic recovery of the North Sea’s reserves. Noting that oil and gas currently provide about 75% of the UK energy consumption, it said: “As long as this demand exists, managing production and maximising value from the United Kingdom Continental Shelf as cleanly and efficiently as possible is necessary for security of supply, to ensure an orderly energy transition, and to reduce reliance on hydrocarbon imports.”

The OGA required industry to “operate in a way consistent with net zero ambitions, lowering production emissions and making serious progress on the solutions that can contribute to the UK achieving net zero”.

Siccar Point says it has taken significant steps to minimise the emissions footprint of the Cambo development.

Campaigners may not get what they want from the OGA on Cambo.

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It should be remembered, however, that even if the development wins clearance there is no guarantee that Shell and Siccar Point will decide to commit to the huge investment that would be required to bring it into production.

Shell may have played its part in drafting the plan submitted to the OGA but last week referred enquiries about Cambo to Siccar Point.