ONE of the country’s leading oil industry economists has said the discovery of what has been described as the “largest undeveloped discovery” of oil on the UK Continental Shelf this century raises questions about what benefits will come to Scotland.

Professor Alex Russell – chairman of the Oil Industry Finance Association – was speaking exclusively to The National after Hurricane Energy announced that one billion barrels of oil could be contained in its Halifax well in the Greater Lancaster Area (GLA), 60 miles west of Shetland.

It found oil in two wells about 19 miles apart and said the combined discoveries have proved the presence of a single, giant field, and hoped to begin production in 2019.

Dr Robert Trice, Hurricane’s chief executive, said: “This is a highly significant moment for Hurricane.

“I am delighted that the Halifax well results support the company’s view that its substantial Lancaster discovery has been extended to include the Halifax licence.

“We believe that the GLA is a single hydrocarbon accumulation, making it the largest undeveloped discovery on the UK Continental Shelf.

“The discovery of a 1km (0.62-mile) column at Halifax validates the efforts the company undertook to acquire the licence and test and the Halifax well through the winter months. Given the positive well results, the Halifax well has been suspended to provide the company the option to return to undertake further testing as well as provide the option to deepen the well and thereby establish a definitive oil water contact.

“These are exciting times for Hurricane.”

The company’s shares rose six per cent in early trading after the announcement.

Russell, however, said he was reserved about the discovery.

“It’s the biggest for some time and if the two wells are part of the same field it’s amazing news.

“It’s great news for Hurricane and particularly for its shareholders.

“It is still a fair bit short of the size of Forties, about a fifth the size and although they say there are a billion barrels the amount that could be recovered could be substantially less.”

He said the only around two billion of the estimated five billion barrels in the Forties had been recovered.

“What we witnessed is a drastic drop in oil revenues to the Scottish Government and the UK Government and an incredible reduction in the number of employees in the North Sea.

“What I do not understand is the fact that Holyrood, the Scottish Government does not have under its control the determination and powers entrusted to it to drive forward developments like this.

“As long as Westminster is in control of energy I would be a bit reserved about being jubilant about this discovery. What we have is a sizeable asset that basically belongs to Scotland, lying in Scottish waters.

“What revenue will actually flow to Scotland from this discovery?

“Will be see an increase in the jobs that have been lost if the field were to be developed?

“Will it be done in a way that maximises the jobs created and maximises revenue to Scotland - which is badly in need of tax at this stage ?

“Or will it be done with the help of the Oil and Gas Authority (OGA) to maximise the recovery to the oil companies that are doing this.”

Hurricane will now have to generate investment of around £300 million to advance development in the area.

Russell said there would likely be a plea from the OGA, Oil and Gas UK and the company that there should be tax incentives to encourage the investment.

“My view is get your act together,” said Russell. “The oil companies are the richest companies in the world worth billions of dollars.

“That should be ploughed back into these developments – the time for handouts has gone.

“We want to see in Scotland the maximisation of these discoveries on the Scottish economy.

“At the moment that’s outside the control of the Scottish Parliament – that’s completely unacceptable. I hope it’s good news but it raises issues about who drives it forward and who will be the winners and losers.”

Professor Paul de Leeuw, director of the Oil and Gas Institute at Aberdeen’s Robert Gordon University said the find is yet another signal that confidence is returning to the sector: “With the industry going through a rather challenging time at the moment, this will certainly provide another positive boost for the industry.” Meanwhile, international energy services company Wood Group has been awarded a £40m contract with Premier Oil.

This will deliver topside operations and maintenance services to the Balmoral floating production vessel (FPV) in the central North Sea and the Solan installation, west of Shetland.

The two-year contract retains more than 150 jobs and extends Wood Group’s support of Premier Oil in the United Kingdom Continental Shelf.

Dave Stewart, chief executive of Wood Group’s Asset Life Cycle Solutions business in the eastern region, said: “This contract clearly demonstrates the strong partnership we have developed with Premier Oil in the North Sea.”

“We are renewing our support of the Balmoral FPV and broadening our delivery to the Solan field, which came on stream in April 2016.”