begin quote from:
Canada Wildfires Raise Threat to Oil-Sands Mining Operations
| Wall Street Journal | - |
CALGARY,
Alberta—Forest fires in Northern Alberta are threatening two major
oil-sands mining complexes, government officials said on Tuesday, a day
after 8,000 workers evacuated camps and production facilities at risk
from the spread of uncontrolled ...
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Canada Wildfires Raise Threat to Oil-Sands Mining Operations
Winds push blazes toward shuttered facilities a day after 8,000 additional workers were evacuated
CALGARY, Alberta—Forest fires in Northern Alberta are threatening two
major oil-sands mining complexes, government officials said on Tuesday,
a day after 8,000 workers evacuated camps and production facilities at
risk from the spread of uncontrolled blazes.
Two weeks after fires forced 80,000 residents to leave a northern town at the hub of the energy industry, shutdowns at many oil-sands sites have reduced Canadian production by at least one million barrels of oil a day, or about 40% of the country’s total oil-sands output.
Alberta Premier Rachel Notley said prevailing winds are pushing the fires toward oil-sands mines operated by industry leader Suncor Energy Inc. and its subsidiary Syncrude north of the town of Fort McMurray, which the blaze devastated this month.
“Westerly winds will push the fire closer to Syncrude and Suncor, but we expect very high resiliency with both those facilities” from firebreaks, Ms. Notley said at a news conference in the provincial capital of Edmonton.
The production disruption has contributed to a recent rise in oil
prices. On Tuesday afternoon, U.S. benchmark West Texas Intermediate
crude was up 1.5% at $48.44 a barrel.
The latest evacuations threaten to further delay a restart of
oil-sands output, which some producers had begun planning last week.
Suncor has closed down production of 300,000 barrels of oil a day at two mines and a pair of oil-sands well sites, and its Syncrude unit has shut its 350,000-barrel-a-day-capacity mines.
Syncrude has evacuated all but about 100 staff needed “to maintain the safety and stability” of operations at its Aurora and Mildred Lake mines, a company spokesman said. It has plans in place to evacuate those remaining workers if needed, he said.
Suncor said it was relocating nonessential workers in the area to camps farther north that aren’t part of the evacuation order.
The forest fire has grown to more than 877,000 acres, or nearly 1,370 square miles, up from 704,250 acres on Monday, Ms. Notley said.
The fire’s expansion led to the evacuations of nearly 20 worker camps late Monday. That included a 655-unit lodge operated by Horizon North Logistics Inc., which caught fire early Tuesday, the company and provincial officials said.
The government said the fire poses a threat to neighborhoods in northwestern Fort McMurray, which has lost some 2,400 houses and other buildings since the fires were first detected on May 1. Thick smoke and fire risks have postponed efforts to restore utilities and plans for some retail business operations to resume in the town, officials said.
Two unexplained explosions damaged homes late Monday in residential neighborhoods in Fort McMurray, they said.
No oil-sands facilities have sustained damage from the fires and government officials said they are confident key energy infrastructure would be spared because of their wide surrounding firebreaks free of vegetation and firefighting capacity.
“We feel fairly confident that the sites themselves will be OK,” Chad Morrison, the Alberta forest ministry’s wildfire compliance and investigations manager, told reporters at the news briefing.
The outages are expected to have a minimal impact on Canadian economic growth, according to a report from the Conference Board of Canada released early Tuesday. The Ottawa think tank bases its findings on an estimated oil-production loss of about 1.2 million barrels a day over a two-week period.
The Conference Board’s findings are based on information available before the latest evacuations. The latest setback could result in a “bigger [production] hit” in May, but the industry will likely make up that lost output in June, assuming operations resume, said Pedro Antunes, the Conference Board’s deputy chief economist. Similarly, efforts to rebuild the oil-sands region will help to offset the decline in economic growth caused by the fires, Mr. Antunes said.
Other sites that were affected include oil-sands projects owned by Marathon Oil Corp. and PetroChina unit Brion Energy, according to the Regional Municipality of Wood Buffalo.
Some facilities, while not damaged, have been affected by staffing issues stemming from the evacuation of Fort McMurray’s residents and logistics issues preventing them from shipping heavy crude. Pipeline operator Enbridge Inc. has reduced its oil-sands crude shipments by about 900,000 barrels a day, down from a capacity of 1.5 million barrels a day.
Ms. Notley said the fires have moved away from the Cheecham oil storage hub located about 43 miles southeast of Fort McMurray, Enbridge Inc., which operates a terminal there, said on Monday that the facility was at a heightened risk from fires.
Corrections & Amplifications
Marathon Oil Corp. is a nonoperating producer at oil-sands projects in Fort McMurray. An earlier version of this article incorrectly implied the company is an oil-sands-project operator.
Two weeks after fires forced 80,000 residents to leave a northern town at the hub of the energy industry, shutdowns at many oil-sands sites have reduced Canadian production by at least one million barrels of oil a day, or about 40% of the country’s total oil-sands output.
Alberta Premier Rachel Notley said prevailing winds are pushing the fires toward oil-sands mines operated by industry leader Suncor Energy Inc. and its subsidiary Syncrude north of the town of Fort McMurray, which the blaze devastated this month.
“Westerly winds will push the fire closer to Syncrude and Suncor, but we expect very high resiliency with both those facilities” from firebreaks, Ms. Notley said at a news conference in the provincial capital of Edmonton.
Uncontrolled forest fires forced
the evacuation of some 8,000 oil-sands workers late Monday, nearly two
weeks after more than 80,000 other people fled blazes that destroyed
part of a nearby town in Western Canada’s Alberta province. Photo: Getty
Images
Suncor has closed down production of 300,000 barrels of oil a day at two mines and a pair of oil-sands well sites, and its Syncrude unit has shut its 350,000-barrel-a-day-capacity mines.
Syncrude has evacuated all but about 100 staff needed “to maintain the safety and stability” of operations at its Aurora and Mildred Lake mines, a company spokesman said. It has plans in place to evacuate those remaining workers if needed, he said.
Suncor said it was relocating nonessential workers in the area to camps farther north that aren’t part of the evacuation order.
The forest fire has grown to more than 877,000 acres, or nearly 1,370 square miles, up from 704,250 acres on Monday, Ms. Notley said.
The fire’s expansion led to the evacuations of nearly 20 worker camps late Monday. That included a 655-unit lodge operated by Horizon North Logistics Inc., which caught fire early Tuesday, the company and provincial officials said.
The government said the fire poses a threat to neighborhoods in northwestern Fort McMurray, which has lost some 2,400 houses and other buildings since the fires were first detected on May 1. Thick smoke and fire risks have postponed efforts to restore utilities and plans for some retail business operations to resume in the town, officials said.
Two unexplained explosions damaged homes late Monday in residential neighborhoods in Fort McMurray, they said.
No oil-sands facilities have sustained damage from the fires and government officials said they are confident key energy infrastructure would be spared because of their wide surrounding firebreaks free of vegetation and firefighting capacity.
“We feel fairly confident that the sites themselves will be OK,” Chad Morrison, the Alberta forest ministry’s wildfire compliance and investigations manager, told reporters at the news briefing.
The outages are expected to have a minimal impact on Canadian economic growth, according to a report from the Conference Board of Canada released early Tuesday. The Ottawa think tank bases its findings on an estimated oil-production loss of about 1.2 million barrels a day over a two-week period.
The Conference Board’s findings are based on information available before the latest evacuations. The latest setback could result in a “bigger [production] hit” in May, but the industry will likely make up that lost output in June, assuming operations resume, said Pedro Antunes, the Conference Board’s deputy chief economist. Similarly, efforts to rebuild the oil-sands region will help to offset the decline in economic growth caused by the fires, Mr. Antunes said.
Other sites that were affected include oil-sands projects owned by Marathon Oil Corp. and PetroChina unit Brion Energy, according to the Regional Municipality of Wood Buffalo.
Some facilities, while not damaged, have been affected by staffing issues stemming from the evacuation of Fort McMurray’s residents and logistics issues preventing them from shipping heavy crude. Pipeline operator Enbridge Inc. has reduced its oil-sands crude shipments by about 900,000 barrels a day, down from a capacity of 1.5 million barrels a day.
Ms. Notley said the fires have moved away from the Cheecham oil storage hub located about 43 miles southeast of Fort McMurray, Enbridge Inc., which operates a terminal there, said on Monday that the facility was at a heightened risk from fires.
—Ben Dummett
contributed to this article.
Write to Chester Dawson at chester.dawson@wsj.com contributed to this article.
Corrections & Amplifications
Marathon Oil Corp. is a nonoperating producer at oil-sands projects in Fort McMurray. An earlier version of this article incorrectly implied the company is an oil-sands-project operator.
