Northern Alberta wildfires limit regional gas, oil sands operations

By ROBERT TUTTLE and LYNN DOAN
Bloomberg

Wildfires in northern Alberta spread farther into the oil sands area, keeping about 10% of production offline for a fourth day.

A fire at Cold Lake Air Weapons Range that started Saturday expanded to cover 17,500 hectares (43,000 acres) as fire crews worked to prevent the blaze from reaching the Foster Creek area, Alberta’s Environment and Sustainable Resource Development agency said on its website. Another fire near the town of Chard grew to 1,400 hectares and burned in an area with “numerous pipelines and well sites.”

Blazes have prompted the shutdown of about 230,000 bpd of oil-sands output and will trim as much as 0.3% from Canada’s second-quarter economic growth if disruptions persist through May, Bank of America economist Emanuella Enenajor said in a report Tuesday.

“There is an economic fallout from the blaze,” she wrote. The effect on gross domestic product includes “the drag on oil- sands production as well as indirect impacts on support industries.”

Heavy Western Canadian Select crude’s discount to US benchmark West Texas Intermediate narrowed Wednesday for a second day, shrinking 50 cents to $9/bbl, data compiled by Bloomberg show. The grade traded at an average discount of $8.72/bbl to WTI this month, the longest period for a sub-$10 discount since 2010, data compiled by Bloomberg show. WCS’s absolute price rose 8 cents to $48.61/bbl.

Maintenance Halt

MEG Energy halted maintenance at its Christina Lake site and evacuated staff, spokesman Brad Bellows said Tuesday. Production had been been ramping down since last week, although some continues, he said. Statoil will evacuate non-essential staff from its Leismer site, which remains in operation, spokesman Knut Rostad said in an e-mail.

Canadian Natural Resources said Monday it cut output at its 18,000-bpd Kirby South oil-sands operation after shutting in 80,000 bpd of production from its Primrose facility over the weekend. Cenovus Energy closed its 135,000-bpd Foster Creek operations on the Cold Lake Air Weapons Range in northeastern Alberta.

Energy companies with production offline because of the fires probably won’t suffer financially, said Chris Cox, an analyst at Raymond James in Calgary. The fires aren’t expected to destroy any facilities or continue burning past this week and business interruption insurance will cover revenue losses, Cox said.

Other Fires

Uncontrolled fires were also burning farther west in the Slave Lake area, the Alberta government website said. A province-wide ban was imposed on campfires in forests.

Canadian Natural evacuated personnel from its Primrose operations on Saturday. Also on Saturday, Cenovus evacuated 1,700 staff members from its Foster Creek site and shut 20 million cubic feet/day of gas production, most used to fuel its Foster Creek operation. The company pulled workers out of its Birch Mountain natural gas site northwest of Fort McKay late Monday and from its Narrows Lake oil-sands project on Tuesday as fires intensified.

The Narrows Lake oil-sands site isn’t producing and workers were finishing the camp project there when they were evacuated, Cenovus said in an e-mailed statement.

Canada, the world’s fifth-largest crude supplier, produces most of its oil from the oil-sands reserves of northern Alberta. The country will produce about 2.3 million bpd from the oil sands this year, according to the Canadian Association of Petroleum Producers.

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