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Wildfires rage across Alberta
A seemingly unending winter that played havoc at times with upstream operations has quickly been replaced with a spring drought and fires raging across northern Alberta that are scorching industry profits.
At their peak, the blazes have forced the shut-in of about 150,000 barrels of oil equivalent per day, while hundreds of workers have been pulled out of camps and infrastructure has been threatened.
The greatest physical damage occurred in Slave Lake, where a mandatory evacuation was ordered for 7,000 residents ahead of a sudden wind shift that sent fire raging through about one-third of the town, destroying 354 homes.
The Alberta government immediately launched a C$50 million disaster relief program.
So far the fires have claimed one life — that of a firefighting helicopter pilot.
In addition to a spate of production cuts, work has been stopped at several oil sands construction sites and on a C$440 million project by Pembina Pipeline Corp. designed to move 100,000 barrels per day of crude and 20,000 bpd of diluents.
Kyle Preston, an analyst with Canaccord Genuity, said the losses will affect the earnings of several producers this quarter.
Production halted Oil sands producer Cenovus Energy halted 22,000 bpd of production at its Pelican Lake operation and Canadian Natural Resources slowed output of 40,000 bpd, also at Pelican Lake.
Husky Energy said that although it is not directly affected by the fires, related pipeline shutdowns and power disruptions have impacted 17,000 bpd of its production.
Other shut-ins affected Royal Dutch Shell (an unspecified cutback at its 21,000 bpd Cliffdale and Seal heavy oil projects in the Peace River area of northwestern Alberta); Penn West Energy (25,000-35,000 bpd in Alberta and 40,000 bpd because of flooding in southern Manitoba); Pengrowth Corp. (5,000 bpd); and smaller volumes by BlackPearl Resources, Baytex Energy and Exall Energy.
Canadian Natural and Royal Dutch Shell moved construction workers and non-essential workers from their oil sands operations.
The fires forced the closure of the southern leg of Plains All American Pipeline’s Rainbow system. The northern leg had already been shut due to a 28,000 barrel spill in late April.
Petroleum industry donations to relief work quickly gathered momentum. Clients of FirstEnergy Capital raised C$400,000 to help those who lost homes, while Canadian Red Cross donations included C$80,000 from Apache, C$50,000 from Cenovus and C$10,000 from Gibson Energy.
—Gary Park
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