Canada is the world’s fifth largest crude oil producer – mostly from the oil-sands reserves of northern Alberta. But wildfires have encroached on the productive region, which has been forced to cut its capacity by 10 percent for the fourth day running as workers attempted to contain the spread and keep it from reaching other oil-rich regions. Companies have had to pull out maintenance, service, and other staff from other sites — while economists project that the fires could cut off 230,000 barrels a day and lead to trimming 0.3 percent of Canada’s projected second-quarter economic growth. Peter Wilhelm
By Robert Tuttle and Lynn Doan
(Bloomberg) –Wildfires in northern Alberta have spread farther into the oil-sands area, keeping about 10 percent 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 barrels a day of oil-sands output and will trim as much as 0.3 percent 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 (WCS) crude’s discount to US benchmark West Texas Intermediate (WTI) narrowed Wednesday for a second day, shrinking 50 cents to $9 a barrel, data compiled by Bloomberg show. The grade traded at an average discount of $8.72 a barrel to WTI this month, the longest period for a sub-$10 discount since 2010. WCS’s absolute price rose 8 cents to $48.61 a barrel.
MEG Energy Corp halted maintenance at its Christina Lake site and evacuated staff, spokesman Brad Bellows said Tuesday. Production had been ramping down since last week, although some continues, he said. Statoil ASA will evacuate non-essential staff from its Leismer site, which remains in operation, spokesman Knut Rostad said in an e-mail.
Canadian Natural Resources Ltd said Monday it cut output at its 18,000-barrel-a-day Kirby South oil-sands operation after shutting in 80,000 barrels a day of production from its Primrose facility over the weekend. Cenovus Energy Inc closed its 135,000-barrel-a-day 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 Ltd. 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.
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 per 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 barrels a day from the oil sands this year, according to the Canadian Association of Petroleum Producers.
