Canadian wildfire shifts north toward oil sands facilities, prolongs shutdown

Canada losing 1 million b/d or production

By Nia Williams

CALGARY, Alberta, (Reuters) – A massive wildfire around the oil sands hub of Fort McMurray, Alberta, moved toward energy production facilities on Tuesday, extending a shutdown that has led to lost Canadian output of one million barrels a day.

Wildfires burn around Fort McMurry, Alta.

Wildfires burn around Fort McMurry, Alta.

The fire jumped a critical firebreak area where plants and trees had been removed to stop its spread late Monday, moving north of Fort McMurray into oil sand camp areas. Some 4,000 workers were evacuated in the heavily forested northern part of the province.

The uncontrolled blaze covered 285,000 hectares (704,000 acres), officials said Monday and was moving 30 to 40 meters (98 to 131 feet) per minute.

“This is quite an unexpected u-turn in events,” said Jackie Forrest, vice president of energy research at ARC Financial Corp. “It’s realistic to think this outage is going to last about another couple of weeks.”

“The thing about it moving north is that it has potential to impact a much bigger part of the production and impact facilities that were deemed as having no damage,” she said.

Suncor Energy Inc, one of the area’s biggest operators, started a staged and orderly shutdown of its base plant operations, but said it has not suffered any damage to its assets. It has boosted fire protection around the facilities.

Syncrude, majority owned by Suncor, has evacuated the majority of its workforce to Edmonton but left a minimum staff of about 100 people at its Mildred Lake upgrader and Aurora Mine. The company produces synthetic crude oil.

The fire also threatened Enbridge Inc’s Cheecham crude oil tank farm south of Fort McMurray. The blaze was about 1 km (0.6 miles) from the tank farm, but firefighters had it under control as winds cooperated, officials said Monday.

Enbridge said a firebreak around the terminal was being widened and crews were assessing other ways to suppress the fire like spraying down facilities. It said some pipelines in and out of the terminal were operating.

TransAlta Corp’s Poplar Creek cogeneration power plant, which provides power to Suncor, was also shut by early Tuesday due to the wildfire.

Prior to the latest setback, lost oil production was expected to average about 1.2 million barrels a day for 14 days, or roughly C$985 million ($763 million) in lost real gross domestic product (GDP), according to the Conference Board of Canada.

The disaster is expected to cut about 0.33 percent from Alberta’s GDP in 2016, according to the nonprofit research group, but the rebuilding should add 0.4 percent to provincial growth next year.

Global oil prices touched a six-month high on Tuesday, with the Canadian outages among factors lending support.

Fort McMurray’s 90,000 residents were forced to flee nearly two weeks ago as the fire raged through neighbourhoods and destroyed about 15 percent of the city’s structures.

Roughly a million barrels per day of oil sands crude production was shut down as a precaution and because of disruptions to regional pipelines. Much of that production remains offline. (With additional reporting by Jeffrey Hodgson in Toronto and Julie Gordon in Vancouver; Editing by Jeffrey Benkoe)

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