By May 9, 2016 Read More →

Alberta gets started on rebuilding oil infrastructure amid Fort McMurray fires

Outages longer than 10 days have implications for North American prices as US heads into peak driving season

By Shaun T. Polczer, special to American Energy News

Highway 63 South — With the final evacuations of civilians and oil sands workers complete, Alberta authorities are beginning the arduous task of rebuilding Fort McMurray and critical infrastructure needed to get 1.1 million barrels of shut in oil sands production moving again.

Screen-Shot-2016-05-04-at-1.49.10-PMAmid joyous scenes of 25,000 stranded people arriving at a checkpoint south of the fire ravaged city, the Alberta government began moving in supplies and equipment to relive embattled firefighters still fighting a blaze that has encompassed an area the size of the city of Tokyo.

Convoys of cars and trucks were escorted by RCMP — 50 at a time — through the fire zone to a point south of the destroyed city at the junction of Highways 63 and 881 on the weekend, after spending nearly a week of living in oilfield camps and in their cars after being trapped north of the Athabasca River.

Flags waved and crowds cheered as the procession of vehicles — a motley crew of pickups, RVs and cars — were led by police cruisers through the checkpoint to hospitality centres in towns and cities across northern Alberta.

On the other side of the highway, long lines of utility workers and trucks bearing generators and fuel lined up to get into the fire zone.

Credit: Shaun T. Polczer.

Credit: Shaun T. Polczer.

Highway 63, the only road in or out of the besieged town, is a 300 kilometre long expanse through the Alberta wilderness with no services. Volunteers set up staging points at intervals along the road to provide much needed food, water, diapers and especially fuel for stranded motorists fleeing the flames to Lac La Biche, Edmonton and beyond. It was a modern day exodus of biblical proportions.

At Wandering River and Grasslands, towns at the terminus of Highway 63, retailers reported running out of critical supplies such as food — and  beer — to satisfy the hordes of refugees headed south. One Grasslands liquor store sold $10,000 worth of suds in an hour. The shelves were bare.

In the bars and restaurants along the route, survivors told harrowing tales of escaping the flames. Like the parting of the Red Sea, it was a miracle nobody was hurt.

Meanwhile, helicopters and water bombers continued a relentless assault on the flames, which were expected to reach the Saskatchewan border early this week.

With the evacuations complete — the largest mobilization of civilians in modern Canadian history — attention quickly returned to restoring essential services in the town of Fort McMurray itself. Alberta Premier Rachel Notley was to tour the city on Monday, May 9. Despite widespread destruction, firefighters have managed to preserve critical infrastructure such as the airport, hospital, water treatment facility and power plant.

The latter is critical to restoring some 1.1 million bpd of oil production that was shut in as fires raged. Shell, Suncor, Nexen and Cenovus completed controlled shutdowns of oil sands facilities as workers evacuated.

The flames apparently engulfed Nexen-CNOOC’s Long Lake facility which was spared due to pre-planned fire breaks, a testament to the resilience of the local infrastructure.

Nonetheless, power lines are down and nobody knows what’s needed to bring them back on. Such is the fog of war. At a press conference in Edmonton on Sunday, Premier Notley said she would be meeting with oil companies to take an “inventory” of what’s needed to restore production.

A report by FirstEnergy Capital suggested it could be weeks, not days, before full output is restored. Anything longer than 10 days would have implications for North American prices as the US heads into peak driving season. Four in every 10 barrels imported to the US come from Athabasca.

Already three producers — BP, Suncor, and ConocoPhillips 66, which has a refining joint venture with Cenovus — have declared force majeure on future deliveries of crude to US refineries.

With fires still raging, it is obviously a moot point. Public safety is the first concern. Even though it is a local story, the fires have created an international dimension well beyond Alberta’s borders. Due to high storage levels all down the line from Fort McMurray, oil prices aren’t expected to spike in the short term.

But as Fort McMurray residents know all too well, that could change with a shift of the wind.

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