Oil sands companies starts to resume oil production

Oil sands area fire moving east

By Rod Nickel

Oil sands

Oil sands companies are working out the logistics of flying in and out staff who have been displaced due to the wildfire that razed some Fort McMurray neighborhoods.  National Defence Canada photo.

FORT MCMURRAY, Alberta, May 10 (Reuters) – Oil sands companies around wildfire-hit Fort McMurray hoped to resume production on Tuesday after an initial inspection found the Canadian boomtown was less severely damaged than first feared.

Premier Rachel Notley was slated to meet with energy company executives a day after officials found about 90 percent of businesses and homes survived the blaze that began on May 1, forcing the evacuated of 88,000 people.

Royal Dutch Shell Plc resumed production at its operation in the center of Canada’s oil sands region, while Enbridge Inc began inspecting its facilities and prepared plans to restart operations shuttered during the blaze.

“These are difficult circumstances,” said Al Monaco, Enbridge chief executive officer, in a statement. “We have a well-trained and experienced team that has developed a detailed logistical plan to enable the safe restart of our pipelines and terminals.”

Officials grappled with transportation problems as the blaze spread across 229,000 hectares (560,000 acres) of Alberta, spreading east to connect with another fire burning near Campbell Lake, some 50 kilometers (30 miles) east of Fort McMurray. The specialists who run the oil production sites were also among the area residents displaced by the blaze.

In another sign a recovery was underway, the amount of power from cogeneration plants in the region increased by early Tuesday with the restart of Syncrude Energy Inc’s 510-megawatt plant. Still, just 21 percent of the total capacity was online.

Shell said it will fly staff in and out of the region, while Imperial Oil Ltd said its Kearl oil sands mining project will remain shut until the company worked out the logistics of moving people and materials to and from the remote site.

About half of Canada’s crude output, or 1 million barrels per day, was taken offline by the blaze, according to a Reuters estimate.

Canadian crude prices slipped on Tuesday, trading below the U.S. crude benchmark, as signs of resuming production eased supply concerns.

The fire’s growth was not likely to trigger further evacuations, Travis Fairweather, an Alberta wildlife information officer said.

Cool weather, with overnight temperatures dropping below zero degrees Celsius (32F), helped firefighters contain the blaze, though forecasts from Environment Canada showed rain was unlikely in the coming days.

The fire’s massive size has prompted some officials to say that rain would be necessary to fully extinguish it, as much of Alberta is tinder-box dry after a mild winter and warm spring.

The inspection revealed scenes of devastation, with blocks of homes reduced to blackened foundations, front steps and metal barbecues. Notley said 2,400 structures had burned within the city while almost 25,000 were saved.

Officials warned it was not safe for residents to return to Fort McMurray, with parts still smoldering and large areas without power, water and gas. Notley said repair crews will need weeks to make the city safe.

About 250 workers with utility company ATCO were in Fort McMurray working to restore gas and electricity, Notley said.

Insurance experts on Monday revised sharply downward their estimates of the cost of damage from the blaze.

(Additional reporting by Ethan Lou in Toronto; Writing by Scott Malone and Jeffrey Hodgson; Editing by Ryan Woo and Jeffrey Benkoe)

Posted in: Energy News

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