Alberta wildfires spread north, forcing evacuations from camps

By Robert Tuttle on 5/17/2016

CALGARY, Alberta (Bloomberg) -- Wildfires raging across northern Alberta shifted back toward oil-sands installations north of Fort McMurray, forcing the evacuation of thousands of workers who have been trying to get production restarted after fires curbed output by more than 1 MMbpd.

About 4,000 workers were removed from camps north of the city run by Noralta Lodge Ltd., South Pacific Resources Ltd. and other companies, according to a statement from the regional municipality of Wood Buffalo, which includes Fort McMurray. Fire crews were also working to keep flames away from a transport hub run by pipeline operator Enbridge Inc.

The shifting winds are a setback for companies in Canada’s oil patch that had started to resume production following the country’s costliest disaster. The fires have reduced output by about 1.2 MMbopd, according to new estimates from the Conference Board of Canada. The research group says 14 days of production cuts represent an economic hit of about C$985 million ($762 million) to the Alberta economy.

“The shutdown of activity in Fort McMurray and in the oil sands will have a major impact on the local economy in the short-term,” the Ottawa-based group said in a statement Tuesday.

Economic Impact

The reduced production will cut Alberta’s gross domestic product by about 0.33% this year, and erode Canada’s GDP by 0.06%, the Conference Board said. The rebuilding effort to replace the 2,400 homes and buildings in Fort McMurray destroyed by the fires will add about C$1.3 billion to the economy next year.

The wildfires, now burning for 17 days, have come to within a kilometer of an Enbridge Inc. oil-sands transportation terminal as warm weather and strong winds spread the flames.

Fire crews are working with bulldozers to keep the blaze from the Cheecham Terminal operated by Enbridge about 75 km (47 miles) southeast of Fort McMurray, Alberta Premier Rachel Notley said at a news conference late Monday.

Winds were expected to be favorable in helping push the fire away from the Cheecham Terminal, where crude is stored and shipped out from the Athabasca region. Enbridge is widening an existing firebreak around the terminal and is considering spraying down facilities, Graham White, an Enbridge spokesman, said by email Monday. Some pipelines in and out of the terminal are operating.

‘Good Luck’

“We hope to secure that site a little more and hope to have good luck there by the end of the day,” Chad Morrison, an Alberta wildfire official, said at the news conference with Notley.

The wildfires burned down entire neighborhoods in Fort McMurray, the gateway to the world’s third-largest crude reserves, forcing more than 80,000 people out of their homes and prompting the shutdown of production earlier this month.

The blazes have grown to about 2,840 square kilometers (1,096 square miles), almost the size of Rhode Island, from 2,410 kilometers on Friday as 40 kilometer-an-hour winds and hot weather cause them to spread to the northeast, south and west, Barry Shellian, an Alberta Forestry spokesman, said by phone.

Resuming Operations

Suncor Energy Inc. and Syncrude Canada Ltd. workers were evacuated from camps north of the city, Alberta officials said in a briefing. Oil-sands companies including Suncor and Syncrude have been preparing to resume operations over the days and weeks ahead after the fire moved away from mines and upgraders north of Fort McMurray. Statoil ASA has resumed operations at its Leismer oil-sands facility, which is located south of the area swept by the fires but lacked diluent supplies from up north.

Suncor has put its Firebag oil-sands site back to work, according to two people with knowledge of the operations. The company moved 120 workers from its MacKay River operations, as well as lodges and camps on Aostra Road, to camps further north, spokeswoman Sneh Seetal said by email. MacKay River is a 35,000-bopd production facility.

Enbridge said in a May 13 update on its website that the Cheecham Terminal was staffed and conduits that connect to it, including lines 18 and 19, were put into service. The terminal, which Enbridge operates with a 50% stake, wasn’t damaged, according to the update.

There are 1,919 firefighters, 161 helicopters, 377 pieces of heavy equipment and 29 air tankers currently battling the fires in Alberta.

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