Wildfires threaten Canadian oil sands, prompts evacuations

(Bloomberg) – Resurgent wildfires in Canada’s main energy-producing province prompted what may be the first round of evacuations in the country’s vast oil-sands producing region and are raising the possibility of more shut-ins in the days ahead.

ConocoPhillips is restoring non-essential workers to its Surmont oil-sands site in Alberta after removing them Tuesday because of a wildfire nearby, the company said in an emailed statement. Until now, the blazes were hindering oil and gas production in the western part of the province, far from the oil sands in the northeast.

Almost 2.7 MMbbl of daily oil-sands production in Alberta is now in “very high” or “extreme” wildfire danger zones, consultant Rystad Energy said in a report. The equivalent of at least 240,000 bbl — and possibly more than 300,000 bbl — of daily oil output already is shut, mainly in western Alberta, the firm estimates.

The total number of active wildfires in Alberta climbed to 91 as of Wednesday afternoon from 86 a day earlier. The number of out-of-control blazes rose to 27 from 24, according to provincial data.

While winds weakened and temperatures returned to normal seasonal levels recently, conditions are expected to worsen in the days ahead, Christie Tucker, a spokeswoman for Alberta Wildfire, said during a media briefing Wednesday.

“It will get hotter and drier as we head to the weekend, and as we’ve seen, that can lead to more active wildfire behavior,” she said.

About 38,000 Alberta residents have been evacuated since the fire season began, and almost 12,000 currently remain evacuated, officials said at the briefing.

In 2016, wildfires ripped through Alberta’s oil sands region, cutting more than 1 MMbpd crude production and destroying whole sections of Fort McMurray, the biggest city in the area.

Operational updates

Below is a summary of operational updates from companies working in the area:

Whitecap Resources Inc. said Wednesday that it has about 26,000 bbl of daily production shut in. That figure has fluctuated from 12,000 to 40,000 barrels over the past two weeks, the company said in a statement.

Athabasca shut two facilities in its light-oil division at Kaybob, with the equivalent of about 2,300 bbl of daily output curtailed.

Obsidian Energy Ltd. shut down production from fields at Seal, Walrus and Nampa in the Peace River area on May 12 and the Peace River Harmon Valley South field on May 14. The company restored 2,500 bbl of daily production in Pembina, while 8,500 bbl remains offline. A total of 9,700 bbl of output is currently curtailed.

Chevron’s production at the Duvernay formation near Fox Creek, Alberta, has been shut in. Last year, the major’s net oil equivalent production was 40,000 bpd, and net crude oil production was 11,000 bpd.