WALL STREET JOURNAL: Canada Wildfires Force Evacuation, Hampering Oil-Sands Operations

Repost from the Wall Street Journal

Canada Wildfires Force Evacuation, Hampering Oil-Sands Operations

Rapid spread of Alberta blaze prompts evacuation of Fort McMurray, hub of country’s oil-sands industry

By CHESTER DAWSON, Updated May 5, 2016 11:13 a.m. ET

CALGARY, Alberta—Raging forest fires in Canada’s oil-rich province of Alberta forced the evacuation of nearly 80,000 people, devastating the remote town at the hub of the country’s oil-sands industry and threatening to further burden a sector already plagued by low energy prices.

Some 76,000 people evacuated from Fort McMurray, 270 miles north of Alberta’s capital Edmonton, to shelters hundreds of miles north and south of the town, officials said, revising an earlier estimate of 88,000.

“We had a devastating day yesterday and we’re preparing for a bad day today,” said Darby Allen, the town’s regional fire chief, at a news briefing Wednesday. He said there were no known casualties or injuries.

The uncontrolled blaze shut down one major oil-sands mining operation on Wednesday and forced another to curtail production. Other operators have evacuated nonessential personnel to make room for thousands of evacuees who fled the disaster and sought refuge in camps designed to house temporary workers.

Firefighters working through Tuesday night extinguished all building fires by early morning, but local officials said nearly 25,000 acres around Fort McMurray were ablaze and that the downtown remains at risk for new fires.

“This is a very complex fire with multiple fronts and explosive conditions,” said Bernie Schmitte, wildfire manager for Alberta’s agriculture and forestry ministry. Officials said the cause of the fire, which they are calling Horse Creek, is being investigated to determine whether any human role or some other cause, such as lightning, triggered the blaze.

Most residents were informed about the mandatory evacuation on Tuesday afternoon and had only 30 minutes to prepare. “Residents were advised to grab what they could and go,” said Mr. Darby, the fire chief. “We didn’t factor in people taking family heirlooms.”

Provincial officials said about 1,600 buildings have been damaged by the fire, which burned parts of several housing subdivisions and some structures in the town center.


The town of Fort McMurray became the symbol of Canada’s oil boom the last decade, attracting some of the world’s biggest energy producers amid a rush to build megaprojects to extract nearby oil sands. Thanks to the influx of investment from producers such as Shell and Exxon Mobil, thousands flocked to “Fort McMoney” as the city spent millions building heated bus shelters, schools, bridges and hockey arenas to accommodate its rapidly growing and affluent population.

Thanks to the oil boom, Fort McMurray’s average household income hit C$186,782 (about $148,500) in 2013, the highest of any Canadian city. But since then, thousands of workers have been laid off due to the oil-price slump and according to the national statistics agency the town’s unemployment rate hit 9.8% in March, double the rate of five years ago.

Now, the town faces the grim task of rebuilding at a time when its biggest industry has been challenged by high extraction costs and low oil prices.

The premier of Alberta, Rachel Notley, on Wednesday expressed hope that Fort McMurray would rebound from the damage. “Our province is strong and we will get through this. Albertans have proven time and time again that when disaster strikes, we come together and we find the solutions and we get through it,” she said.

Like some 10,000 other displaced residents, the mayor of Fort McMurray, Melissa Blake, stayed overnight Tuesday at an oil-sands camp with her husband and another family, sharing a room with a single bed. “The reality is setting in about how significant and serious the loss is,” Ms. Blake told reporters. “We have been a community fighting an uphill battle for a long time in terms of the rate of changing growth that we’ve been experiencing.”

The evacuation is the largest in Alberta’s history, forcing residents in more than 12 northern communities including Fort McMurray to leave their homes, according to the Canadian Red Cross. The Red Cross set up a toll-free number to help evacuees connect with family members.

Across the province, many private citizens opened their homes to those fleeing the fires, officials said.

The rapid spread of the blaze has started to affect operations at major oil-sands productions sites. The oil-sands facilities aren’t directly threatened by the uncontrolled forest fires, but mandatory evacuations of workers have brought some operations to a halt.

PHOTOS – (see below)

Royal Dutch Shell PLC’s Canadian unit halted its oil-sands mining operations, which produce about 250,000 barrels a day, to speed evacuations of people who fled to the site, which is about 60 miles north of the fires. A spokesman didn’t provide an estimate for how long the shutdown is expected to last.

Suncor Energy Inc., Canada’s largest oil producer, said late Tuesday that it reduced production at all of its oil-sands operations due to the forced evacuations. It also said that none of its operations were in the path of the forest fires. Exxon Mobil Corp.’s Canadian unit, Imperial Oil Ltd., said it was evacuating nonessential employees but that production hasn’t been affected “at this time,” according to a spokeswoman.

Inter Pipeline said it partially closed its 540,000 barrel-a-day Polaris pipeline system and its 346,000 barrel-a-day Corridor system. Related to Inter Pipeline’s moves, producer Husky Energy Inc. said it cut output at its Sunrise oil- sands plant by two-thirds, to 10,000 barrels a day.

Western Canadian Select, the benchmark Canadian heavy crude oil, traded Wednesday at $12.84 a barrel below the benchmark U.S. price, according to FactSet. That is the highest price relative to the U.S. price since March 1, with the price difference between the two contracts is 73 cents narrower than Tuesday.

Canada’s total oil sands production is around 2 million barrels a day, much of which is exported to the U.S.

The fires, which started late Sunday, spread from a forested area southwest of Fort McMurray and crossed the Athabasca River bisecting the town Monday. They began to threaten residential neighborhoods by midday Tuesday, prompting evacuations.

Officials said the town has been vacated by all but firefighting and public safety personnel, but first responders continued to check housing subdivisions and public buildings downtown for any remaining people, using door knocks, bullhorns and patrols by emergency vehicles. Dozens of pets left behind by their owners were taken to a local community center awaiting their owners, they said.

Traffic lines the highway as residents leave Fort McMurray on Tuesday. More than 80,000 residents were ordered to flee as a wildfire moved into the city, destroying whole neighborhoods
Traffic lines the highway as residents leave Fort McMurray on Tuesday. More than 80,000 residents were ordered to flee as a wildfire moved into the city, destroying whole neighborhoods PHOTO: JASON FRANSON/ASSOCIATED PRESS

Southbound traffic on Highway 63, the city’s main arterial road, resumed late Tuesday after being shut down earlier in the day as a precautionary measure due to the wildfires. An estimated 18,000 evacuees used the road to flee to Edmonton.

Photos: Alberta Wildfires Force Evacuation of Oil-Sands Hub

Town of Fort McMurray, Alberta, evacuated as uncontrolled forest fires spread through oil-sands region

Crystal Maltais prepares her family to leave Conklin, Alberta, for Lac La Biche after evacuating their home in Fort McMurray on Tuesday.
A Royal Canadian Mounted Police officer surveys the damage on a street in Fort McMurray, Alberta, on Wednesday. Forest fires continued to rage in the oil-rich province as a mandatory evacuation order for areas near the hub of the country’s oil-sands industry widened and key transportation routes remained closed.
Royal Canadian Mounted Police officers wear masks to protect themselves from smoke from nearby wildfires while directing traffic at a roadblock near Fort McMurray.
Wildfires burn near neighborhoods in Fort McMurray in this aerial photo provided by the Canadian Armed Forces.
Officers look on near Fort McMurray as smoke from the wildfires billows into the air on Wednesday.
Flames rise in Fort McMurray. Nearly 80,000 people in the area have been evacuated to shelters.
Strathcona County, Alberta firefighters take a break in Fort McMurray in this photo posted on Twitter on Thursday.
Evacuees from the Fort McMurray wildfires use the sleeping room at the "Bold Center" in Lac la Biche, Alberta, on Thursday.
An evacuee puts gas in his car on his way out of Fort McMurray.
Alberta Premier Rachel Notley speaks to the media after visiting residents of Fort McMurray who had assembled in a community center in Anzac.
A helicopter, left, flies past thick smoke while battling a forest fire outside of Fort McMurray.
Volunteers help carry food into a community center in Anzac.
A wildfire moves towards the town of Anzac from Fort McMurray on Wednesday. Alberta declared a state of emergency Wednesday as crews frantically held back wind-whipped wildfires.
Long traffic lines formed Tuesday outside Fort McMurray as residents were forced to leave.
Crystal Maltais prepares her family to leave Conklin, Alberta, for Lac La Biche after evacuating their home in Fort McMurray on Tuesday.
A Royal Canadian Mounted Police officer surveys the damage on a street in Fort McMurray, Alberta, on Wednesday. Forest fires continued to rage in the oil-rich province as a mandatory evacuation order for areas near the hub of the country’s oil-sands industry widened and key transportation routes remained closed.

FORT MCMURRAY WILDFIRES: Could the tar sands mines erupt?

Repost from McLean’s
[See also The New Yorker, Fort McMurray & the Fires of Climate Change.  – RS]

Could the oil sands catch fire?

What if the wildfires raging in Fort McMurray hit the oil sands?

By Chris Sorensen, May 4, 2016
The Suncor oil sands facility seen from a helicopter near Fort McMurray, Alta. (Jeff McIntosh/CP)
The Suncor oil sands facility seen from a helicopter near Fort McMurray, Alta. (Jeff McIntosh/CP)

The wildfires ravaging Fort McMurray are well to the south of most oil sands projects, which is why several oil sands operators volunteered to use their work camps as shelter spaces for fleeing residents. But wildfires—and fires in general—are a constant occupational threat for anyone who works in the oil and gas business, and the oil sands are no different.

In their natural state, the oil sands themselves aren’t particularly flammable. Bitumen has the consistency of molasses at room temperature, and is mixed with sand, making it burn at a slower pace if ignited (plus, 80 per cent of it is buried deep underground). But the same can’t be said of all the equipment and chemical processes used to extract and upgrade that bitumen into synthetic crude oil. Companies that mine and upgrade oil sands bitumen rely on massive pieces of machinery, high temperatures and high pressures to do the dirty work—producing fuels and feedstock.

Related: Want to help those fleeing Fort McMurray? Here’s how.

A 2004 article in the U.S. National Fire Protection Association Journal offered a list of the potential fire risks faced by Suncor Energy, one of the oil sands’ biggest producers. It included: “hydrocarbon spill and pressure fires; storage tank fires; vapour cloud explosions; flammable gas fires; runaway exothermic reactions; and coke and sulfur fires.” The list continued by noting the fire potential posed by: “natural gas- and coke-fired electricity/steam generating plants; a large fleet of mining equipment; ore-processing and oil extraction plants; multi-story office buildings; fleets of tank trucks carrying combustible and hazardous commodities; and the wildlands and boreal forests that surround the facility.”

On that last point, Chelsie Klassen, a spokesperson for the Canadian Association of Petroleum Producers, says oil sands companies have “had production reduced or shut in because of wildfires in the past.” But she said all operators have emergency teams in place to make sure workers are evacuated safely and fires are prevented from spreading beyond the facility.

And those soupy, bird-killing tailings ponds? “They’re not flammable,” Klassen says.

It may well be the only thing about an oil sands operation that isn’t.



BLOOMBERG: Local opposition to crude by rail is succeeding in California

Repost from Bloomberg
[Editor:  Note 3 mentions of crude by rail, and in the final paragraph a reference to local opposition to CBR in Santa Maria, Pittsburg and Benicia.  – RS]

California Isn’t Feeling U.S. Oil Boom as OPEC Dependence Grows

By Robert Tuttle, May 4, 2016 9:01 PM PDT

• State sourced a record 52% of its crude from overseas in 2015
• Falling in-state and Alaska production is driving imports

BBGThe shale oil boom that cut U.S. crude imports by 32 percent in a decade isn’t being felt out west as California grows increasingly dependent on Middle East supplies.

California brought in a record 52 percent of its crude from abroad last year, up from just 9 percent 20 years earlier, according to California Energy Commission data. The state hasn’t yet released the specific countries that supplied that oil in 2015, but in 2014, about 58 percent came from Saudi Arabia and Iraq, the most recent data show.

Foreign dependence is only expected to grow as supplies from within the state and Alaska diminish and efforts to bring U.S. crude from the Midwest by rail face local opposition.

“Regulatory impediments have kept California isolated from the growing sources of domestic crude production,” John Auers, executive vice president at Turner Mason & Co., said by phone from Dallas. “California refiners won’t be able to take advantage”’ of lower-priced domestic crude.

Growing imports mean that California refiners have some of the highest crude costs in the U.S., which are passed onto consumers in the form of higher gasoline prices, David Hackett, president of Irving, California-based Stillwater Associates, said in a phone interview.

Imported crude is priced off Brent, which was selling at less than a $1 premium to U.S. West Texas Intermediate Wednesday. While the lifting of restrictions on U.S. oil exports has narrowed the gap from as high as $15 a barrel in 2014, the spread between the grades could widen again when oil rises and U.S. shale oil production picks up, Hackett said.

Drivers in Los Angeles paid the highest pump prices in the U.S. for much of last year, exceeding $4 a gallon last summer, according to AAA.

Domestic Supply

Alaska supplied the state with 73,000 barrels a day of crude in 2015, about 12 percent of California’s total supply, state data show. That’s down from as high as 46 percent in the early 1990s and may fall further as Alaska’s production is forecast to drop to 319,100 barrels a day in 2023, down from almost 500,000 barrels a day this year, official datashow.

California itself produced about 225,000 barrels a day in 2015, supplying about 36 percent of its own needs, according to state data. That’s a drop from 240,000 barrels a day in 2014. The decline in the state’s own production came as producers cut output amid falling oil prices and following the shutdown of the Plains All American pipeline near Santa Barbara after a spill curtailed about 38,000 barrels a day of offshore production, Stillwater’s Hackett said.

California could benefit from cheaper Midwestern oil if crude by rail terminals were built. New terminals planned for Santa Maria, Pittsburg and Benicia have been stymied by local opposition and regulatory holdups, Hackett said. In February, for example, Valero Energy Corp’s planned crude-by-rail project was rejected by a city commission.

DERAILMENT: 2 train tanker cars derail in Montgomery ny

Repost from the Times Herald-Record, Middletown NY
[Editor: Another seemingly minor derailment, involving cars carrying “non-hazardous” products: liquified salt and a plastic compound.  No spills, no injuries, no evacuations.  The point?  Derailments DO happen frequently, and it could have been much worse.  – RS]

2 train tanker cars derail in Montgomery

By James Walsh, Times Herald-Record, May 2, 2016 at 11:48 PM
A derailment Monday sent two railroad tanker cars falling into a wooded area off Route 17K in Montgomery.
A derailment Monday sent two railroad tanker cars falling into a wooded area off Route 17K in Montgomery. JAMES WALSH/TIMES HERALD-RECORD

VILLAGE OF MONTGOMERY – Two railroad tanker cars at the rear of a freight train derailed on a sharp bend of the tracks Monday afternoon, but the public was never in danger.

Village Police Chief Steven Walsh said the tankers carried non-hazardous cargo. The cause of the wreck was undetermined.

Officials say there was no danger to the public after the train cars derailed.  JAMES WALSH/TIMES HERALD-RECORD
Officials say there was no danger to the public after the train cars derailed. JAMES WALSH/TIMES HERALD-RECORD

“No leaks, no spills, no danger to the public,” Walsh said near the wreck off Route 17K near the village’s downtown.

The train, operated by the Middletown & New Jersey Railroad, was pulling 11 cars including the two that derailed, when the accident occurred at about 3:15 p.m.

Four other tankers were among the cars that remained on the tracks. The tracks are owned by Norfolk Southern Railway.

“It shook the building,” said Rick Wolden, proprietor of Allard Corners Garage. “It was loud. We thought it hit a car.”

Tanker cars carrying crude oil on mainlines, not on local lines like the one passing through the village, have raised concerns from environmental groups and others worried about explosions that have killed dozens of people, led to community evacuations and polluted waterways elsewhere.

The state has conducted track and tanker car inspections for more than a year with federal authorities in an attempt to ward off a hazardous derailment in populated areas including Kingston, Newburgh and Cornwall.

Walsh, the police chief, said one tanker in Monday’s wreck contained liquefied salt of the kind spread on highways before winter storms. That was destined for Nesco in the Town of Montgomery. The other contained a plastic compound bound for Hunter Panels, also in the town. Both tanker cars held about 20,000 gallons.

“The trains go very, very slow through here,” said Dorothy White, whose home overlooks the wreck site from about 30 feet away. The track speed limit is 8 mph through the village, Walsh said.

Village police and volunteers from the Wallkill Engine & Hose Co. of the Montgomery Fire Department were the first emergency responders to arrive. They were joined by the Orange County Hazmat Team, the state Department of Environmental Conservation, and the state office of Fire Prevention and Control.

“The first thing we’re thinking about is public safety,” Walsh said. “A fire department assessment determined there was no hazardous cargo and no threat…It could have been worse, and we’re grateful it wasn’t.”