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.

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.

—David George-Cosh and Paul Vieira contributed to this article.