Alberta Wildfire Risk Seen Biggest for Storage Tanks, Equipment
Alex Nussbaum, May 6, 2016 — 2:25 PM PDT
Blaze reaches gates of Cnooc’s Long Lake, official says
Oil sands unlikely to burn but equipment, chemicals at risk
As a wildfire rages across Alberta’s oil-sands region, pipelines, tanks full of chemicals, buildings and equipment are more at risk than the thick, tar-like deposits that are mined from the ground.
The fire neared the gate of Cnooc Ltd.’s Long Lake oil sands plant in northern Alberta Friday. While officials were hopeful that winds would push the flames away to the northeast, many oil companies also have fire crews preparing to defend their complexes, Chad Morrison, the province’s wildfire compliance and investigations manager, said during a conference call. “They’re highly trained and have great emergency response plans in place for that.”
The mines are cleared of vegetation so it’s unlikely the flames could reach any deposits. And burning oil-sands creates a hard, coal-like residue on the rock called coke, which prevents fire from reaching deeper into a seam, said Rick Chalaturnyk, an engineering professor at the University of Alberta.
“It seals itself off,” he said in a telephone interview. “You can find records of natural wildfires in these deposits for centuries and none of them have produced a situation where you have an extended fire.”
Royal Bank of Canada estimated that as much as 1 million barrels a day of production was shut because of the blaze, or about 40 percent of oil sands output, as companies including Suncor Energy Inc., Cnooc’s Nexen, Royal Dutch Shell Plc, and ConocoPhillips reduce production and open work camps to residents escaping blazes in Alberta’s biggest-ever evacuation. Inter Pipeline Ltd. shut part of its system in the province. The disruptions pushed up the price of oil sands crude.
“Eighty percent of the oil sands are located deep underground and can only be extracted through an in-situ drilling process,” Chelsie Klassen, a spokeswoman for the Canadian Association of Petroleum Producers, said in an e-mail on Thursday. “The remaining 20 percent is mineable from the surface and predominantly located north of Fort McMurray. Hydrocarbons can burn under the right conditions, however oil sands would burn at a much slower pace considering its composition with sand.”
I’ve had my eyes on Alberta Canada since June of 2013, when I first learned about the terrible destruction of pristine boreal forests and native communities in Alberta caused by the mining of tar-sands for crude oil production. Those operations are concentrated in the Fort McMurray area, so my interest and concern peaked recently when reports surfaced about the massive wildfires there.
Most, but not all of the mining operations are north of Fort McMurray, and most, but not all of the worst fires are in and to the south of Fort McMurray. But the fires and the oil mines are intimately linked. Here’s are several of the latest reports (thanks to Google):
It’s been one week since the fire known as “the beast” reared it’s ugly head. The wildfire outside of Fort McMurray, once measured in football fields, now sits at …
More than 500 firefighters, 15 helicopters and 14 air tankers are trying to put out the fires in Fort McMurray, which grew by nearly 50% in the past day to now …
Lac-Mégantic sends sympathy, donations to Fort McMurray
Ingrid Peritz, May 05, 2016 2:59PM EDT, Last updated May 05, 2016 7:48PM EDT
An ever-changing, volatile situation is fraying the nerves of residents and officials alike as a massive wildfire continues to bear down on Fort McMurray. (JASON FRANSON/THE CANADIAN PRESS)
In their time of need, the people of Lac-Mégantic got support from across Canada to help cope with the disastrous aftermath of a deadly train derailment. Now the Quebec town wants to give back, by helping the victims of the Fort McMurray wildfires.
The mayor of Lac-Mégantic says his town of 5,900 will make a donation to support residents whose lives have been upturned by the devastating blazes in Alberta.
“In 2013, all of Canada helped Lac-Mégantic. Now it’s what we want to do [for Fort McMurray],” Mayor Jean-Guy Cloutier said in an interview on Thursday. “After our catastrophe, a lot of citizens sent us messages of courage, determination and resilience. We want to send them the same thing. They will need it.”
Aid began to pour into Lac-Mégantic in the days and months after a runaway train carrying crude oil derailed and exploded in the heart of Lac-Mégantic, killing 47 people and obliterating much of the town centre. Nearly three years later, the Red Cross has collected $14.8-million for the town and aid workers are still present in the struggling community.
To Mr. Cloutier, the “images of horror” in Fort McMurray are darkly reminiscent of the apocalyptic scenes in Lac-Mégantic in the early hours of July 6, 2013, when the tankers burst into flames.
“We can only feel solidarity,” the mayor said.
Mr. Cloutier and the region’s local MP, Conservative Luc Berthold, have joined together to call on people to support Fort McMurray through the Canadian Red Cross.
Mr. Berthold said “all of Canada mobilized for us,” and now, “it’s our turn.”
“These people need us and will need us,” Mr. Berthold, who represents Mégantic-L’Érable, said in a statement. “I want to put all efforts forward so that we respond rapidly to the needs of the citizens of Alberta.”
Residents of Lac-Mégantic are still suffering the economic and health-related after-effects of the disaster.
Through the Red Cross, more than 3,200 people in Lac-Mégantic have received support, including 256 people who lost their jobs, 113 families who have grieved loved ones, and 32 children who lost one or both parents.
“We know that in one year, people in Fort McMurray will still have problems. These are major catastrophes,” Mr. Cloutier said.
On Thursday, the Quebec government also sent four water bombers to Alberta from the province’s forest-fire protection service. Premier Philippe Couillard called the fires in Alberta and forced evacuation of 80,000 people a “cataclysmic” situation.
“Firemen, airplanes, whatever is needed, we will provide. These are fellow Canadians and we want to be there with them,” the Premier said.
Alberta oil-sands companies reduce output, evacuate staff due to risk from encroaching blazes
By CHESTER DAWSON, Updated May 6, 2016 2:01 a.m. ET
The Suncor tar sands processing plant near near Fort McMurray, Alberta. Forest fires continued to rage in Canada’s oil-rich province of Alberta on Thursday. PHOTO: REUTERS
CALGARY, Alberta—Raging forest fires in the heart of Canada’s oil-sands region curbed production and helped drive up global prices on Thursday as some worried enough oil was threatened to nearly wipe out the world’s oversupply.
Many companies evacuated staff and cut production because of pipeline outages and the risk from encroaching blazes. No oil operations reported fire damage, but their efforts to protect themselves led to a reduction of at least 645,000 barrels a day, or almost one-quarter of Canada’s 2.5 million barrels in total oil sands production. Much of that output is sent to refineries in the U.S.
The outages are widely expected to be temporary, but they drove up the price of typically heavily discounted Canadian crude in recent trading. Prices for the U.S. benchmark crude rose 1.2% to $44.32 a barrel Thursday, and the global benchmark gained about 1%—with worries about lower supplies from Libya and Nigeria also affecting trading.
If oil production now threatened by the Canadian fires were halted, it would be enough to nearly wipe out the world’s oversupply, said Tim Pickering, chief investment officer of Calgary-based Auspice Capital Advisors Ltd., which manages $300 million and an exchange-traded fund based on the Canadian Crude Index.
“This is the most important issue in oil today,” Mr. Pickering said. “That will put the system back in check really quick.”
Oil prices have been pressured for almost two years by excess supplies. But production has started to fall in the U.S. and elsewhere following massive spending cuts by energy companies. Meanwhile, demand continues to grow.
Analysts say the global market is less oversupplied than it was even a few months ago at a time when producers’ capacity to ramp up production has been reduced. That makes the oil market more vulnerable to a shortage if production is halted in any part of the world.
In addition to Canada, oil traders are currently worried about lower supplies from Libya because of political unrest and from Nigeria due to a pipeline outage. Some analysts also warn that Venezuela’s oil production could fall amid the country’s struggling economy and power shortages.
The longer-term impact of the Alberta fire remains unclear. Some officials say production will likely bounce back once the fire threat recedes; others say damage to infrastructure and from displaced workers could hamper efforts to ramp up output once the fires are put out.
“I expect we’ll recover fairly quickly, but it’s too early to say how much damage has been done to equipment and operations in the town of Fort McMurray,” Steve Laut, president of Canadian Natural Resources Ltd., said on a conference call with analysts. Mr. Laut said that oil sands output at his company, a major oil and gas producer, hasn’t been affected by the disaster.
But the Bank of Nova Scotia said the destruction of property and loss of production at other oil sands operations could cast a long shadow. The forest fire fallout could mean “very little” GDP growth for the overall Canadian economy in the second quarter and that the damage to infrastructure will slow the recovery in the country’s oil patch, the bank said in a report.
In the latest of a series of plant closures, Suncor Energy Inc., Canada’s largest producer, late Thursday shut down all of its wholly owned oil sands assets, including two mines and a pair of well sites, which had been producing a total of 300,000 barrels a day. It had previously reduced output at another mining operation called Syncrude, in which it owns a controlling stake.
Exxon Mobil Corp.’s Imperial Oil and ConocoPhillips also shut some production earlier Thursday. Exxon cut output by an undisclosed amount at its 194,000 barrel-a-day mine, citing “uncertainties.” Conoco halted a 50,000 barrel-a-day mine and evacuated all staff due to a fire near the town of Anzac. They followed a move Wednesday by Nexen Energy ULC, a subsidiary of China’s Cnooc Ltd. On Wednesday, the Canadian unit of Royal Dutch Shell PLC shut down two oil-sands mines, which produce 255,000 barrels a day, that it owns in partnership with Chevron Corp. and Marathon Oil Corp.
“That’s largely being done to allow folks to focus on rendering aid to the community and emergency response,” Lee Tillman, chief executive of Marathon Oil said on a conference call. “The mines themselves are not under any direct or immediate threat.”
—Nicole Friedman, Timothy Puko and Erin Ailworth contributed to this article.
You must be logged in to post a comment.