Suncor Shuts Oil Sands Mine Again as Alberta Fires Spread
(Bloomberg) - Wildfires raging across Alberta shifted back toward oil-sands installations north of Fort McMurray, forcing the evacuation of thousands of workers and prompting Suncor Energy Inc. to shut its main mine just as work was resuming.
About 8,000 workers were removed from lodging facilities threatened by a fire that had grown to about 3,550 square kilometers (1,370 square miles), Alberta Premier Rachel Notley said. That’s an area bigger than Rhode Island. Suncor began shutting operations at its base plant days after workers returned to restart the facility. Horizon North Logistics Inc.’s Blacksand lodge, a work camp about 40 kilometers (24 miles) northwest of Fort McMurray that serves Suncor and Syncrude Canada Ltd. sites, was destroyed by fire on Tuesday, Notley said.
“Mother Nature continues to be our foe in this regard and not our friend,” Notley said in a briefing. Westerly winds will push the fire closer to Suncor and Syncrude oil-sands plants, though fireproofing should mean “very high resiliency” of both facilities, she said. “We expect fire growth in the area of many of these camps today.”
The growth of the fire may delay efforts by oil-sands companies including Syncrude to restart operations, Notley said, another setback for Canada’s oil patch that had begun resuming production following what’s estimated to be the country’s costliest disaster. The fires have reduced output by about 1.2 million barrels a day, according to estimates from the Conference Board of Canada. The research group said 14 days of production cuts represent a hit of about C$985 million ($763 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.
Suncor is in the process of transporting workers from lodges on Aostra Road and near its base plant to other camps as it starts a staged and orderly shutdown of the facility, the company said in a statement Tuesday. The plant’s upgrader has a capacity to process 357,000 barrels a day. Syncrude’s upgrader is able to process 350,000.
The renewed threat from the blaze, which forced more than 80,000 people out of their homes earlier this month, helped push crude to a seven-month high on Tuesday. West Texas Intermediate for June delivery gained as much as 70 cents to $48.42 a barrel on the New York Mercantile Exchange, the highest since Oct. 13.
The reduced production will cut Alberta’s gross domestic product by about 0.33 percent this year, and erode Canada’s GDP by 0.06 percent, 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 Conference Board estimates are in the range of what the Alberta government is considering, though it’s too early to provide specific figures, Notley said.
Wildfires came within a kilometer of the Cheecham oil terminal where crude is stored and shipped out from the Athabasca region about 75 kilometers southeast of Fort McMurray, operated by Enbridge Inc. Winds are pushing the fire away from the terminal, heading east, Notley said. Enbridge sought to widen an existing firebreak around the terminal and spray down the facilities Graham White, a company spokesman, said by e-mail Monday. Some pipelines in and out of the terminal were operating.
Other work camps are currently threatened by the fire, in addition to the Horizon North facility that was already destroyed, officials said on Tuesday. Highway 63, the main road in and out of Fort McMurray that has been closed for periods during the fire, is very likely threatened again and may close, Notley said.
The blazes, now burning for 17 days, forced more than 80,000 people out of their homes in Fort McMurray earlier this month. Winds from the south and west and hot weather are expected to cause them to continue to spread, Travis Fairweather, an Alberta Forestry spokesman, said by phone on Tuesday.
Oil-sands production came offline as companies took precautionary measures including evacuating workers and shutting down power lines and pipelines. Companies are taking similar measures again. Inter Pipeline Ltd. said Tuesday it had partially shut down its Polaris and Corridor systems due to fires. Horizon’s Blacksand lodge, a 665-room facility near, was safely evacuated and the company assumes it was entirely lost, Rod Graham, chief executive officer, said in a phone interview.
“If the workers are being evacuated, it would delay getting back to full capacity,” in the oil sands, Graham said. “This fire is unpredictable and volatile.”
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