Rystad Warns Alberta Wildfires May Put Over 2MM Barrels Per Day at Risk

Alberta wildfires may put more than two million barrels per day of oil sands output at risk, Rystad Energy Vice President Thomas Liles said in a special market update sent to Rigzone late last week.

“Wildfire conditions in northeastern Alberta, the focus of the province’s oil sands industry, have worsened,” Liles stated in the update, adding that on May 14, the Regional Municipality of Wood Buffalo issued an evacuation order for several communities “threatened by an out of control 209-square-kilometer (81-square-mile) wildfire southwest of Fort McMurray”.

“Although oil sands operators have not yet indicated any impacts to operations, Rystad Energy estimates that more than 2.1 million barrels per day of marketable oil sands output could be at risk should conditions materially worsen, equating to around 2.6 percent of total crude oil and lease condensate supply,” Liles warned in the update.

“Although wildfire danger ratings have improved in the affected areas overnight, MFW-017 has not yet been held and the evacuation order remains in place, thus threats to production cannot be ruled out,” he went on to state.

In the update, Liles highlighted that the MWF-017 fire is located on the right bank of the Athabasca River and intersects with “critical” midstream infrastructure that supports the Horizon and Syncrude mining and upgrading projects.

“The closest areas of extraction include Suncor’s Base Operations, Syncrude, and the Long Lake thermal in-situ project,” Liles said in the update.

“However, an evacuation order for Fort McMurray could impact a slew of service activities and projects further north,” he warned.

“Additionally, the spread of wildfires further south could affect Long Lake and Surmont, which together produce more than 200,000 barrels per day and were both severely impacted by wildfires in May 2016,” he continued.

The blaze harks back to the upheaval the industry experienced in the first half of 2016, when a major wildfire shook Fort McMurray and brought nearly one million bpd and 600,000 barrels per day offline in May and June 2016 alone, respectively, Liles stated in the update.

He pointed out, however, that there are several differences between 2016 and the current fire.

“The 2016 fire had an abundance of coniferous forest crowns at its disposal, leading to a faster and more unpredictable spread,” Liles said in the update.

“The current flora around Fort McMurray is still recovering from the events that took place eight years ago, thus, MFW-017 is spreading on the ground at a slower pace,” he added.

“Still, wildfire seasons have only gotten more severe in the Western Canadian Sedimentary Basin in recent years,” he warned.

“Throughout the spring and summer of 2023, they hit a wide swathe of short-cycle operations in northwestern Alberta and northeastern British Columbia,” Liles said.

“The industry entered into 2024 with a wary eye on conditions, as experts warned of a potentially more severe wildfire season due to limited snowpack over the winter months and continuing drought conditions,” he went on to state.

There is one wildfire of note in the Forest Protection Area of Alberta, an update posted on the Government of Alberta’s website on May 19 stated.

“MWF017 is classified as out of control at 19,493 hectares … There was no growth on the fire yesterday and fire activity was minimal,” the update added.

“There are 233 firefighters, 24 helicopters and 40 pieces of heavy equipment currently assigned to the wildfire,” it continued.

“Structure protection is in place in the Abasand, Prairie Creek, Grayling Terrace and Beacon Hill neighbourhoods, as well as on the Rickards Landing Industrial Park, Gregoire Lake Estates and Gregoire Lake 176,” it went on to state.

The update noted that the cause of this wildfire remains under investigation.

An update posted on the Government of Alberta’s website on May 16 revealed that there were two wildfires of note in the Forest Protection Area of Alberta.

“MWF017 is classified as out of control at 19,820 hectares,” it added. An update posted on the government’s site the day before classified the fire as out of control at 20,940 hectares.

“The size reduction is due to a more accurate scan of the wildfire perimeter, it does not mean that the wildfire has gotten smaller,” the May 16 update warned.

“There are 172 firefighters, 22 helicopters and 57 pieces of heavy equipment currently assigned to the wildfire,” it added.

“Alberta Wildfire and the Regional Municipality of Wood Buffalo have entered unified command and will work together to manage this wildfire. The cause of this wildfire remains under investigation,” it continued.

The other wildfire of note was listed in the update as the Kleskun Creek Fire.

“Alberta wildfire is assisting the County of Grande Prairie with a wildfire 4km east of the town of Teepee Creek,” the government said in the update.

“It is estimated to be 1,382 ha and is classified as being held. No substantial growth was observed yesterday,” it added, highlighting that the wildfire would be removed as a wildfire of note from May 17.

A wildfire of note is determined to be of significant public interest and may pose a threat to public safety, communities, or critical infrastructure, the government update stated. Wildfires of note do not typically include mutual aid wildfires located outside of the Forest Protection Area of Alberta, it added, noting that Alberta Wildfire provides assistance on a mutual aid wildfire but is not the lead agency.

To contact the author, email andreas.exarheas@rigzone.com