No end in sight to oil sands shutdowns

9 05 2016

Alberta’s oil sands have been spared a direct hit from the devastating wildfire that forced the shutdown of more than one million barrels a day of production, but it remains unclear when companies can restart operations.

After visiting Fort McMurray on Monday, Premier Rachel Notley will meet the next day with oil company executives to gauge the impact on the province’s biggest industry and discuss plans for getting it back on line.

Alberta oil sands faces production challenges with ‘pressured’ work force (The Globe and Mail)

The Fort McMurray fire: Here’s how you can help, and receive help.

“Each of these operations and these companies are very sophisticated in terms of the work and capacity to keep themselves safe and ensure their work starts up again in a safe way,” Ms. Notley said on Sunday during a news conference in Edmonton.

“But we’ll see if there is anything the province can offer to ensure the safe resumption of economic activity in the area.”

Several of the largest operators in the oil sands have either shut down or reduced operations, as the fire threatened some projects; crews and their families were forced to evacuate, and critical supplies and services were diverted to emergency operations.

It remains unclear how long the oil sands shutdowns will continue.

Ms. Notley and company officials refused to speculate.

When Cenovus Energy Inc. and Canadian Natural Resources Ltd. were forced to shut down last year due to wildfires, it took more two weeks for them to resume operations once the area was declared safe, noted Jackie Forrest, a Calgary-based energy economist with Arc Financial Corp.

“I do think they’ll start up quickly once the danger from the fire is gone because there is a lot of motivation to do that,” Ms. Forrest said. “They have a lot of fixed costs so they’re going to be motivated to get some revenue to pay for those costs that aren’t going away.”

She expects production costs to rise as operators have to turn to service companies and suppliers beyond the Fort McMurray area until the city is resettled. Ms. Forrest said the province will also be eager to see production resume to generate economic activity in a province that was hurting financially before the crisis and now faces massive rebuilding costs.

The provincial government forecast it would collect $1.4-billion in royalties this year, down from $9-billion in 2014-15.

Firefighters caught a break Sunday as cooler temperatures and some light rain slowed the fire’s advance.

On Saturday, officials expressed fear that the growing inferno would reach two oil sands operations: Suncor Energy Inc.’s base mine to the north of the city, and CNOOC Nexen’s Long Lake in situ operation, which is south of Fort McMurray.

But thanks to the change in weather and the efforts of the firefighters, the blaze approached but did not hit the Suncor plant and “blew over” the Long Lake operation, Chad Morrison, Alberta’s wildfire manager, told a news conference Sunday.

In a social-media post late Sunday, Suncor confirmed its plant was not damaged. “We expect to be able to get our facilities back on line soon,” the company said.

However, there were still flames to the south and west of the Suncor operation. “With the cooler weather, I do expect to hold the fire there for the next few days,” Mr. Morrison said, though he offered no guarantees.

Syncrude Canada Ltd. on Saturday shut down its oil sands mine and processing plant which produces 350,000 barrels a day of light synthetic crude. Syncrude said there was no immediate danger to its facilities but that it was taking its production units off line and evacuating personnel as a precaution.

“Syncrude will bring units back on line when there is no risk to personnel or operations,” the company said.

Husky Energy shut down production at its Sunrise joint venture with BP PLC, located about 60 kilometres northeast of Fort McMurray, on the weekend. Production had already been cut to about 10,000 barrels a day from 30,000 barrels. Husky spokesman Mel Duvall said “it would be difficult to speculate” on when production will resume, given the key question about the safety of employees.

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