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Alberta Readies to Bring Oil Production Back Online in ‘The Beast’s’ Wake

Preparations began Sunday to resume nearly one million b/d of production shut down when a forest fire nicknamed “The Beast” forced evacuation of all 85,000 residents of the northeastern Alberta oil sands capital, Fort McMurray.

Suncor Energy -- the region’s top producer and employer, and the biggest industrial victim of the blaze -- set an optimistic tone in a message circulated to its staff via its social media internet sites.

“We know many people are eager to return to work -- we appreciate your enthusiasm and plans are underway to make that happen, once we know it’s safe to do so,” said Suncor. “We are currently making plans for temporary commuting arrangements from Calgary and Edmonton, using our lodges and camps for employee temporary housing. We are currently implementing these arrangements.”

The company’s production chief, upstream executive vice-president Mark Little, added that “significant progress in a limited time was made on enhancing fire protection, primarily through the construction of fire breaks around our assets.”

After provincial emergency services authority issued the evacuation order last Tuesday, the Alberta Energy Regulator granted permission for all industry sites to fortify themselves with protective structures such as berms and high walls.

A weather change also came to the rescue. Little said, “We are also encouraged by shifting winds that have created more favorable conditions. The fire is currently moving east [across largely vacant forest towards thinly populated northwestern Saskatchewan], temperatures have declined, humidity has increased -- and our assets have not been damaged. All this means, we expect to be able to get our facilities back online soon.”

A larger, slower version of recovery preparations was under way for Fort McMurray, which is about 30 kilometers (20 miles) south of the bitumen mining district and houses much of the industry’s operational staff.

During a situation update over the weekend, the Alberta government said “preliminary re-entry planning is underway, including preparing for coordinated damage assessments and ensuring that vital emergency services and utilities are back online and operating safely. It’s important to note there is no date for re-entry yet.”

The government also noted that in addition to Suncor, Shell Canada, Husky Energy and Canadian Natural Resources Ltd. had to release employees to look after their households in the evacuation. An array of installations eventually reduced or halted operations, cutting total oil sands output by about 40%.

The forest fire approached some industrial locations, but missed all vulnerable sites and did no damage. No injuries or fatalities occurred in or near Fort McMurray, although close calls in scorched neighborhoods and on congested roads provided lively broadcast media dramas for a few days.

Alberta oil and natural gas production continued to reach markets across Canada and the United States. No gas operations were affected. About 50 million bbl of oil flowed from storage facilities in Alberta and Saskatchewan.

But the events ignited flurries of activity among financial forecasters and on stock and commodity-futures exchanges. Benchmark oil sands grades of heavy bitumen and upgraded light synthetic crude gained about US$1 per bbl.

A widely favored projection and transaction prototype was also blamed for softening natural gas prices. The theory held that lost demand for fuel at thermal oil sands plants would worsen the shale supply glut on North American gas markets.

But most of the forest fire disruption was at the bitumen mines that use the least gas. The biggest gas consumers, “in-situ” underground extraction plants that use mammoth steam injections and webs of well bores, mostly lie far southeast of the blaze and continued to operate without interruption.

A less spectacular, but no less hazardous, forest fire in a British Columbia (BC) hotbed of natural gas production provided energy forecasters and traders with fuel for other market projections.

Fort St. John, BC’s gas operations capital beside the Alaska Highway, was partially evacuated briefly when a blaze approached its outskirts. Residents were allowed to return over the weekend but nearby communities farther out in the woods remained on alert, warned to be ready for evacuation on short notice.

Fire seasons, with evergreen tree forests set ablaze by lightning, are routine annual events in northern BC and Alberta, and have long been an employment mainstay for Aboriginal settlements and Metis colonies.

The 2016 difference has been an early warm spring, a prolonged dry spell and ignitions near populated areas. Veteran residents and meteorologists, citing cool temperatures and signs of rain Sunday, say it is too soon to tell how the rest of the season will shape up or whether the current fires are signs of a long-range climate change trend.

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