Fort McMurray fire destroys oilsands camp, forces evacuation of thousands of workers as blaze continues to grow

Tar Sands Fort McMurray fire black-sands

This photo of Blacksand Executive Lodge was taken by a CBC News contact around 6 a.m. Tuesday morning. (Name withheld by request)

by Geoffrey Morgan, Financial Post, May 17, 2016

CALGARY – The out-of-control wildfires in northern Alberta have forced a new wave of evacuations, by ground and by air, and delayed plans to restart oilsands productions at some projects, dealing another setback to the already hard-hit sector.

Suncor Energy Inc. spokesperson Sneh Seetal confirmed the company had begun airlifting employees to safety Tuesday after the fire had changed course Monday night, moved northward and forced the evacuation of its facilities and surrounding camps.

Hot, dry conditions and winds pushed the fire toward Suncor and Syncrdue Canada Ltd. oilsands projects over the course of Monday night and Tuesday morning, leading to the evacuation of 8,000 workers in camps between Fort McMurray and Fort McKay.

 The fire destroyed one of those evacuated camps, owned by Horizon North Logistics Ltd., on Tuesday morning and put two others at risk.

“My expectation is there is very little there to be salvaged,” Horizon North president and CEO Rod Graham said, adding that the company plans to re-build the burned camp because it close to, and well-used by, Suncor and Syncrude.

Alberta Wildfire senior manager Chad Morrison told a press conference the fire would move closer to both of those companies’ sites over the course of the day Tuesday. But he added: “We feel confident that these sites will be OK.”

Tar Sands Ft McMurray fire mapThe companies in the area have cleared large swaths of land that will function as fire breaks, preventing the flames from reaching multi-billion-dollar upgrading and processing facilities, Morrison said.

Syncrude spokesperson Will Gibson said his company had evacuated staff to Edmonton on Monday night and did not have a timeline for sending employees back up to the projects until emergency managers had decided it was safe to do so.

Shutdowns in the region knocked an estimated 1.2 million barrels of oil production per day offline, causing the companies to forfeit roughly $70 million a day in lost revenues.

Work had been underway to restart production, but the renewed fire threat will delay restarts for Suncor, Syncrude and Husky Energy Inc., which are all shutdown. The fire also threatened Enbridge Inc.’s Cheecham oil storage terminal in the area, but had not damaged it on Tuesday.

A report Tuesday from the Conference Board of Canada estimated that if the fires knock 1.2 million barrels of oil production off-line for two weeks, $985 million of real gross domestic product be lost.

Pedro Antunes, the Conference Board’s chief economist, told The Canadian Press the latest evacuations could cause another week of outages but are unlikely to lead to shutdowns of a month or more.

Last week, executives from oilsands companies met with Alberta Premier Rachel Notley about timelines for re-starting their facilities.

Notley said the fire’s rapid growth and volatility made it difficult to predict when oilsands production might resume.

“It’s still a bit of a moving target, but those numbers are in the range of things that we’ve seen,” Notley said of the Conference Board’s report. “The actual numbers? It’s too early to tell.”

The still-growing fire could also delay plans to re-enter the Regional Municipality of Wood Buffalo, which includes Fort McMurray and surrounding towns.

“The Government of Alberta has been discussing a re-entry plan with the Municipality of Wood Buffalo. Obviously, yesterday’s events have caused us to take a second look at those plans,” Notley said.

Some oilsands companies further north from the fire than Suncor and Syncrude have begun ramping production back up following last week’s meeting with Notley.

“We do have plans in place to move people out of the area (if the situation worsens),” Shell Canada spokesperson Cameron Yost said Tuesday. He said the company is currently operating at reduced rates but would evacuate if the fire approached or if air quality worsened.

To the northwest of Shell’s mines, Canadian Natural Resources Ltd. said in a statement that the fire posed no threat to the health or safety of the company’s personnel, but it would take immediate action and evacuate if conditions change.

The fire was expected to move eastward to the Saskatchewan border over the course of Tuesday.

Posted on May 17, 2016, in Oil & Gas and tagged , , , , . Bookmark the permalink. 1 Comment.

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