Oil and gas producers take precautions as wildfires rage

CALGARY – Forest fires in northern Alberta continued to rage out of control, forcing oil and gas producers to shut down operations as smoke and flames spread across the province.

Companies evacuated workers and closed heavy oil facilities, pipelines and processing plants in north-central and northeastern Alberta as emergency teams battled fires which had spread across more than 30,000 hectares by Monday, fuelled by strong winds over the weekend.

Canadian Natural Resources pulled 1,300 workers from two campsites associated with its Horizon oilsands project outside of Fort McMurray as flames burned within 150 metres of one of its lodges.

"We have no actual fire on our site per se, it’s still a ways away, but we’re just taking precautionary measures," vice-chair John Langille said.

Operations at Canadian Natural’s Horizon oilsands project have been at a virtual standstill since an explosion ripped through its upgrader in January, injuring five workers.

Repairs to the mine’s upgrader, non-operational since January, have been delayed because of Monday’s evacuation, but Langille said the company still was scheduling to commission the first coker units by mid-June.

"It depends how long we’re in this situation," he said. "If it’s only one day, then I expect (the delay) to be very minimal."

Market sources said the situation had yet to move prices for Canadian heavy crude, but cautioned that lengthy outages could tighten supplies. The danger of oil-related infrastructure catching fire likely is minimal because it sits in cleared areas, but outages don’t help the bottom line, noted UBS analyst Chad Friess.

"The principal risk is that they are shut down and can’t produce the oil they normally do," Friess said. "It could impact pricing and result in premium prices for certain products."

Cenovus Energy Inc. said it was ready to halt operations at its 22,000 barrel a day Pelican Lake heavy oilfield, 300 kilometres north of Edmonton.

"Our facilities aren’t in jeopardy from the fires, but right now the Rainbow Pipeline is shut down," spokeswoman Rhona DelFrari told Reuters.

Cenovus has enough storage capacity to keep pumping crude until Tuesday, she said.

The fires forced the closure of the southern leg of Plains All American Pipeline LP’s Rainbow Pipeline from the Nipisi terminal, 80 kilometres northwest of Slave Lake, on Sunday. The northern leg, running to Nipisi from Zama in northwest Alberta, was shut due to a 28,000 bpd oil spill on April 29.

Spill cleanup was suspended on the weekend as the fire threat forced workers to flee the area.

Penn West Exploration said Monday it had suspended heavy oil operations in the South Swan Hills and Red Earth areas of north-central Alberta.

"We are monitoring the spread of the fire and the potential for additional production shut-ins," the company said in a statement.

The company has had to shut in 35,000 barrels per day and 40,000 bpd, or approximately 20 per cent of its production, primarily because of the forest fires in Alberta but also due to flooding in neighbouring Saskatchewan and Manitoba.

Oilsands giant Suncor Energy said activities at is facilities were unabated.

"So far, there has been no impact to our (operations) but we continue to monitor the situation closely," said spokesman Dany Laferriere.

Royal Dutch Shell Canada also said its oilsands operations at Muskeg River had not been affected by the fires.

"All of our operations have emergency response plans in place should they be required," said spokesman Stephan Doolan in an email.

ATCO Electric and Gas, which services most of northern Alberta, said power to the most affected areas was shut down.

"The fires obviously have had quite an impact on the community of Slave Lake and a number of the smaller communities there, as well as a lot of the area that we serve for the oilfield and larger industrial customers," said Bobbi Lambright, president of operations with ATCO Electric.

Electrical and gas services to the town and evacuated communities have been shut down, and the company is on standby to go back in once the fires were under control, she said.

Oil and gas drilling activities were already slowed by spring break, said Gene Stahl, president of drilling operations for Precision Drilling.

The oil and gas drilling and service giant had been on alert since Saturday, and had evacuated two crews from the area.

As of Monday, 113 wildfires were burning in Alberta, 34 of them out of control, the provincial government said. A total of 557 square kilometres had been burned.

Calgary Herald