CALGARY – Several major Canadian oil producers are slowing output in northern Alberta and may have to halt it completely as unpredictable wildfires continued to burn across the region.
Canadian Natural Resources Ltd. (TSX:CNQ) and Cenovus Energy Inc. (TSX:CVE) both say the flames were not posing a risk to their facilities at Pelican Lake, about 90 kilometres northeast of the devastated town of Slave Lake, Alta.
However, the oil they produce has nowhere to go. Electricity is out in much of the region and that means pumps along a nearby pipeline aren’t working. The companies have been putting their oil into storage tanks, but those are quickly filling up.
"Right now we’re slowing down, but we’re not shut in at Pelican," Canadian Natural chief operating officer Steve Laut told reporters Tuesday at the company’s investor open house.
"Probably in the next day or so, Pelican will be shut down unless the pipeline starts back up again and starts pumping."
Canadian Natural produces about 40,000 barrels a day at Pelican Lake. Laut said it will be relatively simple to restart production once the situation improves.
Cenovus has slowed its production from Pelican Lake to about 11,000 barrels per day, about half what it would be normally, spokeswoman Rhona DelFrari said in an email.
If Cenovus keeps producing at that rate, it expects its storage tanks to be full early Thursday, though it could decide to slow production even more.
The affected pipeline is Plains Midstream Canada’s Rainbow system. Another portion of the line broke last month, spilling 28,000 barrels of crude. The wildfires have hampered cleanup efforts there.
The pipeline outage has also forced Shell Canada Ltd. to shut in production from its Cliffdale and Seal oil fields in northern Alberta, said company spokesman Stephen Doolan.
The fires have not had a direct impact on its Albian Sands oilsands mining operations north of Fort McMurray, Alta., though the company is monitoring the situation, Doolan added.
As of Tuesday morning, there were 100 wildfires in Alberta, 23 of which were out of control. The blazes have burned some 105,000 hectares of land.
In the Lesser Slave Lake area alone, about 15 fires were burning out of control. Penn West Exploration (TSX:PWT) and Exall Energy Corp. (TSX:EE) have shut down production in that region.
The fires were also causing problems near Canadian Natural’s Horizon mine north of Fort McMurray, Alta.
Flames came close to a work camp on Monday, but on Tuesday that danger had largely passed. Two lodges have been evacuated and the 1,300 workers who live there have not yet been cleared to return.
The company was also working to keep embers away from blocks of sulphur, which are a byproduct of the oilsands extraction process. Laut said that material is flammable and could release harmful emissions if it burns.
Canadian Natural is in the process of rebuilding part of an upgrader that was badly damaged in a fire in January and production at Horizon isn’t expected to start up until next month.
"Obviously we haven’t done anything yesterday, and I don’t know if we’re doing anything today, mainly because there’s a lot of smoke going through there," Laut said Tuesday. "You don’t want to take a safety risk."
Oilpatch companies, meanwhile, were also working to help communities hit by the disaster.
Cenovus is donating $50,000 to the Canadian Red Cross and will match employee donations dollar-for-dollar up to $25,000 per employee.
Calgary-based investment dealer FirstEnergy Capital is donating all commissions it earns on Thursday to the Canadian Red Cross.
"It’s the people in communities like Slave Lake who drill the wells and drive the trucks for companies that FirstEnergy finances," says chief executive officer Jim Davidson.
"The entire town has been evacuated, with stories of people fleeing with nothing but the clothes on their backs."
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