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Alberta Wildfires Wane as Winds Ease, Lessening Risks to Oil Production

19 May 2011

published by www.bloomberg.com

Canada — Firefighters may begin to gain the upper hand over Alberta’s wildfires as winds ease and humidity rises, lessening the risk to crude production sites, said a spokesman from Alberta Sustainable Resource Development.

Wind speeds have fallen from a peak of almost 100 kilometers (62 miles) an hour on May 15 when fires forced the evacuation of all 7,000 inhabitants of the town of Slave Lake, Dave Ealey, a spokesman for the Alberta ministry, said yesterday. About 1,000 firefighters were deployed across the northern half of the province.

Strong winds and a lack of moisture at a time of year when trees haven’t started to draw water into their stems facilitated fires that have burnt more than double the area damaged in 2010, Ealey said. Canadian Natural Resources Ltd. (CNQ), Cenovus Energy Inc. (CVE) and other oil producers either cut or said they may cut output as the fire disrupts repair work on one of the main pipelines in the region.

Slave Lake’s temperature was 17 degrees Celsius (63 Fahrenheit) with winds blowing at 4 miles an hour and a 60 percent chance of precipitation at 10:46 a.m. local time, according to Weather Underground, a private forecaster based in Ann Arbor, Michigan.

Eight new fires were reported in the past 24 hours and 19 wildfires are listed as “out of control,” according to the ministry website.

Cenovus Production

Cenovus today shut production of 22,000 barrels a day at its Pelican Lake oil-sands project, Rhona DelFrari, a spokeswoman for the Calgary-based company, said in an e-mail. Cenovus has been storing oil in tanks at the site since May 15, when a pipeline was shut. The company will conduct maintenance at Pelican Lake until shipments on Rainbow resume.

Canadian Natural Resources may have to shut production of 40,000 barrels a day at its Pelican Lake oil project if the pipeline doesn’t reopen, the Calgary-based company said in a May 17 statement.

Small producers like Calgary-based Exall Energy Corp. (EE) have also turned off wells. Exall said in a May 16 statement that it shut 921 barrels a day of output because of the fires and mandatory evacuation orders in the town of Slave Lake.

Royal Dutch Shell Plc (RDSA) is limiting nonessential staff at its Albian Sands site north of Fort McMurray because of smoke from the fires, the company said today. Production isn’t affected.

‘Rounding Error’

“This is a tiny volume of oil relative to what’s basically an 88 million-barrel-a-day global market,” said Tim Evans, an energy analyst at CitiFutures Perspectives in New York. “Certainly it’s a significant development for those living in Alberta, but more of a rounding error when it comes to global oil supply.”

Fires forced Plains All American Pipeline LP (PAA) to stop cleanup work from an earlier oil spill and shut down its Rainbow pipeline system on May 15.

The northern portion of the 772-kilometer Rainbow pipeline was closed after an April 29 leak of 28,000 barrels of oil. Fires forced evacuation of the cleanup site and closure of the southern portion. The system carried an average of 187,000 barrels a day in 2010, according to the company.

Alberta’s Energy Resources Conservation Board said on May 17 it won’t allow Plains to restart the Rainbow line until further inspection is done.

Syncrude Evacuations

Wildfires have destroyed 186,000 hectares (460,000 acres) this year, said Ealey, the Alberta government spokesman.

Syncrude Canada Ltd., the biggest oil-sands miner, is evacuating nonessential personnel from its Aurora project in northeastern Alberta because smoke from the fires is causing air-quality and visibility concerns, said Alison Trollope, a spokeswoman for Canadian Oil Sands Ltd., owner of the largest stake in Syncrude.

“The facilities are not at risk” and production of bitumen from the sandy deposits continues, Trollope said yesterday.


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