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Works are returning to the Canadian oil sands as wildfires move away from production sites

The Alberta government lifted mandatory evacuation orders for the last of the oil sands accommodation and production sites Monday, beginning the process of inspections by forestry and health officials to make sure they are safe for workers to return. All of the oil sands facilities which were evacuated last week are being allowed to prepare for restart as cool, humid weather helps contain nearby wildfires.

The wildfires took more than 1 MMBOPD worth of production offline, and forced the evacuation of all 88,000 residents in Fort McMurray earlier this month. Last week’s evacuations of surrounding oil field sites saw another 8,000 people pulled from the area as fires turned back north toward oil sands production.

Alberta wildfire near oil sands


“From the southern facilities to Suncor and Syncrude, we continue to secure the sites,” Chad Morrison, an Alberta wildfire manager, said Tuesday during a briefing with reporters. The fire is largely moving north and east, away from the oil-sands operations, he said. “The prevailing winds will be pushing that fire, most of the time, away from those facilities and we continue to put thousands of resources on it to hold it.”

Suncor (Ticker: SU), Canada’s largest energy company, started mobilizing workers for a staged restart of its operations in the Regional Municipality of Wood Buffalo, according to a statement from the company. SU added in its statement that there was no damage to any of its assets. The company cleared three sites that account for the bulk of its upstream production: the base plant mine, MacKay River and Firebag facilities.

Royal Dutch Shell (Ticker: RDSA) has begun ramping up output at its Albian Sands mine. “While the wildfires are still continuing to burn in the region, we are now able also to safely and securely start the mine again,” Shell CEO Ben Van Beurden said Tuesday at the company’s annual meeting.

Syncrude, the joint venture controlled by Suncor, is making progress on a plan to return to operations and will be able to give an update later as to timing for production restart, Will Gibson, a Syncrude spokesman, told Bloomberg. The company had evacuated all but critical staff from its Mildred Lake and Aurora mines.

ConocoPhillips (Ticker: COP) is also beginning the process of bringing workers back to its oil sands operations. The company shut down production at its Surmont project south of Fort McMurray on May 5. The company expects roughly 350 people will be back on site by the end of the week. There is still no estimated date for a production restart on the 30 MBOPD project, however.

The Alberta wildfire lent support to crude oil prices over the last several weeks as the flames forced production to shut down. Unexpected production declines in other parts of the world have also helped to support oil prices, but as Alberta’s oil sand operators prepare to bring more than 1 MMBOPD of production back online, it remains unclear how oil prices might react. West Texas Intermediate and Brent Crude both neared $50 per barrel today as a larger than expected draw on crude inventories helped push crude prices higher.

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