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A fire fueled by shifting winds that forced more than 80,000
people to flee their homes and disrupted oil-sands operations in
Western Canada is poised to expand.

The fire will probably grow to about 100 square kilometers (40
square miles), from around 80 now, Chad Morrison, a wildfire
official, said Wednesday. Suncor Energy Inc., Royal Dutch Shell
Plc and Husky Energy Inc. are among companies reducing
production and opening work camps to residents fleeing blazes in
Alberta’s biggest-ever evacuation caused by a fire. Inter
Pipeline Ltd. shut part of its system in the province. No deaths
or injuries have been reported although 1,600 buildings have
been damaged.

Many residents of oil-sands hub Fort McMurray fled north to
nearby sites where companies are flying out workers and making
room for evacuees. Shell has shut its 255,000 barrel-a-day
Albian Sands mine and Suncor, Syncrude Canada Ltd. and Connacher
Oil & Gas Ltd. have also reduced output from the region. More
than 1 million barrels a day of oil sands production capacity
may be affected by the blaze, according to company statements
and data published in Alberta’s Spring Oil Sands Quarterly.

“My house and everything I own is gone,” Mike Marchand, a crane
operator for Suncor, said in a phone interview from Edmonton,
where he evacuated with his family after the trailer park where
he lives in Fort McMurray went up in flames. “I’ve never had
anything like this happen.”

The wildfire is the latest blow to a province already grappling
with the economic toll of a two-year oil price slump in one of
the world’s most expensive places to extract crude. More than
40,000 energy jobs have been lost in Canada since the price
crash began in 2014. Some 250 firefighters, 10 helicopters and
17 air tankers have been deployed to fight the blazes around
Fort McMurray, about 700 kilometers northeast of Calgary.

While lower temperatures may aid firefighters on Thursday, the
blaze is expected to last at least until the weekend, Morrison
said. The area will require years to recover, Scott Long, an
emergency official, told reporters. In the hardest-hit Fort
McMurray neighborhoods, between 50 percent and 90 percent of
homes have been lost, officials said.

Production Cuts
Suncor said it brought down its base plant while cutting output
from its Firebag and MacKay River oil sands operations. Husky
cut production at its Sunrise facility to 10,000 barrels a day
from 30,000 after Inter Pipeline shut a diluent line to the
plant, company Spokesman Mel Duvall said. Connacher cut about
4,000 barrels a day of output at its Great Divide project. Inter
Pipeline said it shut part of its Corridor and Polaris systems.

The annual wildfire season in Western Canada started early this
year after a dry winter and low spring rainfall. Officials have
yet to identify a direct cause for the inferno, which quickly
strengthened Tuesday afternoon and caught emergency responders
by surprise.

An out-of-control blaze in 2011 caused an estimated C$700
million ($544 million) in damage after burning 47 kilometers and
forcing some oil and gas operations to shut around Slave Lake,
also in northern Alberta. Oil sands operations belonging to
Canadian Natural Resources Ltd. and Cenovus Energy Inc. were
disrupted last year by a blaze near Cold Lake.

Unpredictable Fire
The current evacuation has been hindered by the unpredictability
of the fire, which on Tuesday afternoon breached Highway 63, the
main road in and out of Fort McMurray, south of the community.

Videos posted to Twitter as residents were trying to escape
showed vast tracks of trees being swallowed by fire along
Highway 63, the forest floor engulfed in flames and the sky
thick with smoke. Helicopters flew overhead on their way to
fight the fire.

Some who headed south to escape the blaze ran out of gasoline as
refueling stations along the road were emptied. Alberta’s
Transportation Department escorted a fuel tanker along the
highway to assist stranded motorists, according to a Wednesday
morning Twitter post. Imperial Oil Ltd. is also supplying fuel
to evacuees who fled north at the Wapasu Creek Lodge, which
normally houses oil-sands workers, the company said on Twitter.

Too Early
It’s too early to tally the damage, according to Premier Rachel
Notley. The evacuation is the largest ever for the province tied
to a fire, she said. The provincial cabinet has approved C$2
million in upfront funding for the Red Cross and will continue
to review further needs, she said.

“At this point the focus continues to be on the safety of the
residents,” Notley told reporters at a Wednesday morning
briefing in Edmonton. “Right now it’s people, then critical
infrastructure, then stopping the fire.”

Fort McMurray is at the heart of the Athabasca deposit, one of
three large bitumen reserves that make up Alberta’s oil sands
where companies produce about 2.5 million barrels a day. Oil-
sands crude prices rose after producers cut output.

The discount for Western Canadian Select, the heavy grade that
includes oil-sands bitumen, shrank relative to West Texas
Intermediate futures by 65 cents to $12.95 a barrel on
Wednesday, according to Calgary brokerage Net Energy. That’s the
smallest gap since March 1, data compiled by Bloomberg show.
Light synthetic crude, also produced from the oil sands, flipped
to a 75-cent premium to WTI from a five-cent discount yesterday,
according to Net Energy.

Canada’s Public Safety Minister Ralph Goodale pledged federal
support for Alberta, while the national government dispatches
military planes to the region. Fort McMurray faces a long road
ahead to rebuild, Goodale said at a briefing. “The recovery from
this situation is going to take a considerable amount of time.”

http://www.bloomberg.com/news/articles/2016-05-03/alberta-fires- force-evacuation-at-center-of-oil-sands-region

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