Canada’s oil sands cuts production as wildfire forces mass evacuation

The entire population of Fort McMurray, the heart of Alberta’s oil sands region, had to evacuate on Tuesday night as a wildfire raged unchecked through the city and cut off its only highway link to the south.

Photos and videos showed flames and smoke rising hundreds of feet into the sky, prompting the largest fire evacuation in Alberta’s history, according to the province’s Premier Rachel Notley. The fire was expected to get worse on Wednesday, when winds are forecast to switch direction and increase in speed.

Oil sands producers, whose operations are mostly located in the north, far from the blaze, have begun sheltering about 80,000 who fled their homes overnight as the provincial government declared the fire “out of control.”

Suncor Energy (TSE, NYSE:SU), Canada’s largest crude producer, said it is reducing output at its operations in the region to allow workers and their families to get to safety and use the company’s facilities if needed.

Shell Canada said it would open its oil sands camp to evacuees and was looking to use its airstrip to fly out non-essential staff and accommodate displaced residents.

Representatives of Syncrude, CNOOC subsidiary Nexen Energy (TSE, NYSE:NXY) and pipeline company Enbridge (TSE, NYSE:ENB) all said their operations were unaffected.

The current fire is the latest blow to a community already hit by slumping oil prices that have forced producers to halt projects and lay off hundreds.

It is also the second major wildfire in the oil sands region in less than a year. Last May, wildfires led to the evacuation of hundreds of workers, and a 9% cut in Alberta's oil sands output as Cenovus Energy (TSE, NYSE:CVE) and Canadian Natural Resources Ltd (TSE:CNQ) called shutdowns at some of their projects.

Residents of Fort McMurray flee southbound on Highway 63 Tuesday evening. (Image from CTV News video, via YouTube)

Fort McMurray is home to the world’s largest single oil deposit, containing an estimated 174 trillion barrels of bitumen, the core raw material in the production of synthetic crude oil.

 

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