(Calgary) Some Alberta oil and natural gas producers are temporarily halting production as more than 100 wildfires rage in the energy-producing province.
With the establishment of a provincial state of emergency, oil and gas companies active in the west and northwest of the province have evacuated their workers and halted operations.
Crescent Point Energy, which has significant operations in the Kaybob Duvernay light oil field, said Monday it has temporarily halted production by the equivalent of about 45,000 barrels of oil per day from the affected areas.
“This precautionary measure is taken by the company to protect the safety of its personnel, the community, the environment and its assets,” Crescent Point explained in a press release.
Vermilion Energy said it had temporarily halted production of the equivalent of about 30,000 barrels of oil per day, while Paramount Resources said Sunday that its operations in the Grande Prairie and Kaybob areas of Alberta were affected and that it had temporarily cut production by the equivalent of about 50,000 barrels of oil per day.
Tourmaline Oil, Canada’s largest natural gas producer, said Monday that its staff and their families have been safely evacuated from some facilities and homes in the Edson area. Tourmaline has closed nine natural gas processing facilities in the region.
Cenovus Energy said in an email that it had safely halted production and closed plants in parts of its conventional business.
Pipeline operator TC Energy said it closed two compressor stations on its Nova Gas Transmission system, while Trans Mountain Corporation deployed a perimeter sprinkler system at its Edson pump station as a protective measure.
The Trans Mountain pipeline itself and its expansion project, currently under construction, were not affected.
The wildfire situation in Alberta is changing rapidly and there are no official estimates of the volume of the oil and natural gas production cut, observed Rory Johnston, a Toronto-based energy analyst and founder of the Commodity Context newsletter.
While the number may already be as high as the equivalent of 185,000 barrels of oil per day, Johnston pointed out, that’s a much smaller impact than that felt during the Fort fire. McMurray in 2016.
This event resulted in a temporary 14% drop in crude oil exports from Alberta, as oil sands facilities had to be taken out of service and not fully restored for several months.
According to the Canada Energy Regulator, the Fort McMurray wildfire in May 2016 caused oil sands production losses that could reach one million barrels per day at the height of the disaster.
“So far this is considered temporary – this is not a rerun from 2016,” Johnston said. But it is very dry, and there are forest fires everywhere. Nothing says it won’t get worse. »
Johnston added that he believes wildfires are becoming a significant risk to Canada’s oil and natural gas sector.
“Particularly as the oil industry continues to grow, so that it covers an ever wider area, and wildfire activity continues to increase,” he pointed out.
“I think some of that will be an ongoing risk to Canadian industry. »
Other companies that halted production included Pipestone Energy, which temporarily cut approximately 20,000 barrels per day of output in the Grande Prairie region, and Kiwetinohk Energy, which halted the majority of its operations in Placid. “in response to downstream third-party interruptions”, which are in the vicinity of wildfires.
Most of the companies affected have not reported any damage to their infrastructure or assets so far.
Vermilion Energy said its assessment to date indicated “minimal” damage to its key infrastructure.
It is unclear when oil and gas companies will be able to resume operations in the affected areas. Scotiabank analyst Jason Bouver told clients in a note on Monday morning that Crescent Point alone could see its cash flow per share in 2023 decline by around 4% due to the effects fires, assuming the company’s production at Kaybob Duvernay is halted for the remainder of the second quarter.
Approximately 29,000 people have been evacuated due to wildfires in Alberta.
Alberta Premier Danielle Smith declared a province-wide state of emergency on Saturday.
