Canadian Wildfires Slow Their Spread as Workers Reach Safety – Wall Street Journal

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Members of the Alberta Royal Canadian Mounted Police monitored the Fort McMurray wildfire, on May 7. The fires had been expected to double in size over the weekend, but officials said that as of Sunday morning, the blazes covered close to 400,000 acres, about 100,000 fewer acres than expected.


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Members of the Alberta Royal Canadian Mounted Police monitored the Fort McMurray wildfire, on May 7. The fires had been expected to double in size over the weekend, but officials said that as of Sunday morning, the blazes covered close to 400,000 acres, about 100,000 fewer acres than expected.


Photo:

RCMP ALBERTA/AGENCE FRANCE-PRESSE/GETTY IMAGES

By

Ben Dummett and

Chester Dawson

May 8, 2016 7:45 p.m. ET

CALGARY, Alberta—Cooler temperatures on Sunday helped slow the spread of wildfires that ravaged the hub of Canada’s oil sands, as the last of 25,000 evacuees from work camps around Fort McMurray found their way to safety while the toll on Alberta’s energy industry mounted.

The fires had been expected to double in size over the weekend, but officials said that as of Sunday morning, the blazes covered close to 400,000 acres, about 100,000 fewer acres than expected. The fires continue to move east and away from populated areas, with its edge approaching Alberta’s border with Saskatchewan.

“We still have a lot of work ahead of us in the forested area,” said Chad Morrison, a senior manager at Alberta Wildfire Prevention.

Two people died in car accidents during the dayslong evacuations. During that process, some 25,000 people had initially fled to worker camps north of Fort McMurray, when 80,000 people were ordered to leave the burning town on Tuesday in one of the most far-reaching disasters in recent Canadian history.

Alberta Premier Rachel Notley confirmed the deaths on Sunday, saying the evacuations, mostly by highway convoys, had been completed.

“The fire is very dangerous and the end is not in sight,” Ralph Goodale, Canada’s public-safety minister, said on Sunday on CTV Question Period, a Canadian news program.

Although officials say it is too early to accurately estimate the fire’s economic toll, Mr. Goodale estimated that the cost would likely “far exceed” six billion Canadian dollars (US$4.65 billion). That accounts for the physical damage, the cost to fight the fires and the shutdown of a good chunk of the oil-sands production as a precautionary measure, Mr. Goodale said.

Officials maintain that the fire has so far not damaged any of the province’s oil-sands operations, and companies say they have cut or halted production to evacuate workers as a safety precaution and to cope with supply disruptions or smoke that has interfered with operations.

At least 645,000 barrels a day of oil-sands output, or more than a quarter of Canada’s total 2.5 million barrels a day in oil-sands production, have been sidelined, based on public announcements.

But the true figure may be close to one million barrels a day of production because two of the largest operators haven’t specified the extent of their production losses due to the fire fallout.

Syncrude Canada Ltd. evacuated 1,500 workers on Saturday and shut production at its Mildred Lake and Aurora facilities north of Fort McMurray to guard against the encroaching blaze.

“There is no imminent threat from the fire. However, smoke has reached [the] Mildred Lake site,” Syncrude said.

To protect against the incursion of the fires, Suncor Energy Inc.,
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which shut its oil-sands sites last week, has started building fire breaks around its facilities.

“Significant progress in a limited time was made on enhancing fire protection,” said Mark Little, the company’s executive vice president in charge of oil sands.

Suncor and other companies have indicated they expect to ramp up production as soon as the immediate danger recedes. But that may prove to be a daunting task, as operators face long-term issues such as potential damage to idled reservoirs and worker housing shortages.

“I’m not going back, not for a while,” said Terry Fleming, 36, a Syncrude employee who came to Fort McMurray 14 years ago from Newfoundland.

Standing outside an evacuation center in Edmonton on Friday, Mr. Fleming said he was forced to flee his home last week and shared a bed with his wife and two young children at a company work camp north of Fort McMurray; they were then evacuated south later in the week.

Mr. Fleming said he won’t return to work even if asked until he finds a place for his family to stay, which he expects to take weeks, adding that they left Fort McMurray so suddenly they didn’t even pack spare clothes.

Longer-established oil-sands mines have favored local residents, many who live in and around Fort McMurray, over temporary workers, while newer mines and more remote oil-sands well-site operations increasingly have built airstrips to accommodate a transient workforce.

Companies that rely on so-called fly-in fly-out, or FIFO, workforces may be better positioned to restart production sooner than those who rely on local workers.

Some 43,000 transient workers living in remote work camps make up a group equal to half the size of Fort McMurray’s permanent resident population.

In recent months as they cut costs because of the oil price collapse, oil-sands producers had reduced the number of transient workers, who require constant flights in and out of work camps, as they cut costs to cope with a decline in oil prices. The practice is widely considered a perk to attract and retain workers, and when oil prices surged in recent years extended flight service to destinations in British Columbia and Eastern Canada.

The loss of oil-sands output, a key engine of the Canadian economy is expected to damp the country’s economic growth in the second quarter, and worsen a downturn from low oil prices that already has led to large job cuts and lost production.

“We are looking at ways we could safely resume some of our mining operations. However, it’s too soon to say when this could happen,” said Zoe Yujnovich, Shell’s executive vice president of oil sands.

Write to Ben Dummett at ben.dummett@wsj.com and Chester Dawson at chester.dawson@wsj.com

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