Fort McMurray fires cut Canada's Oil sands production
Commodity Online | June 08 2016
UPDATED 19:00:02 IST

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While evacuees from the ongoing fires in Fort McMurray have begun to return to the city, a state of emergency remains in place throughout Alberta, Canada, and the temporary shutdown of the area's oil sands production sites continues, EIA reported today.

EIA estimates that disruptions to oil production averaged about 0.8 million barrels per day (b/d) in May, with a daily peak of more than 1.1 million b/d. Although projects are slowly restarting as fires subside, it may take weeks for production to return to previous levels. EIA expects disruptions to average 400,000 b/d in June.

The oil sands facilities are located mostly to the north of the fires and initially were not physically threatened by the fires. However, as winds pushed the fires northward, oil sands facilities and work camps had to be evacuated. Oil sands production companies operating near Fort McMurray either shut down completely or operated at reduced rates.

Although the fires have not been contained, they have moved away from Fort McMurray, but dangerous air quality conditions at facilities and surrounding towns have slowed the return of workers. As conditions improve, facilities located farther north of Fort McMurray have begun to restart production, although not at full capacity.

Local pipeline capacity was also shut down in response to the fire, reducing crude oil takeaway capacity. Oil sands production yields very thick crude oil that often requires liquid diluent such as natural gas condensates to reduce viscosity so that the crude oil can flow in pipelines. Because this diluent is delivered to the production area by pipeline, the pipeline shutdowns also affected this diluent supply.
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