The flames known as “The Beast” may have moved on from the Fort McMurray region, but a new wildfire is threatening oil sands productions in northern Alberta. Canadian oil producers Cenovus Energy and Canadian Natural Resources Ltd. have been forced to shutter, just as they were regaining lost output as a result of the last month’s fire, which cut an estimated 40% of oil production.
This new fire erupted about 30 kilometers (19 miles) northeast of Wabasca and covers an area of less than a square kilometer, Travis Fairweather, an Alberta Forestry spokesman, said in an interview to Bloomberg. The blaze was about 1 kilometer from the Cenovus facility with winds blowing it to the northeast, away from the site.
It’s the second time in as many months that the regions’ oil sands have been forced to close due to forest fire. In late May, the Horizon North Blacksands Executive Lodge burnt down, and a dozen other projects in the area were forced to evacuate.
The shutdown led to a 1.2-million barrel gap per day, costing Canada’s GDP roughty $985 million, and racking up losses for insurers and reinsurers. “At this time, the estimates of insured damages have been between $5 billion and $9 billion. Included in these estimates reflect insured physical damage to residential and commercial property and direct business interruption losses, except for those related to the oil industry,” said Hart Brown, Senior Vice President, Practice Leader, Organizational Resilience at Hub International Inc., in an interview with Insurance Business.
“This is the early part of the fire season,” John Auers, executive vice president at Turner Mason & Co. in Dallas, said to Bloomberg. “The last two winters have been pretty dry so these fires started earlier than normal.”
Cenovus is assessing the potential restart of Pelican Lake operations after the fire was brought under control and the threat was downgraded, the company said in an e-mail Wednesday afternoon, adding it planned to return 44 essential staff to the site by Wednesday evening.
A total of 28 fires were burning in Alberta Wednesday with five categorized as “out of control,” Fairweather said. Twenty-two of those fires broke out Tuesday, he said. The Fort McMurray blaze that started early last month and burned down entire neighborhoods of the city was about 5,820 square kilometers and burning in forests to the northeast of the town. That blaze is no longer threatening any population centers or industrial sites, he said.
Costs for reinsurers to balloon as oil sands set ablaze