The FINANCIAL - Canadian Oil Sands Resume Output

Canadian Oil Sands Resume Output

Canadian Oil Sands Resume Output

The FINANCIAL -- Two major Canadian oil sands operators said on June 8 they have resumed output at sites that had been shut down by a more than two-week old wildfire in northern Alberta, which exports much of its crude oil production to the U.S.

The blaze had shut-in nearly 10% of Canada's oil sands output, or about 233,000 barrels a day, since it was first detected on May 22, according to Nasdaq.

Canadian Natural Resources Ltd. said it expects to resume full production later this week at its 80,000 barrel-per-day Primrose site, which had been evacuated and shut down, and its 30,000 barrel-a-day Kirby South operation, which was forced to cut output due to the temporary closure of a pipeline.

Cenovus Energy Inc. said it began ramping up production at its 135,000 barrel-per-day Foster Creek site over the weekend, but didn't provide an estimate for when output levels would return to normal.

Both companies' operations are located in the Cold Lake region, which is about 300 kilometers (186 miles) northeast of the provincial capital of Edmonton.

The oil sands wells are protected by nonflammable berms, but they were affected by the precautionary closure of the sole access road into the area, which is located on the grounds of a Canadian military training facility.

"The access road is no longer as threatened as it was previously," said Alberta Agriculture and Forestry spokesman Geoffrey Driscoll, who added the Cold Lake wildfire is about 60% contained but still classified as out of control.

About 343 firefighters are involved in efforts to douse or control 36 wildfires in northern Alberta, four of which remain uncontrolled as of Monday, Mr. Driscoll said.

Last week, some 1,400 firefighters were engaged at one point across the province and the Cold Lake fire alone engulfed nearly 80,000 acres.

About two-thirds of Canadian oil production—most of which is from Alberta's oil sands deposits—is exported to the U.S. The wildfire-induced drop in output has eased pipeline capacity constraints and helped narrow a price gap between West Texas Intermediate and cheaper Western Canadian Select crude oils.

The affected Canadian Natural and Cenovus production sites are located on the Cold Lake Air Weapons Range, a 7,208- square-mile restricted access facility that straddles the Alberta-Saskatchewan border. The Royal Canadian Air Force describes Clawr as home to "the only tactical bombing range in Canada."


Author: Temur Tatishvili