TORONTO (miningweekly.com) – Canadian oil sands producer Cenovus Energy has shut down its Pelican Lake operations, in Alberta, as a wildfire approached less than 1 km from the plant.

The Calgary, Alberta-based company said Wednesday that by 21:00 local time on Tuesday, it had safely evacuated 18 staff members to a temporary evacuation centre in Wabasca.

All nonessential staff had since been sent home, while essential workers remained on standby in Wabasca and a small group of six staff returned to site Wednesday morning to inspect the facilities from a safe location, the company advised.

The wildfire was currently estimated to be about 90 ha in size.

Emergency responders from Alberta Agriculture and Forestry were fighting the wildfire and Cenovus stated that it would continue to work with them to determine when it was safe to return to site.

The Pelican Lake facilities, located about 300 km north of Edmonton and 27 km south-west of the hamlet of Wabasca, produced just under 23 000 bbl/d of heavy oil in the first quarter.

As of Tuesday, no damage was reported to its facilities, but the company advised early on Wednesday that the location of the fire was unknown.

SUPPLY DISRUPTION
While evacuees from the ongoing fires in Fort McMurray had started to return to the city, a state of emergency remained in place throughout Alberta, and the temporary shutdown of the area's oil sands production sites continued.

The US Energy Information Administration (EIA) on Wednesday published a report estimating that disruptions to oil production averaged about 800 000 bbl/d in May, with a daily peak of more than 1.1-million barrels a day. It noted that, despite projects slowly restarting as fires subsided, it could take weeks for production to return to previous levels.

The EIA forecast disruptions to average 400 000 bbl/d in June.

Canada is the largest oil exporter to the US, and the supply disruptions, coupled with supply disruptions elsewhere in the world and increased demand from China, had pushed the West Texas Intermediate benchmark above $51/bl on Wednesday for the first time since July.

According to the authors of the EIA’s ‘Today in Energy’ brief, Laura Singer and Alex Wood, the Fort McMurray wildfires had not significantly affected the regional crude oil price, Western Canadian Select (WCS). The price difference between WCS and the global crude oil benchmark Brent had narrowed slightly since the fires began, but WCS still remained at least $10/bl less than Brent.

The effect of the fire was most likely moderated by high inventories of crude oil in both the US and Canada, the analysts argued, despite crude oil imports from Canada having fallen, but to a lesser extent compared with the oil sands production outage.

CHEAP GAS
Meanwhile, the EIA advised that the oil production outages caused by the Fort McMurray fires had also led to decreased natural gas consumption and record-low Canadian natural gas prices.

The analysts advised that Canadian spot gas prices rose in the early days of the fires early in May, but pointed to media reports estimating consumption of natural gas in Alberta to have fallen by close to 25% in the immediate aftermath of the fires, pushing prices to record lows.

At the AECO trading point (the over-the-counter trading point in Alberta), a pricing hub for spot natural gas markets in Canada, prices dropped to $0.55 per million British thermal units (BTU), their lowest price in the 14-year available history. Prices at AECO had been relatively low before the fires, due in part to high storage levels in the US and Canada. According to some industry analysts, natural gas storage in Alberta was nearing capacity and could be full within the next few months, the EIA reported.