Alberta fires may cost producers $50mn/d

OREANDA-NEWS. May 13, 2016. Wildfires that swept through the heart of Canada's oil sands producing region may end up costing producers as much as \\$50mn per day in lost revenue, according to Goldman Sachs.

The fire, which started late last week, led to the shut-in of an estimated 1.2mn b/d, as producers at 11 oil sands plants suspended operations because of safety concerns, a lack of pipeline transport and diminishing diluent supply.

Production is starting to come back online as the fire continues to move away from Fort McMurray, Alberta, but as much as 14mn bl of production could have been lost over the past week, according to the investment bank.

Actual financial losses may be much less, however, since most major producers issued a force majeure, in which they argue circumstances out of their control led to them not being able to fulfill customer contracts.

The wildfire, which continues to rage out of control south and east of Fort McMurray, led to the largest evacuation in Canada's history. About 15pc of the city of 88,000 was damaged as "The Beast" swept through. Residents likely will not be allowed back for weeks as emergency crews assess the damage and return power, water and natural gas to the town. A shortage of workers will also impact the speed at which oil sands operations are able to restart.