Canadian Oil Production at Risk as MEG Energy Evacuates Workers Due to Wildfires
Wildfires in Alberta Threaten Significant Oil Output, Prompting Worker Evacuations by MEG Energy
A resurgence of wildfires in Alberta is endangering up to half a million barrels per day of oil production, with MEG Energy Corp being the latest company to evacuate its workers.
According to a report by Rystad Energy on Thursday, around 500,000 barrels per day of marketable oil sands production are within 10 kilometers (6.2 miles) of an uncontrolled blaze. This amount represents roughly 10% of the province’s total oil output. Additionally, up to 1.2 million barrels per day could be within 20 kilometers of the fires.
The province, which holds the world’s third-largest crude reserves, is currently battling 133 wildfires, 52 of which are categorized as out of control due to hot, dry weather. These fires have contributed to a rise in the premium for the US benchmark West Texas Intermediate’s front-month futures over the next contract, a crucial US crude spread that indicates short-term market tightness.
MEG Energy has started evacuating non-essential workers from its Christina Lake oil sands site, which produced almost 100,000 barrels per day of crude in May, according to data from the Alberta Energy Regulator. As of early Thursday, production had not been reduced.
Other companies have also been impacted by the wildfires. Suncor Energy Inc. has curtailed production at its Firebag facility, which produced about 231,000 barrels per day in May. Greenfire Resources Ltd. reduced output from its two oil sands facilities over the weekend but began restoring production by Monday. Similarly, Imperial Oil Ltd. has evacuated non-essential workers from its Kearl oil sands mine, located west of the same fire affecting Suncor.
Gas production is also at risk, with wildfires within 10 kilometers of approximately 26,000 barrels of oil equivalent of production in the western part of the province. Tourmaline Oil Corp., Canada’s largest gas producer, reported having about 2,620 barrels of oil equivalent per day of output near a fire, though production remains unaffected. Peyto Exploration and Development Corp., another gas producer, stated there were “no material impacts” from the fires but continues to monitor the situation closely.
