Wildfires blazing in the heart of Canada’s oil sands region have knocked out up to one-third of the country’s daily crude capacity, helping erode some of the global oil glut.
Oil sands producers shuttered at least 690,000 barrels per day of capacity as fires in Fort McMurray, Alberta, forced tens of thousands of residents to evacuate their homes, Reuters reported Friday. While oil sands facilities are not directly in the fire’s path, several energy companies and two pipeline operations have curbed production to allow workers and their families to move to safety.
The Reuters estimate doesn’t include the unspecified output reductions from the joint venture Syncrude Canada or some other decreases, meaning the total is likely higher. Royal Bank of Canada has estimated as many as 1 million barrels a day of production — or about 40 percent of oil sands output — was shut due to the blaze.
Alberta, in western Canada, accounts for roughly 80 percent of Canadian oil production. Much of the province’s crude is produced through mining or melting tarry, viscous bitumen crude from the oil sands formations.
The drop in oil sands production this week is one of several global supply disruptions that are erasing some of the oversupply in crude. Instability in Venezuela, China’s sluggish economy and idling U.S. fracking operations have also tightened the oil market, helping to boost prices from their February lows of less than $30 a barrel.
West Texas Intermediate, the U.S. oil benchmark, was down about 1 percent to $43.84 a barrel at 8:50 a.m. EDT. Brent crude, the global oil price gauge, was down about 1.2 percent to $44.45 a barrel.
In Canada this week, Royal Dutch Shell said it shut down production at its Albian Sands mining operations to focus on helping families evacuate from the region. Production capacity from Shell’s two oil sands mines, Muskeg River Mine and Jackpine Mine, is 225,000 barrels per day, the company confirmed.
“Efforts to maintain necessary operations at site are ongoing, and staff are actively monitoring the fires,” Cameron Yost, a spokesman for Shell Canada, said via email. “Shell staff continue to respond to wildfires in Fort McMurray providing support for our people, their loved ones and others in the area.”
Suncor Energy Inc., a top Canadian oil producer, said it had closed its main mining site along with its MacKay River and Firebag thermal oil sands operations. The company said it expects to return promptly to full production and is well into its restart planning, Reuters reported.
Other oil companies that have reduced production include Imperial Oil, Athabasca Oil Corp., Statoil ASA, ConocoPhillips, Husky Energy and the China National Offshore Oil Corp. subsidiary Nexen Energy.