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Wildfire's return stalls recovery plans for Fort McMurray oilsands industry

Last Updated May 17, 2016 at 6:01 pm EDT

CALGARY – Plans to quickly restart oilsands production in northern Alberta were turned upside down Tuesday after the Fort McMurray wildfire erupted with renewed vengeance, forcing thousands of workers to scramble to safety.

Oilsands miners had been gradually returning staff to the area to begin the process of resuming production at facilities undamaged by fire but shut down because of the threat.

However, a change in wind direction sent the rapidly moving blaze north toward oilsands projects Monday afternoon, forcing the evacuation of about 8,000 workers from more than a dozen work camps, according to provincial officials.

Brion Energy, a company owned by Chinese giant PetroChina, said it evacuated 106 people from two work camps at the construction site of its MacKay River thermal oilsands project.

The company had reduced its workforce from about 400 to 32 as a precautionary measure about two weeks ago but it began bringing them back in the past week as the fire moved farther away, said Brion spokeswoman Kristi Baron.

Baron said the fire’s change of direction came as a surprise and will likely delay first production.

“We were nearing mechanical completion and aiming for first steam in the fall — until the fire,” she said.

“We expect the fire to have some kind of impact on project timing but at this point it’s kind of hard to know.”

Syncrude Canada said more than 200 of its workers who were part of a team that was supposed to restart production were moved twice on Monday — first from a work camp to its Mildred Lake mine north of Fort McMurray, then by bus to Edmonton when the evacuation order was extended.

About 100 employees were left to maintain and stabilize operations at Mildred Lake and Syncrude’s Aurora mine site 35 kilometres farther north, said spokesman Will Gibson.

Suncor Energy said Monday night it was moving personnel from work camps and its base plant to other camps farther north, adding that it had started a staged and orderly shutdown of base plant operations.

On Tuesday, the company also evacuated its Firebag and MacKay River thermal project sites as winds pushed the fire closer.

“We have enhanced fire protection and mitigation around all of our facilities and we do have experienced industrial firefighters on site,” said spokeswoman Sneh Seetal.

In Ottawa, Natural Resource Minister Jim Carr said he’d speak again with oil company representatives in the next day or two but had no update on what the changing fire conditions implied for the resumption of production.

“It’s important that the production come back on line and they were in good shape until these blazes began to reform,” Carr said. “We’re watching it very carefully.”

He said the industry has not asked for federal assistance.

Premier Rachel Notley said the oilsands companies know best when to restart their operations and the province will work with them to ensure that is done safely.

She said it’s too early for the provincial government to adjust its budget in light of reduced oilsands royalties.

“I think you have to have actual numbers in order to rewrite your fiscal plan, so that’s what we’re going to do, is wait till we have those.”

Earlier Tuesday, the Conference Board of Canada released a study on the anticipated economic impact of the fire, though that was before the change in the fire’s direction and based on the presumption that production would be back up by the end of the month.

The report estimated average oilsands output would fall by 1.2 million barrels of oil a day for two weeks, translating into $985 million in lost gross domestic product.

“As far as I understand, most of the evacuations have been preventative, so it’s still possible we will see production ramp up as expected,” said Pedro Antunes, deputy chief economist with the conference board.

The board expects rebuilding efforts to add roughly $1.3 billion in real GDP to Alberta’s economy next year and construction in the region is expected to be higher than normal in 2018 and possibly 2019.

The economic issue identified by the board is “big and it is serious,” Public Safety Minister Ralph Goodale said.

“It will clearly have a dampening effect on the economy,” he said, though he added it is premature to calculate the fiscal impact on the federal budget.

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Note to readers: This is a corrected story. A previous version had a dated figure for the number of workers evacuated from work camps.