Wildfires Threaten Over 400,000 BPD of Canada’s Oil Sands Production

Alberta is grappling with a surge in wildfires fueled by hot and dry weather, endangering more than 400,000 barrels per day (bpd) of oil sands production.

In the last 24 hours alone, 47 new fires have ignited in the province, predominantly south of Fort McMurray, the unofficial capital of the oil sands, according to Kai Bowering, spokeswoman for Alberta Wildfire. The current arid conditions are expected to continue, facilitating the spread of these blazes.

The wildfires have already impacted oil sands production, which holds the world's third-largest crude reserves, and prompted a partial evacuation of Fort McMurray in May. The recent heatwave has exacerbated fire activity, resulting in over 50 uncontrolled blazes across Alberta, with more than 10% of the province’s oil production now at risk.

One significant fire, spanning 3 hectares (7 acres), is within 10 kilometers (6.2 miles) of MEG Energy Corp.'s Christina Lake site, which produced nearly 100,000 bpd in May, as per Alberta Energy Regulator data.

Another blaze threatens a segment of Imperial Oil Ltd.'s Cold Lake operation, which produces 19,000 bpd, while a third fire is near Canadian Natural Resources Ltd.'s Kirby oil sands. None of these companies responded immediately to requests for comment.

The wildfires have also influenced Canadian heavy crude prices. The discount for Western Canadian Select compared to West Texas Intermediate narrowed to $13.10 a barrel on Wednesday from $14 a barrel on Tuesday, according to a source familiar with the prices.

Two weeks ago, Suncor Energy Inc. curtailed production at its Firebag site, reducing output from a facility that produced around 231,000 bpd in May. This same fire also led Cenovus Energy Inc. to withdraw some workers from its Sunrise oil sands site and prompted Imperial Oil to begin evacuating non-essential personnel from its Kearl oil sands mine.

Temperatures soaring to 32°C (90°F) on Wednesday, combined with low relative humidity and gusty winds up to 30 kilometers per hour in northeastern Alberta, are likely to cause "extreme fire behavior" over the next few days, Alberta Wildfire reported.

The fire impacting Suncor, Cenovus, and Imperial has advanced closer to their production sites, as has another uncontrolled blaze located about 9 kilometers to the south. Fires southwest of Fort McMurray have also disrupted production, leading Greenfire Resources Ltd. to temporarily cut output at its Hangingstone sites, which produce about 23,000 bpd.