Alberta fires prompt Shell to pull workers from oilsands mine site
By Lauren Krugel, The Canadian Press –May 19, 2011
CALGARY — Shell Canada Ltd. said Thursday it was pulling non-essential workers from its vast oilsands mining operations north of Fort McMurray, Alta., as wildfire smoke drifted toward the site.
The winds had previously moved smoke north from the site, but overnight they changed direction and brought heavier smoke into the area.
"This action is a precautionary measure to ensure people who may be sensitive to these conditions and those not essential to ongoing operations are returned home safely," Shell said in a release.
Production from the Muskeg River and Jackpine mines has not been affected, and the company said it is continuing to keep a close watch on the situation.
Elsewhere in the province, Shell has curbed production — not because of the fires themselves, but because the nearby Rainbow pipeline has been shut.
Another major oil producer, Cenovus Energy Inc. (TSX:CVE), said Thursday it has slowed oil production to 4,000 barrels per day at its Pelican Lake operations from the usual rate of 22,000 barrels per day.
The blazes don't pose a direct threat to the Pelican Lake facilities, about 90 kilometres northeast of Slave Lake, said spokeswoman Rhona DelFrari.
But there's nowhere for the oil to go while power to the southern leg of the Rainbow pipeline remains cut. Cenovus has been putting its oil into storage tanks, but those are nearly full.
"If the Rainbow pipeline does not re-open, we expect our storage will be full this afternoon and we will have to completely stop production," DelFrari said.
In addition to Shell and Cenovus, Canadian Natural Resources Ltd. (TSX:CNQ) also relies on the Rainbow pipeline to move its crude, and has slowed production as a result.
Another portion of the line, owned by Plains Midstream Canada, broke last month, spilling 28,000 barrels of crude. The wildfires have hampered cleanup efforts there.
Also Thursday, a big financial player in the oilpatch said the fires could hurt the oil and gas drilling industry, a major source of jobs for many in the region.
Only 19 drilling rigs were working in the Slave Lake, Alta., region as of Wednesday, compared to the average of 42 year-to-date, FirstEnergy Capital said. About 10,000 people have been forced to leave the fire-ravaged town about 250 kilometres north of Edmonton
If not for the fires, the rig count in the area could have reached its peak again in the second half of 2011, the Calgary investment dealer said.
"However, we suspect that due to the damage to pipelines and facilities, in addition to the potential disruption of suppliers in the Slave Lake township, drilling may be curtailed somewhat as producers assess their capability to produce and transport oil and gas in the near term before continuing their drilling efforts," the report said.
Some of the bigger drilling companies should have no problem finding work elsewhere, but it may be tough to move their rigs around because roads are damaged.
"With potential reduced activity, local employment may be curtailed," FirstEnergy said.
"On the other hand, those companies involved in the inspection and repair of pipelines and facilities should be active, as producers assess damage to their facilities."
For example, transportation company Mullen Group (TSX:MTL) and energy services firm Flint Energy Services Ltd. (TSX:FES) could soon find themselves with a lot of work on their plates.
FirstEnergy said earlier in the week it would donate all of the commissions it earns Thursday to the Canadian Red Cross, which has been providing aid to communities affected by the fires.
Other companies affected by the fires include Pengrowth Energy Corp. (TSX:PGF), Exall Exploration Corp. (TSX:EE) and Penn West Exploration (TSX:PWT).
Copyright © 2011 The Canadian Press. All rights reserved.
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