Restart pace uneven for Canadian oil sands producers after wildfire

Thu May 12, 2016 12:37pm EDT
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By Ernest Scheyder

LAC LA BICHE, Alberta May 12 (Reuters) - Efforts by Canadian oil sands companies to restart production are meeting with uneven results in the wake of a raging wildfire, with CNOOC Ltd's Nexen telling customers it may not be able to fulfill its supply contracts even as other companies have begun resuming operations.

Nexen has issued a force majeure for all of its May production of Canadian heavy crude, two sources said on Thursday, the latest sign that the fire is curbing supply. Force majeure is a contract clause to remove liability for unavoidable catastrophes.

The fire that blazed through oil sands hub Fort McMurray, forcing the evacuation of about 90,000 people last week, has moved into sparsely populated woodlands further east. It spans 229,000 hectares (566,000 acres).

Nexen's Long Lake facility, located south of the community known as Fort Mac, sustained minor damage in the yard from the fire, Alberta officials said this week.

Roughly 1 million barrels per day (bpd) of output were shut down during the fire, about half the oil sands' usual daily production. Alberta holds the world's third-largest crude reserves and is the No. 1 exporter of crude to the United States.

Late Wednesday, Enbridge Inc said it had restarted its 550,000 bpd Line 18 pipeline, and Royal Dutch Shell Plc has also partly resumed operations in the area.

Travel to Fort McMurray is restricted to essential services, including workers, supplies and equipment for oil sands operations. Suncor Energy Inc workers are expected to begin returning to shuttered facilities on Thursday.