Canadian oil producers warn of supply shortfalls after wildfire

Thu May 12, 2016 4:48pm EDT
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By Ernest Scheyder

WANDERING RIVER, Alberta (Reuters) - CNOOC Ltd's Nexen is the latest Canadian oil sands company to warn customers it may not be able to fulfill supply contracts in the wake of a massive wildfire, as producers scramble to get facilities back online.

Nexen has issued a force majeure for all of its May production of Canadian heavy crude, two sources said on Thursday. Four major oil firms have now declared force majeure, 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 241,000 hectares (596,000 acres), growing much more slowly than before, but still posing a threat. Cool temperatures are helping contain it, but hot, dry weather is expected starting Saturday, said Chad Morrison, Alberta's senior wildlife manager.

"We're long from over in this fight," he said on a conference call with other officials.

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

Three major oil firms warned last week they will not be able to deliver on some contracts for Canadian crude.

BP Plc and Phillips 66 alerted customers some grades of Canadian crude would not be available, while Suncor Energy, Canada's largest producer, warned clients that some supplies from the region would be disrupted by the fires.   Continued...

A burned stove is pictured amongst the remains of a home in the Abasand neighbourhood of Fort McMurray, Alberta, Canada, May 9, 2016 after wildfires forced the evacuation of the town. REUTERS/Chris Wattie