May 12, 2016 / 4:42 PM / in 2 years

Restart pace uneven for Canadian oil sands producers after wildfire

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.


Hundreds of people lined up around the evacuee center in Lac La Biche, Alberta, on Thursday to collect provincial government debit cards loaded with C$1,250 per adult and C$500 per dependent.

“I just think for government, this could have been organized better,” said Wanda Anderson of Fort McMurray, about the debit card distribution, standing in line wrapped in a purple blanket as temperatures hovered just above freezing.

Even so, Anderson, who is staying in a trailer park with her family, said they have been well cared for with meals and her kids are enrolled in local schools.

The Canadian Red Cross is also distributing C$50 million ($38.93 million) in donated funds, or C$600 for each adult and C$300 for each child.

Evacuees who had been sleeping on cots in a hockey rink in Lac La Biche were moved late Wednesday to longer-term housing in the towns of Bonnyville and St. Paul, Alberta, about 120 to 130 km (72 to 78 miles) to the southeast.

In another sign of life returning to normal in the oil sands, Syncrude Canada Ltd reported its herd of 300 bison, which grazes on a reclaimed area of the oil sands mine site, was doing well after being left behind during the evacuation. ($1 = 1.2842 Canadian dollars) (Additional reporting by Nia Williams in Calgary and Catherine Ngai in New York; Writing by Rod Nickel in Winnipeg, Manitoba; Editing by James Dalgleish)

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