MEG latest to shut oil sands project on Alberta fire threat

Reuters News
Posted: May 26, 2015 3:22 PM

By Scott Haggett and Nia Williams

CALGARY, Alberta (Reuters) - MEG Energy Inc said on Tuesday it was suspending operations at its 80,000 barrel per day Christina Lake oil sands project and evacuated non-essential staff as wildfires rage through northeastern Alberta.

MEG said in a statement that there was as yet no safety risk from the forest fires, but it has halted work on a planned maintenance shutdown at its project site, the latest of several oil producers in the region to move staff away from the potential danger.

"As a precautionary measure, we have temporarily suspended operations, including our planned maintenance turnaround," the company said in a statement. "As soon as we have safety clearance regarding fire hazards, we will resume normal operations."

At least 233,000 barrels per day of oil sands production, nine percent of Alberta's total oil sands output, has been suspended in Alberta's northeast because of the fire risk, though none of the oil sands projects have been damaged.

The shut-in production because of the fires could impact economic growth, Bank of America Merrill Lynch warned in a research report.

"If wildfire disruptions persist through the rest of May, and activity gradually picks up in June, we estimate a 0.1 percent to 0.3 percent hit to (second-quarter) annualized GDP growth," Emanuella Enenajor, the bank's Canada and U.S. economist wrote. Though she warned that the estimate was uncertain and the impact would depend on how long it took to return production to normal levels.

Along with the oil sands projects, several small towns threatened by fires have been evacuated in other parts of the province.

Over the weekend, Cenovus Energy Inc and Canadian Natural Resources Ltd evacuated staff and halted output at two sites as a precaution against the rapidly spreading forest fire.

On Monday, Canadian Natural said it also cut production at its nearby Kirby South thermal project to 12,000 bpd from around 30,000 bpd.

Both companies on Tuesday said there had been no other changes to the status of the projects in the region.

Husky Energy Inc said its operations in the Cold Lake oil sands region have not been affected by the blaze, though it has suspended operations at its Muskwa natural-gas processing plant and its Overlea compressor facilities in north central Alberta due to other fires. Six employees were evacuated from the sites.

In it's daily update, the Alberta government said there are 66 forest fires now burning in the province and 19 of those, including the one in the Cold Lake oil sands region of northeastern Alberta, are considered out of control.

(Reporting by Scott Haggett and Nia Williams; Editing by Andrew Hay)