Wildfire Latest: Rain Seen Helping Revive Canadian Energy Output
Views: 4840
2023-05-10 02:57
Rain headed for the areas in western Canada struck by a spate of wildfires should improve safety conditions,

Rain headed for the areas in western Canada struck by a spate of wildfires should improve safety conditions, and production may be able to return quickly, according to Wood Mackenzie.

About 2.5 billion cubic feet per day of natural gas production — about 15% of all of Canada’s output — has been shut down by the blazes, the firm said. While some oil output has been curtailed, crude pipeline operations in western Canada have been “largely unaffected,” Wood Mackenzie said.

“Based on the current location of the fires, we expect crude supply, flows, and storage levels to be significantly less affected than in May-June 2016, when widespread fires shuttered oil-sands production,” the firm said.

Map of Major Fire Locations (11:45 a.m. MT)

Alberta is reporting 86 active wildfires, with 26 out of control.

Canadian Heavy Oil Prices Strengthen (11:40 a.m. MT)

The price of Canadian heavy oil-sands crude, which is mixed with light condensate produced in western Alberta, strengthened. Western Canadian Select’s discount to the US benchmark shrank 60 cents to $13.50 a barrel, data compiled by Bloomberg show. Condensate’s discount widened 5 cents to $3.25 a barrel. Edmonton mixed sweet crude’s discount was unchanged at $2.50 a barrel.

Military Is Ready to Provide Construction Equipment (11 a.m. MT)

Emergency Preparedness Minister Bill Blair said the Canadian Armed Forces are prepared to provide airlift resources and engineering and construction equipment as requested by Alberta.

However, he said the province also requested military resources to provide security in communities where people have been evacuated from their homes, and the federal government believes that’s primarily a policing responsibility. Blair said his government will work with the Royal Canadian Mounted Police and Alberta, including by potentially bringing in RCMP officers from other jurisdictions to help.

“The policing should be done by the police, but the Canadian Armed Forces have always been there to respond with expertise and with equipment that only they can provide,” Blair said.

Scotiabank Sees Blazes Trimming Canada’s GDP (9:24 a.m. MT)

The wildfires burning across Canada’s main natural gas-producing region may trim 0.2% to 0.3% from growth in the country’s gross domestic product in May if much of the area’s output remains shut for the month, one of Bank of Nova Scotia’s top economists estimates.

That projection is rough and could evolve as more shutdowns are announced, but the blazes “are going to be messing with the Canadian economic statistics,” Derek Holt, head of capital markets economics, said in a note to clients Tuesday.

“We’re getting into the high single-digits of Alberta’s total oil output that is being shut-in, and oil and gas is about 5.3% of monthly Canadian GDP,” Holt said. “There are also effects on prices, including Alberta hub natural gas and Western Canada Select crude oil prices that have been rising as the fires and shut-ins have spread.”

Canada’s economic growth already was expected to stall in the middle of this year as rate hikes from the country’s central bank cool activity. Since the production shock is transitory, it “should not impact monetary policy as rebounds and possible rebuilding will follow,” Holt said.

Alberta Blaze Count Declines (8:25 a.m. MT)

Alberta was reporting 89 active wildfires as of 8:25 a.m. Mountain time, with 27 of those out of control. That’s down from more than 100 total active fires yesterday.

Those blazes have shut down the equivalent of at least 234,000 barrels a day of oil production, sending low-sulfur sweet crude prices in Canada to a one-year high. Nearly a fifth of western Canadian natural gas supply has been suspended, prompting a surge in those prices as well.

Trudeau Says Federal Response Under Discussion (7 a.m. MT)

Prime Minister Justin Trudeau said his government had received the official request for assistance from Alberta Premier Danielle Smith and her government. Discussions are underway on how best to respond, and resources are being mobilized as quickly as possible, he said.

“Over the past number of days, federal resources have been stood up and made ready for what we expected to be a request for assistance,” Trudeau told reporters in Ottawa. “We’re going to be able to be there for the people of Alberta.”

Operational Updates

Below is a summary of operational updates from companies operating in the area:

--With assistance from Erik Hertzberg, Laura Dhillon Kane, Gerson Freitas Jr. and Dave Merrill.

Tags pipe cn bte cn ppl cn vet cn cve cn alltop bns cn tou cn tve cn pey cn business nva cn cpg cn trp cn cnq cn arx cn wcp cn pou cn key cn obe cn