Drilling Companies Halt Natural Gas Production in Canada Following Renewed Wildfire Outbreak

(Bloomberg) – Recent days have witnessed a resurgence of wildfires in Alberta, Canada’s main energy-producing province, leading one drilling company to suspend some of its production once again.

The wildfires have forced Pipestone Energy Corp. to temporarily halt approximately 20,000 barrels of oil equivalent per day (boed) since Friday, as the fires approached certain processing facilities vital to the company. These facilities had been restarted after being shut down due to a series of fires earlier in May.

As of Monday morning, there were 90 active wildfires in Alberta, with 23 of them considered out of control. This is an increase from 87 active fires and 24 out of control on Sunday.

“The fire danger is extreme,” stated Josee St-Onge, spokesperson for Wildfire Alberta, during a news conference on Sunday. “Our peak burning period, when temperatures are at their highest and fuels are at their driest, is still ahead of us.”

The province has been under extreme heat warnings, with temperatures in Manning, a northern town, reaching 30.9°C (87°F) on Sunday. This is approximately 14 degrees above the normal temperature for this time of year, according to data from Environment Canada.

Colin Blair, executive director of the Alberta Emergency Management Agency, warned, “Hot and dry conditions throughout much of Alberta present an ever-increasing risk of new wildfires starting and the potential for current wildfires to grow quickly.”

Crude inventories in monitored sites across western Canada currently stand at 30.69 million barrels, as reported by geoanalytics firm Kayrros SAS. This is roughly the same as on May 1, but approximately 2 million barrels lower than the volumes recorded on April 15.

Over 1,500 people were engaged in fighting the fires on Sunday, with helicopters deployed to drop water on hotspots. Additionally, 200 firefighters from the United States have joined the efforts, according to St-Onge. The fires have resulted in the evacuation of over 19,000 residents.

In 2016, wildfires ravaged Alberta’s oil sands, resulting in the shutdown of over 1 million barrels of daily crude production and the destruction of significant sections of Fort McMurray, the largest city in the oil sands region. Although the current blazes have largely spared the oil sands, they have heavily impacted the drought-stricken western areas of the province, leading to the evacuation of up to 30,000 people and a reduction in natural gas output.

Operational Updates

Here are the operational updates from companies operating in the affected area:

Pipestone Energy has temporarily curtailed around 20,000 boed of production since Friday.
Vermilion Energy Inc. has restored 60% of the roughly 30,000 boed production it shut down earlier this month due to the wildfires. The company has revised its second-quarter output targets as a result of the fires.

Drilling Companies Halt Natural Gas Production in Canada Following Renewed Wildfire Outbreak

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