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Spreading wildfires derail oil sands restart

This file photo taken on May 7, 2016 shows flames and smoke rising off Highway 63 outside Fort McMurray, Canada.

COLE BURSTON//AFP/Getty Images

Alberta's wildfires took a sudden shift toward major oil sands plants north of Fort McMurray, Alta., overrunning at least one work camp and throwing into limbo plans to restart more than one million barrels per day of lost production.

Workers were abruptly evacuated from camps north of the fire-ravaged Alberta city on Tuesday as strong winds drove flames east toward operations run by Suncor Energy Inc. and Syncrude Canada Ltd., escalating evacuations that began on Monday. Several camps were cleared of an estimated 8,000 workers, with many moved to facilities farther north.

The fast-moving wildfire destroyed at least one lodge that housed returning oil sands personnel and by midday on Tuesday was threatening two others in the region.

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Suncor said its base plant, which processes bitumen from two open-pit mines into lighter synthetic oil, was shut down late on Monday as a precautionary measure, scuttling efforts to restart the operation. The company was airlifting staff south to Edmonton and Calgary from its idled Firebag plant on Tuesday. Production at its steam-driven MacKay River facility was also suspended.

Meanwhile, about 100 workers, including emergency personnel, remained at Syncrude's Aurora and Mildred Lake mines to manage critical utilities. Roughly 400 of the company's staff were bused to Edmonton late on Monday. The operation remains shut down and it is not clear if and when restart plans will proceed, a spokesman said.

"We're not making oil," Will Gibson said by phone.

The sudden evacuation of two of Canada's largest oil sands operations throws doubt on industry plans for a quick restart of idled capacity, depriving major producers of desperately needed revenue just as global oil prices edge up toward $50 (U.S.) a barrel.

Workers had only recently started to return to plants following mass evacuations earlier this month, enabling some operations to tentatively resume production. They included Royal Dutch Shell PLC, which said Tuesday there was no immediate threat to its bitumen mines about 70 kilometres north of Fort McMurray.

However, shutdowns at some facilities are now in their second week, with little relief expected. The fire spread on Tuesday to encompass 355,000 hectares, forcing road closings on Highway 63, a critical supply route into and out of energy facilities to the north.

Jackie Forrest, vice-president of energy research at ARC Financial Corp., said companies are losing an estimated $70-million (Canadian) a day as supply disruptions persist. The extended outages only exacerbate matters, she said. Meanwhile, the fire is threatening larger operations north of Fort McMurray that have so far been unscathed by flames.

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"That's where the vast majority of production is," she said Tuesday. "The chances of damage to a larger part of production increases as it moves around in that area."

A week ago, industry executives offered assurances that emergency shutdowns would be short-lived, with some facilities capable of restarting within 24 hours. One reason given was that key infrastructure remained undamaged and there was also ample capacity at regional camps to house displaced workers.

On Tuesday, officials said the fire had "bumped up" against the perimeter of Suncor's base plant, although the company stressed there had been no damage to its assets.

Wildfire officials said the large industrial plants are generally protected by a lack of vegetation and excess gravel on-site, as well as in-house firefighting capabilities.

The out-of-control blaze ripped through Horizon North Logistics Inc.'s Blacksand Executive Lodge early on Tuesday, causing "significant damage" to the facility, according to the company. It had housed workers from nearby Suncor and Syncrude operations.

Horizon chief executive officer Rod Graham said the 665-room lodge's sprinkler system was triggered at about 1 a.m. Tuesday, which is also when the lodge lost Internet connectivity. It had been a refuge for 1,250 Fort McMurray evacuees only two weeks ago, just days before Blacksand itself was evacuated for the first time.

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Rooms were again starting to fill up with oil sands workers as the second evacuation order came down on Monday, forcing about 30 to 40 employees and a couple of hundred guests to flee.

"We've got insurance on the facility, but the real tragedy would be if we lost somebody, and we did not," Mr. Graham said. He remained concerned for the company's other lodges in the area, including its nearby Birch Mountain/Poplar Creek complex, which he said has a fire-break zone of 200 metres.

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About the Authors

Jeff Lewis is a reporter specializing in energy coverage for The Globe and Mail’s Report on Business, based in Calgary. Previously, he was a reporter with the Financial Post, writing news and features about Canada’s oil industry. His work has taken him to Norway and the Canadian Arctic. More

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