Shutdowns, wildfire have Petrocan facing gas shortages across Western Canada

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Suncor Energy Inc.'s Western Canadian retail gas stations are facing fuel shortages, owing to the double whammy of oil sands shutdowns related to the Fort McMurray wildfire and a sudden outage in one unit at the oil giant's Edmonton refinery.

Suncor-owned Petro-Canada outlets that are completely out of gas are showing zeros on their large price signs, while others out of certain products have notices posted directly on pumps, Suncor spokeswoman Sneh Seetal said Wednesday.

As oil sands companies scramble to restart operations after massive northern Alberta wildfires knocked more than one million barrels a day of output offline last month, the fuel shortfall is a clear sign that producers are not yet out of the woods – and that the effects of the fire continue to be widespread.

Earlier this week, Suncor said it had restarted some production at its facilities and that it was in the process of moving thousands of workers back into the region. Imperial Oil Ltd. and Royal Dutch Shell PLC have also restarted some production.

Ms. Seetal said the combination of shutdowns in northern Alberta owing to the wildfires and the unplanned outage in Edmonton means the company's ability to produce gasoline and diesel at regular volumes has been affected. The situation is cutting the fuel supply to some of Suncor's retail outlets. Suncor has seen temporary shortages at Petrocan stations in Alberta, Saskatchewan and Manitoba, as well the B.C. Interior.

Ms. Seetal said the supply of oil sands feedstock to the Edmonton refinery has been reduced as a result of shutdowns related to the forest fires that saw 88,000 residents of Fort McMurray evacuated in the early days of May.

And on Friday evening, the 142,000-barrel-a-day refinery also suffered an unplanned outage at one of its units, she said. The cause is still under investigation. Employees are developing a work plan to bring it back into service safely and as quickly as possible. The Edmonton facility receives feedstock from its own operations, Syncrude Canada Ltd., and other oil sands producers. Syncrude had yet to resume production as of Wednesday, a spokesman said.

"Parts of the refinery continue to operate, producing product. But it is at a reduced rate," Ms. Seetal said.

Petrocan stations deemed "critical" – in areas where there are limited or no other options for fuelling – are being prioritized for fuel supplies, Ms. Seetal said. As the resettlement of Fort McMurray began Wednesday, the three stations located in the city were supplied with fuel and are on the priority list.

"We are looking to minimize the impact on customers as much as possible," Ms. Seetal said, noting a team has been dedicated to the situation. "We realize this is an inconvenience for customers."

Although there is no timeline for when supplies will return to normal, she said Suncor is doing what it can to find solutions to the supply problems. Suncor's oil sands operations that were shuttered because of the fire threat are now being restarted in a staged manner, and the company is also looking for other sources of crude feedstock.

Suncor is also looking to find other supplies of gasoline within its own network outside Alberta, as well as from third parties. "And we're moving that by truck and rail," Ms. Seetal said.

But the "prolonged duration" of the Fort McMurray wildfire as well as the regular season for planned maintenance by the refining industry as a whole means that gasoline and diesel inventory levels are lower than usual, she said.

It's unclear whether other retailers are being affected. On Wednesday, a spokeswoman for Imperial said there are no outages at the company's retail stations as a result of wildfires in the Fort McMurray area.

Refinery outages can contribute to wide regional disparities between wholesale gasoline prices, depending on how long they last.

But so far, the impact of shortages has been muted, said Michael Ervin, senior vice-president at consultancy the Kent Group Ltd., which specializes in refining and retail marketing. For instance, this week prices for wholesale regular gasoline in Edmonton fetched about 64 cents a litre, versus about 63 cents a litre in Sarnia, Ont.

"Given that these wildfires have been running for quite some time, supply planners have got ahead of the potential problem and have managed to make up supply from outside the region," he said Wednesday. "This is something that I expect was on the radar as a contingency."

However, the partial outage at Suncor's Edmonton refinery comes as North American gasoline demand is rising ahead of the busy summer driving season.

There have also been recent problems at refineries in Ohio and Michigan that typically process large volumes of oil sands crude. That has pushed gasoline futures prices higher in Chicago, said Dan McTeague, an analyst at Gasbuddy.com.

"This will probably just add to that," he said. "It just makes a tight situation in the U.S. Midwest and the Prairies that much more volatile."

On Wednesday, Husky Energy Inc. became the latest oil sands company to restart operations after the wildfires, saying it has resumed some production at its Sunrise oil sands project. Husky, controlled by Hong Kong tycoon Li Ka-shing, said Wednesday that output had resumed at the steam-driven plant, one of several large facilities that had been shut down owing to risks from wildfires.

The company did not provide a specific figure, but the steam-driven plant was pumping around 30,000 barrels a day before the fire. It now expects to reach 60,000 barrels a day in early 2017, compared to an earlier target of year-end, said John Myer, Husky's senior vice-president of oil sands.