ITC DIA Europe

Wildfires decimate North America

Written by Merlin Beyts - ITC DIA Europe on May 15, 2023

Wildfires continue to wreak havoc in western Canada, leading to the evacuation of approximately 30,000 residents and causing disruptions in oil and gas production. Companies have been forced to shut down wells and pipelines, resulting in a reduction of at least 234,000 barrels per day.

As of Monday afternoon, around 100 wildfires were burning, with about a quarter classified as out of control. In response, the province of Alberta declared a state of emergency, and evacuation orders were issued for communities located less than 100 kilometers (62 miles) from Edmonton, the provincial capital.

The fires have primarily affected Canada’s main natural gas production region, including the Montney and Duvernay formations. These areas are dotted with wells, processing plants, and pipelines, making them crucial to gas and light-oil production. Consequently, the disruptions have caused prices for certain local grades of crude to surge.

Wildfires have become a dramatic manifestation of climate change, exacerbated by extreme heat and prolonged drought. In March, large portions of British Columbia, Alberta, and Saskatchewan experienced drought conditions, with over 44% of Alberta being affected by drought as of April 22, according to the North American Drought Monitor.

Several communities, including Fox Creek and Grande Prairie, have been placed under evacuation orders due to the wildfires. The situation is being closely monitored by Prime Minister Justin Trudeau, who is scheduled to speak with Alberta Premier Danielle Smith.

Numerous energy companies operating in the affected areas have taken precautionary measures and suspended production. Pembina Pipeline Corp., for instance, shut down gas plants and related infrastructure. Canadian Natural Resources Ltd., Baytex Energy Corp., NuVista Energy Ltd., Whitecap Resources Inc., Crescent Point Energy Corp., Vermilion Energy Inc., Pipestone Energy Corp., Tourmaline Oil Corp., Paramount Resources Ltd., TC Energy Corp., Tidewater Midstream & Infrastructure Ltd., Cenovus Energy Inc., Kiwetinohk Energy Corp., Trans Mountain Pipeline, and Tamarack Valley Energy Ltd. are among the companies that have also been impacted by the wildfires.

Furthermore, Pembina Pipeline Corp. has evacuated some of its workers in the affected region.

The situation remains challenging, and efforts are underway to assess the damage and implement strategies for restarting operations where possible.

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