Energy producers declare they're able to handle drought, wildfires
Conditions are ripe for another fiery year in oil, gas drilling regions of Alberta, B.C.
Canadian energy producers say they are prepared and ready for what could be another spring and summer of drought and wildfires in Western Canada.
Many of this country's largest conventional oil and gas drillers operate in regions that last year were affected by severe hot, dry weather conditions.
As early as the start of last May, oil and gas companies in northwest and central Alberta, as well as northeast B.C., temporarily halted production as wildfires raged across key fossil fuel-producing regions.
Most of the curtailments were done on a precautionary basis and no significant damage to energy-producing infrastructure occurred.
Now, as this year's snow melts and springlike conditions return to Western Canada, oil and gas producers are prepared for what could be another fiery year. In late February, Alberta's government declared an early start to wildfire season, warning of unusually dry conditions and low snow cover.
“We manage these things,” Jonathan Wright, CEO of Nuvista Energy Ltd., said in a phone interview Tuesday from Toronto, where he was attending the annual Canadian Association of Petroleum Producers (CAPP) conference.
The Calgary-based company temporarily shut down all of its facilities in the Grande Prairie area last May when fires made it impossible to access its sites by road.
The precautionary shutdown resulted in a temporary production loss of about 35,000 barrels of oil equivalent per day for much of May, or about 43 per cent of the company's overall production.
Wright said Nuvista will “absolutely stay ahead” of the wildfire situation — both through regular emergency response drills at work sites, as well as the use of satellite imagery to track the course and progression of any blazes.
“We quickly learned (last year) when there were fires coming into the area that we need to track those fires,” Wright said.
“There is a NASA fire-tracking website which our field operations folks watch very closely ... to predict well ahead of time if and when you need to shut in any facilities.”
Many of the fires last year in Western Canada remained smouldering throughout the winter, and are now igniting as the snow melts and temperatures heat up.
A provincial government map shows 51 active wildfires in Alberta as of this week, though all are listed as either under control or being held.
Drought is also expected to be a risk for energy producers this year, particularly in the Montney region of northeast B.C. and northwest Alberta, where natural gas operators use large amounts of water for hydraulic fracturing.
As of March 31, the federal government's drought monitoring website classified the bulk of the Montney's oil and gas producing areas as either under “extreme” or “severe” drought conditions.
Chris Carlsen, CEO of Birchcliff Energy Ltd., which has operations in the Montney, said his company has built its own system of water storage reservoirs and is confident it has enough water saved to execute its 2024 drilling program.
But he said additional drought in 2025 and beyond could become significantly more challenging.
“I think it's a question of what will happen this spring. Are we going to have a wet spring where we're going to be able to collect some water for our 2025 program? I think that's more of a concern,” Carlsen said by phone Tuesday from the CAPP conference.
Brad Wells, head of energy for BMO Capital Markets, said drought and wildfires are significant risks that Canada's energy sector needs to be prepared for this year.
“I think there's the potential for water restrictions to impact (well) completions activity, and water draws from the Athabasca River for the oilsands. So (drought) is definitely something we're watching,” Wells said from Toronto, where BMO is sponsoring the conference.
“And I think wildfires are absolutely a risk that energy producers may have to deal with. Ultimately these things are hard to predict . ... But it's definitely a risk that needs to be considered.”