Wildfire loss to oilsands pegged at $1.4 billion
CALGARY Analysts say lost oilsands production from the Fort McMurray wildfires could top 30 million barrels and cost the industry upward of $1.4 billion.
Some of the largest oilsands producers in the province were forced to shut down or curtail operations last month as 80,000 residents of Fort McMurray fled the city to escape the fierce blaze, which has yet to be extinguished.
Damage to oilsands projects was minimal but Calgary-based analysts say restarting operations is taking longer than expected.
Analyst Martin King of First Energy Capital estimates the industry’s production loss at $1.4 billion, while Nick Lupick, an analyst for Alta Corp Capital, puts the value of the losses so far at almost $1.6 billion. Both said Wednesday that they expect their numbers to grow.
“It sounds like there have been some pipeline-clogging issues on some of these projects,” said King. “I guess when the bitumen cooled it hardened and so they’re having trouble getting stuff down these pipes right now.”
King said his wildfire cost estimate is based on a production loss of about 37 million barrels, about half in the form of raw bitumen, which must be mixed with light oil to facilitate flow in a pipeline. The other half is the much more valuable synthetic crude.
Lupick said he based his calculation on lost production of about 28 million barrels but with a higher proportion in the form of synthetic crude. “Based on an outage of three weeks during the fires on average for all of the affected projects, the total lost revenue works out to be roughly $1.6 billion,” he said. “Made up of roughly $1.05 billion of SCO and $550 million of bitumen revenue.”
He said he expects the final production loss to grow beyond 30 million barrels because of delays in restarting projects and the fact that Syncrude Canada must complete a maintenance turnaround at its upgrader before returning to normal operations.
Lupick estimated Suncor Energy has lost about 21 million barrels of output from its own oilsands operations as well as from Syncrude, in which it has a majority stake.
Those barrels would have been worth about $700 million, he said, adding an outage at Suncor’s Edmonton refinery that caused gasoline shortages in Western Canada would take the loss to about $800 million.