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Canadian crude prices strengthen as Alberta wildfires shut in 200,000 boe/d of output


Mixed Sweet jumps $1.50 to WTI minus $2.75/b

Crescent Point shuts in 45,000 boe/d

Paramount Resources shuts in 50,000 b/d

  • Author
  • Ashok Dutta    with Julia Pecha in Houston
  • Editor
  • Jeff Mower
  • Commodity
  • Natural Gas Oil Petrochemicals

Western Canadian crude differentials strengthened May 8 following news that approximately 200,000 b/d of oil equivalent production of light oil, NGL and natural gas production has been shut in because of wildfires.

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The shut-ins were precautionary, and primarily impacted conventional lighter grades. Also, nearly 450 Mcf/d of natural gas processing was shut in.

Drayton Valley, along with Grand Prairie in the Central and Northwestern area of the province, is a prime area impacted by the wildfire, Alberta Wildfire spokesperson Christie Tucker told reporters May 6.

Platts assessed Syncrude Sweet Premium at Edmonton 80 cents stronger on the day at WTI CMA plus $2.80/b and Mixed Sweet at Edmonton $1.150 stronger on the day at WTI CMA minus $2.75/b.

Condensate at Fort Saskatchewan was assessed 55 cents/b stronger at WTI CMA minus $3.50/b.

Western Canadian Select at Hardisty climbed 30 cents to be assessed at WTI CMA minus $13.85/b.

Platts is a unit of S&P Global Commodity Insights.

NuVista Energy said it has shut in 40,000 boe/d of its output in the Grand Prairie area and depressurized all operations proximal to the ongoing fires.

"The shut ins started partially on May 5 and were then broadened after an infrastructure which serves our production was shut in," the company said, noting NuVista not aware of damage to its facilities.

Light and heavy oil producer Baytex Energy said due to a shut-in of an infrastructure in Central and Northwest Alberta nearly 10,000 boe/d (70% crude oil) of sales volumes has been curtailed since the evening of May 5. Currently, about 60% of the curtailed volumes remain on-line and are producing into inventory, Baytex said.

A shut-in of light oil and NGL production was also reported by Whitecap Resources from its facilities in northern Alberta and in northeast British Columbia, although the company did not give specific figures.

Midstream player Pembina said its current shut-ins include the Saturn I and II gas plants at the Saturn Complex north of Hinton and the Duvernay Complex, with a combined processing capacity of 443 Mcf/d.

The Peace Pipeline crude system which is a 20-inch line from Fox Creek, Alberta to Edmonton was temporarily shut down due to the fire. However, it has since been restarted, Pembina said.

Tourmaline Oil said it shut down nine South and West Deep Basin gas processing facilities starting May 5. Tourmaline is not aware of any damage to those facilities to date and access to the sites is currently prohibited, it said, without giving any figure on the shut-in volumes.

Vermillion shuts in nearly 30,000 boe/d

Vermillion Energy has shut in nearly 30,000 boe/d while it assesses the risk to its operations as the wildfires are surrounding the company's operations in West Central Alberta, it said.

"We have accounted for all of our employees and contractors in the affected areas to ensure their safety," it said. "Our assessment to date indicates minimal damage to our key infrastructure."

It did not provide further comments and no comments were immediately available from Vermillion's office in Calgary.

Vermilion's operations are focused on the production of light oil and liquids-rich natural gas in the West Pembina area near the Drayton Valley, in the Peace River Arch in northeast British Columbia and northwestern Alberta, the company said.

Fellow producer Pipestone Energy said its operations in the Grande Prairie area are being impacted by the ongoing wildfires, resulting in a precautionary shut in of 20,000 boe/d as well as related infrastructure.

The shut ins have been in effect since the evening of May 5, Pipestone said, adding it is not aware of any "significant damage or loss to its owned or third-party infrastructure."

"While timing remains uncertain, Pipestone is ready to restart production as soon as the currently shut down infrastructure is restarted," Pipestone said.

Crescent Point Energy has shut in about 45,000 boe/d at its Kaybob Duvernay assets, it said, adding that precautionary measures have been taken to protect the safety of its staff, the community, environment and assets.

Crescent Point said it had no reports of damage so far from the wildfires.

Terming the shut in of the primarily light oil and NGL barrels as "temporary," Crescent Point said it plans to restart production once it is safe and receives permission from the Alberta Energy Regulator.

The company's assets in Kaybob Duvernay are in the heart of the condensate-rich fairway in Central Alberta, and Crescent brought its sixth fully operated multi-well pad onstream in early 2023, generating a 30-day initial production rate of about 1,235 boe/d per well, it said in March, with 51% condensate, 15% NGLs.

Separately, Paramount Resources said late May 7 it has shut in nearly 50,000 boe/d of output and related infrastructure at its Grande Prairie and Kaybob regions, with all of its affected personnel being evacuated safely.

The curtailment is temporary and has been in place since the evening of May 5, Paramount said, which coincided with the outbreak of the wildfire.

No impact to Imperial, MEG, Keyera

Imperial Oil's oil sands operations in northern Alberta have not been impacted, although the company is closely monitoring the situation, spokesperson Lisa Schimdt said May 8.

Imperial's total output in Alberta averaged 413,000 boe/d, it said late April in its earnings release.

The wildfire has not impacted operations of oil sands producer MEG Energy, spokesperson Sarah Wilson Cook said in an email May 8.

The company has not evacuated its staff, she said.

MEG is the operator of the Christina Lake oil sands facility in the southern Athabasca region in northern Alberta, and in the first quarter output averaged 107,000 b/d.

Midstream player and NGL processor Keyera said its operations had not been impacted, spokesperson Alyssa Haunholter said in an email May 8.

"Keyera is monitoring the situation and continues to support Alberta Wildfire as they manage the fires," Haunholter said, adding that the company's emergency response team remains activated and is directing emergency response procedures to protect the public, the company's staff and the environment.

Keyera is following all mandatory evacuation measures, Haunholter said.

The company has multiple liquids infrastructure and gas processing facilities in Alberta, including Fort Saskatchewan, Rimbey and Wapiti.