Output resumes as Fort McMurray oil workers return to sites

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Oil sands production is resuming slowly in Northern Alberta as companies shuttle workers back to sites following wildfire-related shutdowns that took more than a million barrels a day off the market.

Output of tarry bitumen has resumed at some steam-driven oil sands projects south of Fort McMurray, including those operated by Norway's Statoil ASA and Athabasca Oil Corp.

ConocoPhillips' Surmont venture has "remobilized" staff and is in the early stages of working toward bringing production back on line.

There were no reports of major damage to energy facilities from the blaze that roared into Fort McMurray in early May, causing what is expected to be Canada's costliest natural disaster. Several companies evacuated their oil sands projects in the days after.

Surmont, a joint venture with France's Total SA, had some water damage in its residence building. The company will probably know in a week or so when output can return to pre-fire levels of about 50,000 barrels a day, ConocoPhillips spokesman Rob Evans said.

Syncrude Canada Ltd. and Suncor Energy Inc., which operate the largest oil sands mines north of the city, are in the process of bringing back staff after authorities lifted mandatory evacuation orders over the weekend as the fire threat eased. Syncrude said it could have several hundred more workers on site in the coming days.

"These employees are staying in camps as part of our rotational commuting program until Fort McMurray is stabilized," Syncrude spokesman Will Gibson said in an e-mail.

Resumption of output from the region was stalled more than a week ago when the massive blaze, nicknamed "The Beast," veered close to oil sands projects, forcing about 8,000 people to flee from work camps – in some cases for a second time. Companies must determine if it is safe to return by inspecting facilities and monitoring air quality.

The extended outages have played a role in U.S. oil prices strengthening to near $50 (U.S.) a barrel, as oil held in storage across the continent has been tapped.

Statoil said it restarted its Leismer project as the fire in the region was brought under control, and production at the 20,000-barrel-a-day development is at about 15,000 barrels a day.

"All staff and contractors are back to work on their assigned work schedules," spokeswoman Allyson Zarowny said. During normal operations, 185 people work there.

This week, Suncor took initial steps toward restarting as much as 600,000 barrels a day of idled capacity, even as a top executive warned that the fire will probably burn until the first snowfall later this year.

About 130 staff had returned to its base plant north of Fort McMurray as of Tuesday. Full restaffing hinges on the status of the fires and the condition of nearby work camps, which still require some clearances from provincial health authorities, said Mark Little, executive vice-president of Suncor's upstream division.

The company is also searching for any wildlife that may have sought shelter during the fires, which have consumed more than 405,000 hectares of forest and are still being battled by crews.

It means employees will very likely encounter residual smoke as hot spots flare up through summer and into the winter, Mr. Little said on a conference call with Suncor staff affected by the blaze. "I wouldn't say it's over," he said. "Could the fire move? Yes, it probably could."

Some temporary housing may be required due to constrained lodging space, Mr. Little said. However, direct threats to Suncor's operations are seen as minimal. Forests around the edges of its base operation have already burned, leaving little fuel. Firebreaks have also been widened, further reducing risks. Air quality remains a bigger concern, although Suncor said its internal monitoring has not yet shown levels of particulates above limits set by Alberta's occupational health and safety laws.

Meanwhile, the company is moving thousands of personnel back to its Fort Hills site, roughly 90 kilometres north of the city.

Construction at the $15-billion (Canadian) mine was temporarily scaled back as spreading fires forced mass evacuations beginning May 3. The company aims to have 3,000 staff back at the site by the end of the week, from about 1,600 as of Tuesday, an executive in charge of the project said.