Skip to main content

Pipelines at Canadian Natural Resources Primrose Lake oil sands project are seen near Cold Lake, Alta

Dan Riedlhuber/Reuters

A distant secondary consideration to the human tragedy unfolding in Fort McMurray is the impact to the oil sands' energy output and the operations of its biggest producers.

The wildfires have forced nearly 40 per cent of the region's production off line, according to estimates. But once the flames are extinguished and the damage to energy infrastructure can be assessed, the energy sector itself will likely not have to contend with much more than a temporary disruption, according to RBC Dominion Securities.

"From where we sit, we would be buying oil sands producers on weakness caused by the wildfires, recognizing that while operational risk still exists, it is essentially tantamount to an unplanned outage that should come out in the wash once second-quarter results are released," RBC's energy analysts said in a note.

Story continues below advertisement

As the fires quickly advanced on Fort McMurray, forcing the evacuation of a city of more than 80,000 people, several large producers opted for partial or complete shutdowns. Up to 1 million barrels per day of production capacity was taken off line, which amounts to about 38 per cent of the oil sands' outlook of 2.6 million barrels per day, RBC said.

Several pipelines were also shut down, "out of an abundance of caution," the note said.

"Unless the fires spread, the pipeline infrastructure should be ready to deliver diluent into the Fort McMurray region – and receive oil once the fire situation has been definitively extinguished, and safety inspections have occurred. Power infrastructure – critical to the oil sands, will also need to be inspected for damage."

So far, the biggest oil sands stocks have not been subjected to much in the way of a correlated selloff, but any share price declines would provide buying opportunities in stocks that RBC rates as outperformers: Canadian Natural Resources Ltd., Cenovus Energy Inc., Suncor Energy Inc., Husky Energy Inc., and MEG Energy Corp.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter