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Cenovus, Canadian Natural shut down oilsands output at Foster Creek due to forest fire

Last updated: 13:58 25 May 2015 BST, First published: 18:58 25 May 2015 BST

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The fire started on Friday inside CLAWR, covers about 9,884 acres, and is considered “out of control,” according to the Alberta government’s website.

Cenovus Energy (TSE:CVE), the Canadian oil and gas producer with refineries in the U.S, has evacuated about 1,800 workers and shut down production at its Foster Creek oil sands site in Alberta as a precaution because of a nearby forest fire.

Company spokeswoman Rhona DelFrari said yesterday that there was still no direct threat from the fire to Cenovus operations as of yesterday morning. 

"We will continue to assess the situation to decide when we can bring staff back to site and start to ramp up operations again," she said.

The company had said on Saturday that the fire was about 30 kilometers south of the facilities and had shut the only access road to the operations.

Production at Foster Creek, which is situated on the Cold Lake Air Weapons Range (CLAWR) and is jointly owned with ConocoPhillips, was averaging about 135,000 barrels per day, with the output split between the two companies, Cenovus said.

Separately, Canadian Natural Resources (TSE:CNQ) reduced production from its Kirby South oil sands operation, raising the amount of production brought offline because of a nearby forest fire to 233,000 barrels a day.

Crude output was cut by 18,000 barrels a day to 12,000 at the site, Julie Woo, a company spokeswoman, said in an e-mail Monday. Canadian Natural yesterday said 80,000 barrels a day of production was shut at its Primrose facility.

The production affected by the blaze amounts to about 10 percent of the country’s total oil-sands output at a time when the discount for heavy Canadian crude relative to the U.S. benchmark has stayed below $10 for all of May, the longest streak in five years.

The fire started on Friday inside CLAWR, covers about 9,884 acres, and is considered “out of control,” according to the Alberta government’s website. 

Canada will produce about 2.3 million barrels a day from the oil sands this year, according to the Canadian Association of Petroleum Producers. The Cold Lake fire has claimed the life of a pilot that was fighting the blaze, according to the Alberta agency.

Cenovus lost 1.3 percent to $21.05 at 1:27 p.m. in Toronto, while Canadian Natural skidded 0.3 percent to C$38.50.

 

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