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Workforce key to oilsands restart, observers say

Extended downtime could lead to industry requesting financial help


 

CALGARY – When energy company executives meet Tuesday with Premier Rachel Notley, they should urge the Alberta government to do whatever it can to facilitate the return of their employees in the wake of the wildfire that has devastated Fort McMurray, observers say.

CEO Mark Ward of Syncrude Canada and Steve Laut, president of Canadian Natural Resources Ltd., will be among those meeting Notley in Edmonton to discuss how to get the oilsands industry back on track following the evacuation of 80,000 people from the city.

Warren Mabee, director of the Institute for Energy and Environmental Policy at Queen’s University, said he thinks the companies will be anxious to see people allowed back into Fort McMurray as soon as possible because a stable workforce is critical to their operations.

“I would be looking for a better update on what’s happening on the ground,” he said. “The oilsands can continue to operate – as we said, they haven’t really lost a lot of their critical infrastructure – but what they have lost, right now, is the support mechanism that the whole city represented and that is significant.

“Without that, their costs go through the roof. It’s essential to those companies that the city gets up and running even if all the neighbourhoods aren’t inhabited, even if all of it isn’t back where it was.”

Mabee said an extended period of downtime due to infrastructure or staffing issues could lead to the industry requesting financial help through bailouts or tax incentives.

Asked about the issue on Monday, Notley said the main issue is ensuring the safety of the employees and that there is logistical support for them.

“That and other issues will be discussed with the key leaders (in the oilpatch) but we’re hopeful that we will be able to move in a relatively expedited way,” she said.

Rob Bedin, a 30-year engineer and director at Calgary-based consultancy RS Energy Group, said he doesn’t think the industry will ask for money but agreed that staffing is one of the biggest questions it is facing before the production of an estimated one million barrels per day of raw and upgraded bitumen can resume.

“The fact that it was an organized shutdown, that’s positive in regards to the speed at which it will come back,” Bedin said.

One concern for the sector is water quality. Oilsands mines that draw water from the Athabasca River or have open storage ponds could be exposed to ash contamination. Bedin said producers who have been able to keep their water heating systems warm will have an easier time getting their plants running again.

Jackie Forrest, vice-president of energy research at ARC Financial in Calgary, pointed out the oil sector was back in business within two weeks after wildfires that had closed thermal operations south of Fort McMurray were extinguished last spring.

“Although this is much more serious, once the fires were out, the operators were in there fairly quickly and getting their production back on line,” she said. “Assuming there’s no damage to the actual facilities, that will happen quite quickly.”

Imperial Oil Ltd. said Monday that it had shut down its Kearl operations due to the uncertainty of the situation. Imperial said the plant and other assets were unaffected by fire, and there was no form timeline for operations to resume.

Earlier Monday, the Canadian subsidiary of Norwegian energy giant Statoil ASA said it had closed its Leismer demonstration oil project, which had been producing about 20,000 barrels of bitumen a day. It was shut down after the precautionary closure of an Enbridge pipeline that supplies light oil to the Leismer site, Statoil ASA said.


 
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