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Alberta Wildfires Widen, Increasing Threat to Oil Production

by Krystal

Wildfires in Alberta continue to spread, putting more crude oil production at risk and triggering evacuation alerts.

Currently, the impact on oil production is relatively minor, but concerns are growing that if the fires persist, production cuts could become more significant. In early July, Suncor reduced output at its Firebag site and evacuated non-essential personnel. This week, Imperial Oil announced it would also evacuate some non-essential workers from its Kearl site. Combined, Firebag and Kearl produce over 500,000 barrels of oil daily.

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According to Reuters, up to two-thirds of Alberta’s oil production comes from the oil sands region, raising concerns among analysts that further disruptions could occur. As of late Wednesday, Alberta had 175 active wildfires, including a dozen near Fort McMurray, the province’s largest oil sands production center.

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The wildfires have led to a state of emergency in one Alberta town and an evacuation order for Jasper, a town in western Alberta.

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Despite a strong year for Alberta’s and Canada’s oil industry—marked by the Trans Mountain pipeline’s startup and expected production growth—there are worries about future impacts. The federal government’s proposal to impose an emissions cap on the industry could rapidly change the situation. The plan aims to limit 2030 emissions to 35% to 38% below 2019 levels, with some flexibility to emit 20% to 23% below 2019 levels.

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Both the industry and Alberta’s oil sector have criticized the emissions cap proposal, arguing it could limit oil and gas production and potentially lead to a $55 billion investment loss, according to the Canadian Association of Petroleum Producers.

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