Canada’s Wildfires Have Been Disrupting Lives. Now, Oil and Gas Take a Hit.
Wildfires sweeping across western Canada that have driven thousands of people from their homes are also striking the heart of Canadian oil and gas country, forcing companies to curb production.
As flames bore down on wells and pipelines, major drillers like Chevron and Paramount Resources together shut down the equivalent of at least 240,000 barrels of oil a day, according to the energy consulting firm Rystad Energy.
What It Means: Fires are sending oil prices higher.
The damage to oil and gas production was likely to significantly surpass current tallies, Thomas Liles, vice president of Rystad’s upstream research, said in a note. A large part of Alberta’s shale gas producing regions remained under “extreme” or “very high” wildfire warnings. Another 2.7 million barrels a day of oil sands production was also at risk.
The disruptions from the fires in Canada, a major oil- and gas-producing nation, have helped push oil prices higher. Chevron said it had shut down all production at its Kaybob Duvernay oil and gas fields in central Alberta. Paramount temporarily shuttered a natural gas processing plant along with production in several gas fields, the company said in its latest update on Sunday. Both companies said they were prioritizing the safety of their workers.
Background: Oil and gas are also vulnerable to climate change.
It isn’t the first time Canada’s oil and gas fields have been hit by fires, and the shutdowns, for now, affect a small proportion of the country’s total oil and gas output. Still, they underscore how the production of oil and gas, the main driver of climate change, is also vulnerable to the increasingly dire consequences of a warming planet.
As climate change intensifies, the risk of devastating wildfires around the world will surge, the United Nations warned in a landmark report last year. Researchers found that in regions with long histories of wildfires, like the western United States and Canada, the burning has become larger and more intense over the last decade.
The fires come amid a multiyear drought and much warmer temperatures than are normal in western Canada, which climate scientists attribute to climate change. And in recent years, Alberta has been more affected by climate-related disasters than almost any other part of the country, including severe floods in 2013, a previous round of devastating wildfires in 2016 and thunderstorms that brought billions of dollars in damage in 2018.
While it’s hard to say how much climate disasters will affect Canada’s oil and gas industry, the country can expect more shutdowns, said Ryan Ness, director of adaptation research at the nonprofit Canadian Climate Institute.
“Canada is in a difficult situation in that the oil and gas industry has been a very important part of our economy for a long time,” Mr. Ness said. “But the reality is that the world has to shift away from fossil fuels and meet our greenhouse emissions targets, or else the types of extreme weather and wildfires and the like we’re seeing will just become unsurvivable.”