By Jessica Resnick-Ault and Liz Hampton
NEW YORK/CONKLIN, Alberta, May 8 (Reuters) - The mass
evacuation of residents from the wildfire-devastated Canadian
oil town of Fort McMurray is likely to significantly delay the
restart of production, even though energy facilities themselves
have escaped major damage from the flames.
The huge wildfire that entered its second week on Sunday has
destroyed entire neighborhoods in the town, forcing nearly
100,000 people to flee.
Even though Canadian officials on Sunday showed some
optimism that they were beginning to get on top of the wildfire,
oil prices jumped in early Asian trading on concerns over the
loss of production capacity caused by the fire -- equivalent to
around half of the country's oil sands production.
Energy facilities were barely touched through the first week
of Alberta's devastating wildfire, protected by fire breaks,
other defenses and provincial firefighting crews.
But thousands of evacuees -- many of whom are essential oil
industry workers -- are camped out in nearby towns and stand
little chance of returning soon, even if their homes are intact.
The city's gas has been turned off, its power grid is damaged,
and the water is undrinkable.
"It's the human element," said Mark Routt, chief economist
for the Americas at KBC Advanced Technologies in Houston.
"When you have an operator and his family needs to be
evacuated, the plant may be in good shape, but what is the
operator going to do? Humans have to operate the plant, too."
Routt estimated that production will be shut for two to
three weeks, minimum. And if fires do pass through major oil
operations, he said, a restart could take months:
"Many of these plants have a fireproof control room - the
problem will be equipment on the units," he said, referring to
production facilities.
Producers whose facilities are untouched may also find that
their contractors fared less well.
"If some major service operations (in Fort McMurray) are
damaged, the oil sands will still get back online, but it may be
at a higher cost than before, maybe having to secure service
companies from much further away," said Jackie Forrest, analyst
at ARC Financial.
A prolonged shutdown will heighten concerns about supplies
after three major oil firms warned on Friday they won't be able
to deliver on some contracts for Canadian crude. Fires around
the oil sands last summer knocked out 10 percent of capacity but
the two firms affected were back up and running within 2 weeks.
Only one oil sands production site, CNOOC 0883.HK unit
Nexen's Long Lake facility, has sustained minor damage, and
provincial fire officials said on Sunday they expected to hold
flames back from Suncor Energy Inc's SU.TO main oil sands
plant north of Fort McMurray.
Alberta's vast oil sands are the world's third-largest crude
reserves. The fire has shut down about 1 million barrels per day
or 40 percent of total oil sands production.
The fire that some have started calling "the beast" was not
the first to hit the oil sands. But the huge scale of the
inferno means there is no real precedent for the challenge.
BUFFER ZONES, DEDICATED FIREFIGHTERS
Suncor has boosted fire protection around its facilities,
using bulldozers and other heavy equipment to clear trees and
vegetation, and installing water sprinklers and pumps, said
spokesman Paul Newmarch.
"We have experienced, trained staff on site and monitoring
technology to protect the well-being of our people and assets,"
he said.
Canadian Natural Resources Ltd CNQ.TO constructs
facilities at an "appropriate distance" from the tree line to
reduce the risk of fire, spokeswoman Julie Woo said in an email.
She said the company has an on-site fire department at its
Horizon facility, with 42 full-time firefighters and 65
auxiliary staff who can step in as needed.
Syncrude, majority-owned by Suncor, has two crews of its own
firefighters in Fort McMurray helping to contain the blaze. They
are also monitoring the firm's local sites and can respond if
needed, spokesman Leithan Slade said.
Slade said the Mildred Lake upgrader, which processes mined
bitumen into refinery ready synthetic crude, is the most
critical infrastructure on site and is surrounded by buffer
zones free from vegetation. Syncrude's enormous open-cast Aurora
mine also functions as a firebreak.
"We are working on finalizing a restart plan," said Slade.
"There are a lot of folks in a lot of rooms with a lot of
expertise looking at this."
In contrast, ConocoPhillips (NYSE:COP) COP.N said its Surmount
facility, south of town, must rely on the province for
protection.
"If the fire comes through, there is nothing we can do. We
don't have any fire suppression for forest fires," spokesman Rob
Evans said. "There are no external defenses."
Surmount is not a conventional open pit oil sands mine, and
instead extracts oil by pumping steam deep underground to
liquefy tar-like bitumen so it can flow to the surface.
Evans said the site, which had some 600 workers when it was
evacuated, has a fire suppression system that includes
sprinklers but it is meant to deal with internal fires.
Enbridge Inc ENB.TO said its terminals south of Fort
McMurray, which were evacuated on Wednesday, are designed to
withstand fires even inside storage tanks or on roofs.
"The content of the tanks is processed heavy oil, which has
low volatility," said spokesman Graham White in an email. "They
are also surrounded by gravel berms and firebreaks, so there is
very little risk, even from a close fire."
Shell Canada RDSa.L said it designs its sites with fire
breaks, and that the provincial government requires wildfire
control plans, which the company updates each year.