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OIL AND GAS
Battle against Canada inferno turns to oil sites, infrastructure
By Michel COMTE
Fort Mcmurray, Canada (AFP) May 9, 2016


Oil rally fades as Canadian fires move east
New York (UPI) May 9, 2016 - A rally in oil prices subsided Monday as Canadian wildfires moved away from key production facilities in Alberta, home to some of the world's larger oil fields.

Canadian energy company Suncor had about 10,000 of its employees evacuated from an oil sands operation near Fort McMurray as wildfires rage across the region. The company said the fire moved close to its base operations, but was now moving east, away from the facilities.

"We have routinely brought down assets as part of planned maintenance and safely ramped them back up within days and we believe we can do so in these circumstances," said Steve Williams, Suncor president and chief executive officer, said in a statement late Sunday.

Crude oil prices moved up sharply in overnight trading, but pulled back by the start of trading in New York. The price for Brent crude oil was 1.1 percent lower to $44.85 per barrel early in the Monday session. West Texas Intermediate, the U.S. benchmark price for oil, was down 0.6 percent to start the day at $44.40 per barrel.

April saw crude oil prices move up 25 percent as analysts said the supply-side pressures that pushed oil lower were starting to fade. Underlying economic weakness has surfaced in recent days, notably from weak labor data in the United States, that suggest demand is still below what's needed to take up the volume of crude oil on the market.

The rally may be taking a breather as traders gauge the shakeup in the Saudi government that saw longtime Oil Minister Ali al-Naimi pushed aside. Naimi steered a Saudi oil policy that prioritized lower oil prices as a way to defend a market share from high-cost producers like the United States, which is experiencing a decline in output.

Naimi will be replaced by Khalid al-Falih, the head of state oil company Saudi Aramco. Falih said last year that supply, demand and economic fundamentals would be the governing factors for oil markets.

Firefighters battled Monday to protect oil installations in Canada's wildfire-ravaged city of Fort McMurray, capital of the country's oil sands region, as rain and cooling temperatures slow the spread of the blaze.

Crews turned their attention to the oil facilities that are the economic lifeblood of western Canada's Alberta region, huge swaths of which have burned to the ground in the runaway fires that have raged for more than a week now.

With weather conditions improving and the fire propagating somewhat more slowly, officials said firefighters can now focus on safeguarding the region's industry, as well as restoring essential infrastructure that will have to be up and running before evacuees can return.

Alberta's Premier Rachel Notley is planning to provide an update later Monday on the damages and losses, which according to initial estimates total some $9 billion.

Authorities have yet to say when they expect the tens of thousands of evacuated residents -- who are growing more impatient by the day -- will be able to return to rebuild homes and businesses destroyed by the blaze.

First, they will need to conduct a top-to-bottom review of the damage and replace vital infrastructure -- a process which they acknowledge won't happen quickly.

"We're going to start getting some folks on the ground that can start having a look at those damage assessments and getting a better feel for it," said Scott Long, director of Alberta's Emergency Management Agency.

"We have paid special attention to the critical infrastructure within Fort McMurray, because things like 4power stations, schools, and hospitals, water treatment plants, are essential for the re-entry planning," he explained.

Long said transformers will have to be brought in, as well as equipment to get the water system up and running again. Hospitals and clinics will have to be brought up to code, prior to the return of residents.

- Thousands homeless -

Ralph Goodale, minister for public security urged evacuees to be patient.

"The recovery here is not going to be quick and it's not going to be easy. It will be essential to make sure that can be done safely," he said.

Officials said the inferno consists of 34 discrete fires, five of which are blazing out of control, and containing them is proving to be a massive challenge for even the huge contingent of 1,500 firefighters, 150 helicopters and 30-odd firefighting aircraft deployed to the region.

The fires by-and-large have spared the downtown area, but residential areas, particularly in the west and north of Fort McMurray, have been devastated, said officials, who say that thousands of the city's inhabitants have been left homeless.

The cost of battling the fire, which is continuing to cause havoc, is proving to be a huge economic setback for the entire province.

On Sunday, the local gas and electricity company Atco dispatched a team of 250 workers to start getting the electrical network back on line, including replacement of wood pylons used for the power lines which went up in flames.

The gas supply to the city, which was turned off as the fire bore down on Fort McMurray, will also have to be brought back online, authorities said.

Oil drilling operations have been suspended, causing local companies to have to forfeit the production of between a million and 1.5 million barrels of oil per day -- a blow to a region that already had fallen on rough economic times.

The industry's thousands of workers will also take several days to get back at their jobs.

- Financial aid -

About 100,000 people who were forced to flee the city continue to hunker down in shelters and barracks normally used to house oil workers.

For thousands forced to clear out from the city about a week ago, university dorms, youth hostels and camp grounds -- or even parking lots -- are now home, in many cases hundreds of kilometers (miles) from Fort McMurray.

Another problem is providing schooling to the children affected by the disaster, which threatens to continue for weeks and maybe months.

On Monday, Alberta's capital city Edmonton and it's largest city Calgary, offered a total 12,000 places in their schools for children who evacuated Fort McMurray.

Some five tonnes of vital food supplies were airlifted by helicopter to an indigenous community to the southeast of Fort McMurray.

In a bit of good news, evacuees were finally to be given financial aid: 1,250 dollars for each adult and 500 dollars per child to tide families over until they can access their own financial resources.

Insurance companies, meanwhile, have said they will also work to make funds available quickly for claims over losses sustained in the disaster.


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