The wildfires burning across Canada’s main natural gas-producing region may trim 0.2 per cent to 0.3 per cent from growth in the country’s gross domestic product in May if much of the area’s output remains shut for the month, one of Bank of Nova Scotia’s top economists estimates.
That projection is rough and could evolve as more shutdowns are announced, but the blazes “are going to be messing with the Canadian economic statistics,” Derek Holt, head of capital markets economics, said in a note to clients Tuesday.
“We’re getting into the high single-digits of Alberta’s total oil output that is being shut-in, and oil and gas is about 5.3 per cent of monthly Canadian GDP,” Holt said. “There are also effects on prices, including Alberta hub natural gas and Western Canada Select crude oil prices that have been rising as the fires and shut-ins have spread.”
Canada’s economic growth already was expected to stall in the middle of this year as rate hikes from the country’s central bank cool activity. Since the production shock is transitory, it “should not impact monetary policy as rebounds and possible rebuilding will follow,” Holt said.
Alberta blaze count declines
Alberta was reporting 89 active wildfires as of 8:25 a.m. Mountain time, with 27 of those out of control. That’s down from more than 100 total active fires yesterday.
Those blazes have shut down the equivalent of at least 234,000 barrels a day of oil production, sending low-sulfur sweet crude prices in Canada to a one-year high. Nearly a fifth of western Canadian natural gas supply has been suspended, prompting a surge in those prices as well.
Trudeau says federal response under discussion
Prime Minister Justin Trudeau said his government had received the official request for assistance from Alberta Premier Danielle Smith and her government. Discussions are underway on how best to respond, and resources are being mobilized as quickly as possible, he said.
“Over the past number of days, federal resources have been stood up and made ready for what we expected to be a request for assistance,” Trudeau told reporters in Ottawa. “We’re going to be able to be there for the people of Alberta.”
Below is a summary of operational updates from companies operating in the area:
Keyera Corp. shut six gas plants over May 4-5, including Brazeau River, Pembina North, Zeta Creek, Cynthia, Nordegg and Wapiti gas plants.
ARC Resources Ltd. said it has faced only minimal effects to its operations resulting from impacts to third-party pipelines and related infrastructure.
Canadian Natural Resources Ltd. has temporarily shut the equivalent of about 39,000 barrels of oil production, including all sites in proximity to wildfires. Oil-sands mining operations haven’t been affected.
Baytex Energy Corp. cut 10,000 barrels of daily oil equivalent production, with 70 per cent of the output being crude oil.
NuVista Energy Ltd. shut about 40,000 barrels a day of production after depressurizing operations close to fires.
Crescent Point Energy Corp. has shut in 45,000 barrels a day of production in the Kaybob Duvernay region, though the company said it has seen no damage to its assets.
Vermilion Energy Inc. temporarily shut 30,000 barrels a day of production, but added in a statement that initial assessments indicate minimal damage to key infrastructure.
Pipestone Energy Corp. has shut in around 20,000 barrels a day of production.
Tourmaline Oil Corp. has closed down nine South and West Deep Basin gas-processing facilities as nearby fires expanded and new wildfires rapidly emerged.
Tamarack Valley Energy Ltd. had to shut about 220 barrels a day of production after the gas-processing plants operated by other companies went out of operation due to the blazes.
Pembina Pipeline Corp. shut its Saturn I and II gas plants north of Hinton and the Duvernay Complex, west of Fox Creek. The facilities have a combined processing capacity of 443 million cubic feet a day, net to Pembina. Related pump stations, gathering systems and supporting infrastructure are also down. Wapiti Gas Plant, KA Plant, K3 Plant and Peace Pipeline system’s 20-inch line from Fox Creek to Edmonton have resumed operation after being temporarily shut.
TC Energy Corp. halted two compressor stations on its Nova Gas system nearest to active wildfires, the company said in an email Sunday. Other sections of the system and other networks continue to operate safely. The company is keeping workers away from facilities near active blazes unless necessary.
Article source: https://financialpost.com/commodities/scotiabank-alberta-wildfires-trimming-canada-gdp?utm_campaign=eBulletin_230517&utm_medium=email&utm_source=autopilot#:~:text=The%20wildfires%20burning%20across%20Canada,Scotia's%20top%20economists%20estimates.