Cooler weather on Monday will help in firefighters battle to get the Alberta wildfire under control. The fire, which has destroyed about 620 square miles and has been nicknamed "The Beast", has been burning since May 1 and now has more than 100 water-dropping helicopters flying over it. After expecting the fire to double in size over the weekend, light rains and cooler temperatures helped prevent that from happening. "This is great firefighting weather, we can really get in here and get a handle on this fire, and really get a death grip on it," said Alberta fire official Chad Morrison on Sunday.
The fires have knocked out an estimated 1 million barrels a day, or about half the crude output from the center of Canada's oil sands region, and while the fire approached operations of Suncor Energy, Canada's biggest energy company, there was no damage as firefighters were able to hold the blaze southwest of the area. The good news, as far as the oil facilities and future production are concerned, is that the forecasts show that the winds have shifted, and with gusts of up to 31mph, is moving the fire east, away from the oil sands.
Once the fires are under control, oil sands mining projects could be back to normal production levels in about a week, however projects that require steam to extract the oil could take two or more weeks depending on the start-up method and pressure requirements according to Morgan Stanley.
Companies such as Suncor, Phillips 66, and Statoil ASA have declared force majeure, a provision that protects companies from liability for contracts that go unfulfilled. According to Bloomberg, Suncor has said that it has begun planning to restart production after moving more than 10,000 employees and their families out of the Fort McMurray area. The restart will happen once it's safe and when third-party pipelines are available. The city's water is undrinkable, its gas has been turned off, and its power grid is significantly damaged, so when that restart occurs depends on a number of factors.
Oil is currently trading around $44/bbl
Other than the human impact, and economic impact of lower oil production, one thing to keep an eye on is how much insurance companies will have to cough up in order to cover claims relating to the blaze. In what may be the costliest catastrophe in Canada's history, potential losses may reach $7.3 billion according to Bloomberg.