After Wildfire, Canadian Oil-Sands Boomtown Rebuilds
Inferno Rapidly moving wildfire shut down oil-sands production and displaced the entire population of Fort McMurray, Alberta, in early May. Photo courtesy of Canadian Armed Forces
Fort McMurray, Alberta, the center of Canadian oil-sands crude production, was evacuated on May 5, when a wildfire swept through the city’s outlying forests and through the streets, destroying more than 2,400 structures. It is a particularly devastating blow to a city that has lost thousands of jobs and endured dramatic economic hardship during the past 18 months, following a precipitous plunge in oil prices. The fire touched off the largest forced evacuation in Canadian history, displacing almost 90,000 residents.
“The town was suffering already,” says Douglas Worobetz, board chairman of the Alberta Building Trades and manager of the Sheet Metal Workers International Association Local 8, in Edmonton. “Most of the oil production had to be shut down— hundreds of millions [of dollars’] worth of losses. It just couldn’t come at a worse time.”
None of the $100 billion worth of oil-refining infrastructure that surrounds Fort McMurray was damaged, but local reports say nearly one million barrels per day of raw and upgraded bitumen—representing a quarter of Canada’s total production—is no longer being extracted. Also, it is extremely rare for a massive, high-tech oil-sands refining center to go through a complete shutdown. The extent of the damage and delays in returning systems to complete capacity is unknown.
“There are a lot of moving parts to these plants, and everything has to be done in a very particular order and sequence. So, contractors are already hiring to help get them restarted,” Worobetz tells ENR. “They’ve been flying in pipefitters, electricians … they’ll need all the trades to get back on line.”
Ironically, natural disasters often translate into opportunities for contractors, and the rebuilding effort could provide the direction and funding needed to help firms to persevere through the oil market’s collapse. However, the Fort McMurray Construction Association says local contractors are in danger of closing their businesses as they have been frozen out of remediation work by federal agencies managing the response effort.
In a letter to Oneil Carlier, Canada’s minister of forestry and agriculture, FMCA President Charles Iggulden lamented the fact that, because local contractors were not prequalified with the provincial Sustainable Resources Development agency, they were not eligible to work on government remediation contracts that could reach into the billions of dollars.
“[FMCA] has concerns that the Alberta government and other authorities will ignore the fact that Fort McMurray has a large supply of contractors and equipment [that] can assist with the needs of the Sustainable Resource Development [agency] to aid in the fight of the fire and the subsequent cleanup,” said Iggulden. “By ignoring our local contractors at this stage of the fight, you may actually be inflating the cost associated with rebuilding as these contractors may have to close their businesses.”
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Thousands of workers already have been deployed. The Alberta Emergency Management Agency says utility company Atco has sent 550 staff to Fort McMurray to restore the critical natural-gas, electricity and water systems needed for the larger remediation and rebuilding efforts.
Local contractors need that work, Iggulden said, adding that, if funding isn’t in place within weeks, “not months,” for the rebuilding effort, local construction firms won’t survive.
Fort McMurray is an engineering center: Fluor is one of the biggest employers in Alberta, and all ENR’s top-10 oil-and-gas contractors have a presence in the area.
AECOM, with more than 2,000 employees in Alberta, started a social media fund-raising campaign for its Fort McMurray workers, vowing to match any donations. “Thankfully, everyone is safe and accounted for, but they now face the challenge of rebuilding their lives,” said AECOM spokesman Jeffrey Roman in a statement.
Worobetz said the strong presence of the engineering community will help in securing the workforce and expertise needed for the rebuild effort. The Fort McMurray Fire Dept. said the cause of the fire is still under investigation, with the latest surveys indicating that more than 230,000 hectares were destroyed. The Bank of Montreal says insurance claims alone will cost $9 billion. At press time, evacuees still had not been allowed to return.
