Canadian oil production in 2016 – despite an upward revision by 60 tb/d in 1Q16 – was revised down by 25 tb/d from the previous MOMR to average 4.48 mb/d, due to a vast wildfire in the Fort McMurray area in the province of Alberta, which has caused an approximate outage of 0.7 mb/d in May. This has dragged the forecast lower by 160 tb/d for 2Q16. Expectations for Canadian oil production growth for the year are now lower at 60 tb/d, despite the startup of 0.17 mb/d of new projects and the ramp-up of nine old projects started in 2015.
The wildfire began on 1 May southwest of Fort McMurray and on 3 May swept through the area, forcing the largest wildfire evacuation in Albertan history. It continues to spread across northern Alberta and into Saskatchewan, consuming forested areas and impacting Athabasca oil sands operations. On 16 May, the fire reached oil sands work camps south of Fort MacKay, forcing the evacuation of 19 oil sites and camps with approximately 8,000 workers. By 18 May, the fire had grown to 423 thousand hectares and expanded into Saskatchewan. It is still burning and is expected to take months to contain and extinguish.
The wildfire has halted oil sands production at facilities north of Fort McMurray, shutting down an Albian Sands mining operation located about 70 kilometres north of Fort McMurray. The Albian Sands operation supplies Shell Canada's 255 tb/d Scotford upgrader. Suncor Energy and Syncrude Canada also scaled back operations. Suncor's Millennium and North Steepbank mines are two of the largest and oldest oil sands mining operations in the Fort McMurray area, and Syncrude's Mildred Lake oil sands mine is located 35 kilometres north of Fort McMurray. On 7 May, Syncrude shut down all site and processing operations. Syncrude Canada reduced total May deliveries to customers by 35% on 9 May after shutting production. A quarter of Canada's oil production, equal to approximately 1 mb/d, was halted as a result of the fire. Other sources reported that the fire led to the shut-in of an estimated 1.2 mb/d, as producers at 11 oil sands plants suspended operations due to safety concerns, a lack of pipeline transport and diminishing diluent supply.
There were 41 active rotary rigs in May (14 oil rigs and 27 gas rigs) based on Baker Hughes’ weekly report ended 03 June, down by 44 rigs (-52%), y-o-y. Of these, 29 are active in Alberta, five in British Colombia and six in Saskatchewan. Moreover, one offshore rig was active in the province of Newfoundland.
Mexico’s oil supply for 2016 is expected to decline at a slower pace of 0.13 mb/d, with average supply anticipated to be at 2.47 mb/d. Mexican liquids production in April averaged 2.49 mb/d, down by 30 tb/d m-o-m, while oil output in 1Q16 was pegged at 2.54 mb/d, down by 50 tb/d q-o-q and 0.11 mb/d y-o-y. In April, crude oil saw a decrease of 40 tb/d to average 2.18 mb/d, while NGLs remained at more or less 0.3 mb/d. Mexican oil output in 1Q16 decreased by 50 tb/d to average 2.23 mb/d q-o-q. According to Pemex, crude oil output from the KMZ complex was lower in April by 170 tb/d to average 0.84 mb/d compared with March figures and lower by 20 tb/d y-o-y. Production in Chuc and Cantarell were also down in April by 10 tb/d and 6 tb/d, respectively.