Oil and gas companies curtail production as fires continue to blaze in Alberta

Some oil and gas producers in Alberta are temporarilyshutting in production as wildfires rage across the energy-producingprovince.

With more than 100 active fires burning across Alberta and aprovincial state of emergency in place, oil and gas companies withoperations in the western and northwestern parts of the provincehave relocated workers and halted operations.

Crescent Point Energy Corp., which has significant operations inthe Kaybob Duvernay light oil play, said Monday it has temporarilyshut in production of approximately 45,000 barrels of oil equivalentper day in the affected areas.

Vermilion Energy Inc. has shut in about 30,000 barrels per day ofproduction, while Paramount Resources Ltd. said Sunday itsoperations in the Grande Prairie and Kaybob regions arebeing affected and that it has temporarily curtailed about 50,000barrels per day of production.

Rafi Tahmazian, a portfolio manager with Toronto-based investment firm Canoe Financial, says while this temporary halt in production might seem like bad news for energy companies, it's ultimately a positive for them. With supply down, priceswill go up.

"It's a blip in the life of the company's production," hesaid.

"We're on such a thin razor's edge of availability that it's going to generate opportunity for pricing."

Tahmazian says he doesn't see the current wildfires as causing any medium- or long-term effects on energy prices. And for consumers, he believes it's unlikely a small spike in price will actually affect costs at the pump.

Unclear when production will resume

Tourmaline Oil Corp., Canada's largest natural gas producer, saidMonday that members of its staff and their families have been safelyremoved from certain operated facilities and homes in the Edsonarea. Tourmaline has shut down nine gas processing facilities in theregion.

Cenovus Energy Inc. said in an email it has safely shut inproduction and brought plants down in some areas of its conventionalbusiness.

Other companies that have shut in production include PipestoneEnergy Corp., which has temporarily curtailed approximately 20,000barrels per day of production in the Grande Prairie area, andKiwetinohk Energy, which has shut in the majority of its Placidoperations "in response to downstream third party interruptions"that are in proximity to the Alberta wildfires.

Most of the affected companies have reported no damage to theirinfrastructure or assets so far. Vermilion Energy said itsassessment to date indicates "minimal" damage to keyinfrastructure.

It is unclear when oil and gas companies will be able to resumeoperations in the affected areas.

Scotiabank analyst Jason Bouviersaid in a morning note to clients that Crescent Point alone couldsee its 2023 cash flow per share decrease by about four per cent dueto the impacts of the fires, assuming the company's KaybobDuvernay production is shut in for the remainder of the secondquarter.

About 29,000 people have had to leave their homes due to the wildfires.

Alberta Premier Danielle Smith declared a provincial state ofemergency on Saturday.