A rapidly spreading wildfire in northeastern Alberta has forced the evacuation of several communities near the heart of Canada’s oil sands industry, putting over two million barrels per day of crude production at risk.

On Monday afternoon, the Regional Municipality of Wood Buffalo issued an evacuation order for the Fort McMurray neighbourhoods of Beacon Hill, Abasand, Prairie Creek, and Grayling Terrace as an out-of-control 209-square-kilometre wildfire advanced, prompting nearly 7,000 residents to flee their homes.

While oil sands operators have not yet reported any impacts to operations, energy consultancy Rystad Energy estimates that over 2.1 million barrels per day (bpd) of marketable oil sands output could be threatened if conditions worsen further.

This equates to around 2.6 per cent of global crude oil and lease condensate supply.

Thomas Liles, Vice President at Rystad Energy, said that although wildfire danger ratings have improved overnight, the fire is not yet contained and the evacuation order remains in place, meaning threats to production cannot be ruled out.

The current blaze, known as MWF-017, is located south of the Athabasca River and intersects with critical midstream infrastructure servicing major mining and upgrading projects like Suncor’s Base Operations, Syncrude, and the Long Lake thermal in-situ project.

The situation harks back to the upheaval the industry experienced in May and June 2016 when a major wildfire brought nearly 1 million bpd and 600,000 bpd of production offline, respectively.

Liles noted that while the current flora around Fort McMurray is still recovering from the 2016 fires, slowing the spread this year, wildfire seasons in the Western Canadian Sedimentary Basin have become increasingly severe in recent years.

In a worst-case scenario based on current wildfire perimeters, Rystad Energy estimates that up to 1.73 million bpd of marketable oil sands production could be at risk, with synthetic crude grades from upgrading facilities likely seeing the largest impacts.

However, some of this potential disruption may be offset by planned maintenance turnarounds at facilities like Horizon, Suncor’s Base Operations, Syncrude, and Kearl, which could reduce the impact to around 2.13 million bpd when excluding maintenance.

Liles warned that if more serious conditions emerge, this could usher in upside price volatility for global crude markets.