Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
As cold temperatures and light rain have stabilized a massive wildfire that destroyed vast parts of FortMcMurray, the heart of Canada’s oil sands industry, companies and authorities have begun discussing plans to resume production.
Top producers such as Suncor Energy, Syncrude Canada, Royal Dutch Shell, Imperial Oil and ConocoPhillips took about a million barrels a day offline over the past week, with more shut in on Monday, as they focused on keeping their workers safe and sheltering evacuated locals.
But the region, already battered by a sustained drop in oil prices, is seeking to restart normal operations as soon as possible and so generate much-needed income.
Estimates of how long that will take vary, with the minimum being about a week. Touring the area Monday, Alberta Premier Rachel Notley said the situation was “unprecedented” and that her government was just beginning to realize what the economic impact would be.
Members of the RCMP inspect burnt out homes destroyed by the Fort McMurray Wildfire, on May 7, 2016. (Image courtesy of the Alberta Royal Canadian Mounted Police — RCMP.)
Oil prices have been volatile as a consequence. They climbed again Tuesday, building on Monday’s gain as investors responded to news of supply disruptions, not only in Canada, but also in other countries such as Nigeria, which have knocked out 2.5 million barrels of daily production.
Despite the momentary output reductions, oil prices are down by more than 2% this week, hampered by worries that even hefty dents to production will have little effect on the growth of stocks of unwanted crude.
About 88,000 residents were forced to flee. (Image from Canadian Press, via YouTube)
About 88,000 people were forced out of Fort McMurray in the past week with the bulk of the city’s evacuees moving south after a mandatory evacuation order. About 25,000 moved north and were housed in camps normally used for oil sands workers until they also could be evacuated south.
Fort McMurray is home to the world’s largest single oil deposit, containing an estimated 174 trillion barrels of bitumen, the core raw material in the production of synthetic crude oil.
