Oilsands Wildfire

Thought I’d bring some attention to a massive disaster currently under way in my province (lots of Canadians here so probably some interest). So far, the latest reports based on last night’s damage is 1,600 buildings destroyed. Over 90,000 people have been forced out of their homes. Thankfully, no lives lost at this point. http://www.cbc.ca/beta/news/canada/edmonton/catastrophic-fort-mcmurray-wildfire-surpasses-10-000-hectares-1.3566310 Some of the photos and videos coming out over the past 24 hours are terrifying. Folks fleeing down highways lined with fire. Neighborhoods gutted. There is a financial markets impact as well as Fort McMurray is at the heart of the oilsands and most of the workers live in town or at the nearby camps. A few producers have indicated they have reduced production due to the impacts of the fire. This is pretty much the extraction centre of the Canadian oil industry. Anyway, for those inclined, the Canadian Red Cross is accepting donations to assist the displaced residents. Not sure of tax deductibility for Americans. No pressure of course, just raising the issue.

As it’s not clear from my original post: no oilsands production facilities are threatened by the fire. The production impacts are due to displaced workers.

This is really a terrible news. I hope every property burned in this fire was insured. But how long would be this reduction in oil production? This will definitely put pressure on Canadian oil market, which is already struggling with low oil prices. This incident can also impact housing price in that location.

The pictures in the gallery on Globe and Mail’s website were pretty intense. A couple of our guys at work today were thinking about what the impact on Canada export gas flows would be, since SAGD projects tend to be gas consumers rather than suppliers. Suppose that’s what you get with ex-traders!

In other natural disasters, I was happy my house didn’t flood in the Houston flash floods 3 weeks ago. I’m 2/2 in the past 12 months!

Not sure many houses will be left by the sounds of it. Might be a full rebuild. Will be tough to get labour for the oilsands.

if you lost your job, recently bought a house in Fort Mac and were looking to leave but couldn’t sell your house without taking a big loss, you make some money on this fire, and find some freedom. for the other 99% of people, brutal times. go long Black Diamond, a company with remote accomodations surrounding Fort Mac!. this is where all the displaced people will end up as production will resume far before Fort Mac is rebuilt. stock is up 20% today. i’m suprised and happy to see nobody has died given how hellish it looks out there.

So what’s the deal with this oil sands fire? Is it like a bunch of sands burning? Sounds pretty intense…

Ohai, as far as I’ve heard no facilities have actually burned yet. The town that services a large portion of the Canadian oil sands industry is on fire - trees, houses, businesses, schools, cars and trucks, etc.

^ So significantly more important things are burning? Thats no good. Any idea what caused it?

I should probably just look this up. What I mean is, what is the transmission method of this fire? In California, for instance, grass burns and spreads fire to residential areas or other places. What is burning in the oil sands? It sounds like a lot of land all on fire, which is pretty scary sounding. It is probably something else though…

Looks like your typical wild fire. Probably a cigarette butt or a plastic bottle in the sun. Who knows.

Trees Ohai. The Canadian boreal forest is dense 100 foot tall pine and spruce. Constant wild fire suppression over the last century has now created so much fuel load that a fire can grow and move extremely fast in the right conditions. 90’ F temps in the Canadian North in May, with 10% humidity and high winds, was a big factor as well. The current fire size has now grown to 85,000 hectares, which is about 328 square miles.

Most of the oil sands mining projects are north of Fort McMurray so I don’t think the projects themselves are burning. The area is blanketed by the Boreal forest and there’s a tons of trees there which are what have fueled the fire. I think a big part of the problem has been it’s been very windy there the last two days.

Definitely feel for the people up there. The last year and a half have been difficult enough.

I hold a fairly small chunk in GameHost (casino operator), and one of the Casino’s got closed as part of evac. The stock already took the hit of 10%-ish, once the news came out. Press release claims they have coverage against business interruption. Should I hold, or you guys think it’ll get hammered as it drags out?


I don’t think that’s how insurance works. They don’t buy you out. They pay for your rebuild. You’ve still got to sell the house.

True. Though the fire continues to grow out of control. I imagine Nexen Long Lake might be in the eventual path as it’s only a bit SE of town and that’s been the direction the fire is moving.

Ok so it’s really a forest fire not an “oil sands fire”…

^ Yes. I labelled the topic as such as people know where the oilsands are and probably not Fort McMurray, Alberta. And it’s not so much as a forest fire, but one that has burned down a big part of a city of 100,000. That’s a big deal.

I have no idea how it works in Canada and it varies by state in the US, but generally in the US if you have replacement cost policy, you have to negotiate with the insurance company what it will cost to replace your home and they’ll release the money as you incur those costs. It is technically possible to use the insurance proceeds to just buy another house somewhere else, but the negotiation is going to be much more difficult because you won’t have any actual rebuilding costs as support.

you can definitely buy elsewhere but you’re right you still have to sell the land. the insurance contract states what the insurance company believes your building and land is worth in terms of replacement value so in the case of total loss, it is hard for them to deviate much from these figures. they also charge you premiums based on these numbers so again, hard to deviate. also, i’m sure it’ll be hard for the insurance companies to play hardball when there are several thousand people in distress that are willing to go to any news agency and say how crappy the insurance company is treating them. every time this happens, the company caves.

i’m not expert on this though. i just don’t think it’s possible for a company to charge you premiums on a dwelling replacement value of $400,000, a number they chose, and then try and give you $250,000.