So, umm, well it has certainly been an interesting week and the number one topic without a doubt, at least for us in Alberta, and more broadly Canada, has been the devastating wildfire situation in and around Fort McMurray.

Fort Mac, as it is known, is the figurative and actual heart of Canada’s oilsands region, poster boy for energy sector success or failure, popular whipping boy for pop star environmentalists and, most importantly, home to some 80,000 plus people, most of whom are permanent residents, almost all of them with their livelihood tied in some fashion to the oil sands industry.

As events unfolded this week from a small isolated wildfire of unknown origin on Sunday through the devastating firestorms that raged through the streets on through the week, Canadians watched transfixed as 88,000 people were evacuated in an orderly fashion with no significant injury (a singular Canadian achievement by the way, a testament to our enduring ability to queue in an orderly fashion) and were once again shocked by the images showing the power of a natural disaster, that can never be properly prepared for.

As I have often heard, Alberta is the biggest little province in Canada in terms of degrees of separation and I think you would be hard-pressed to find anyone here who doesn’t know someone directly impacted by this disaster, so it is incredibly personal. This is, in part, what gave rise to the remarkable reaction to the crisis.

Of particular note was the organizing, mostly via social media, of private citizen led “rescue” squads who mobilized up and down the Highway 63 corridor (the main way in or out) providing water, food and fuel to stranded motorists and their families, followed by the opening of hearts, homes and wallets for those affected.

Not to be outdone, the oilsands companies themselves and other corporations have stepped up in no small way, opening up their camp accommodations to affected residents, giving them food and shelter at this critical time and allowing evacuation access to airlines at their private airstrips, where flights from large carriers such as WestJet (yes, and Air Canada) commingled with private planes owned by companies and individuals.

What was also remarkable was the reaction, both local and national, as people across the country stepped up to offer a helping hand and governments leapt to action. First responders and firefighters from Fort Mac and around the province have sent teams to the city to assist in the effort to beat back the relentless blaze.

All said, it has been an enormous mobilization and logistical exercize made all the more remarkable by how isolated Fort Mac is by typical North American standards.

Remarkable, but not really surprising. Close knit communities like Fort Mac have a way of pulling together in the face of adversity and while Alberta is probably no better or worse at it than other places, recent experience from the 2011 Slave Lake fire and the 2013 floods tell us we should expect nothing less than all-hands on deck from its citizens who as a sweeping generalization have a can-do attitude and access to the largest amount of trucks, trailers and yellow iron on a per capita basis than anywhere in Canada.

From an economic standpoint, the effects will be enormous. On a purely monetary basis, the 2011 Slave Lake fire was estimated to cost $700 million and involved about 400 structures and businesses. As it currently stands, the count in Fort Mac is 1600 so simple math suggests something at least in excess of $3 billion and no doubt considerably higher. I have heard a number approaching $9 billion which assumes a total write-off.

But it goes further than that. This doesn’t even account for business interruption costs never mind the human costs.

As the heart of the oilsands, Fort Mac is home to dozens of businesses that provide critical manpower and equipment support to the entire region and there is no telling how many of those businesses and assets were damaged or have displaced staff and when, if ever, they will fully recover.

On the producer side, it is estimated that about 1 million barrels a day of production has been shut in for the foreseeable future. That is about 20% of Canada’s daily production. To put it in perspective, that would be like the United Kingdom or two Alaska’s suddenly going offline or about 1.2% of global daily consumption.

This is significant for the producers who lose money on the barrels they don’t produce, the government that doesn’t collect the royalties and the workers who aren’t, well, working. About the only silver lining, if you can even plug your nose and call it that is the contribution these shut-ins might make to the gradual chipping away at the global surplus oil situation.

Typically such natural disasters have a dampening effect on economic activity in the short term but over the medium to long term add significantly to GDP. Small comfort to those affected, but better to have a kick-start to economic growth in the aftermath of such a disaster than to have it stagnate, exacerbating the human toll.

And Fort Mac will be rebuilt, there is no doubt of this, it’s how things work in Alberta.

People will put things aside and make it right for their neighbours because it’s the right thing to do. The government, both provincial and federal, will make available the disaster relief funds needed to do the heavy long term rebuilding of infrastructure. Oilsands companies and Fort Mac and Alberta-based businesses will step up and show their true colours, because it’s their backyard too – this is already happening.

And hopefully in the short term, the outpouring of support will continue as people across the country continue to donate cash, primarily to the Red Cross (note the governments of Alberta and Canada match all donations for fire relief) donate.redcross.ca/ea-action/action.

And sadly, on the fringes we will also continue to witness opportunists and posers on both sides of the political spectrum who epitomize the ugliness that such an event inevitably brings out – people blaming the government for “something” because it serves a political message, people playing the climate change card because that’s their agenda, idiots saying “they had it coming” because they’re well, self-absorbed a-holes.

But it’s all just noise and these people with an axe to grind need to shup up. Because we need to rebuild lives. And we need to rebuild a city. And we will.

Will it ever be the same? I don’t know, probably not. Nothing – people, place, business – can go through such an event and not be fundamentally altered. But the spirit won’t be broken, the economic engine will be restarted and the people will return, rebuild, move forward and emerge stronger on the other side. It’s human nature, and you can’t fight it, but you can count on it.

Special Contest Alert!

OK – so to brighten the mood up a bit, I have been informed that it is time that this blog had a more “zippy” name than Weekly Update and Energy Musings which, now that I look at it, is actually pretty blah.

So I am going to open it up to you, the reader, to help pick a name. I will take the top 3 submissions (as selected by yours truyly) and share them with you (hopefully next week) for a vote to pick the winner. Up for grabs is a bottle of whiskey (of my choosing, don’t worry, I think I have excellent taste) and, of course, all the accolades and imagined immortality that comes from choosing the name of a blog with a narrow and targeted distribution.

To get things started, a variation on an idea from Craig S. of Calgary – The Weekly Stew…

Prices as at May 6, 2016 (April 29, 2016)

• The price of oil ended the week down
  • Storage posted a small increase
  • Production was down again
  • The rig count fell, but appears to be bottoming out
  • Conitnued production declines in the US are helping keep prices up as are the wildfires and production shut-ins in Canada, but negative noise out of OPEC is capping any rally
• Natural gas fell marginally during the week

• WTI Crude: $44.58 ($45.94)
• Nymex Gas: $2.101 ($2.178)
• US/Canadian Dollar: $0.7731 ($ 0.7974)

Highlights

• As at April 29, 2016, US crude oil supplies were at 543.4 million barrels, an increase of 2.8 million barrels from the previous week and 56.4 million barrels ahead of last year.
  • The number of days oil supply in storage was 34.0, ahead of last year’s 30.1.
  • Production was down for the week at 8.825 million barrels per day. Production last year at the same time was 9.373 million barrels per day. The decrease in production this week was broad based but predominately from Alaska.
  • Imports increased during the week
  • Refinery inputs were up marginally during the week
• As at April 29, 2016, US natural gas in storage was 2,625 billion cubic feet (Bcf), which is 47% above the 5-year average and about 49% higher than last year’s level, following an implied net injection of 68 Bcf during the report week.
  • Overall U.S. natural gas consumption rose by 4.6% for the week
  • An explosion occurred on a Spectra Energy 30 inch pipeline in Pennsylvania this week taking about 1.4 Bcf per day off line.
• Oil rig count at May 6 was down to 328 from 332 the week prior.
  • Rig count at January 1, 2015 was 1,482
• Natural gas rigs drilling in the United States was down 1 at 86.
  • Rig count at January 1, 2015 was 328
• The collapse in the US rig count is likely over with most of the damage already being done.

• As of May, with break up in full force, the Canadian rig count was at 34 (5% utilization), 25 Alberta (5%), 6 BC (8%), 3 Saskatchewan (3%), 0 Manitoba (0%)). Utilization for the same period last year was about 10%.
• US split of Oil vs Gas rigs is 80%/20%, in Canada the split is 20%/80%
• Offshore rig count was at 24
  • Offshore rig count at January 1, 2015 was 55

Drillbits

• Earnings season is here! Earnings season is here!
  • Apache reported a net loss for Q1-16 of $489 milllion, net cash flow from operating activities was $276 million
  • Devon Energy Corp reported Q1-16 operating loss of $3.5 billion and a net loss of $3.468 billion compared to losses of $5.495 and $3.599 in Q1-15
  • Chesapeake reported a net loss of $964 million in Q1-16 compared to a loss of $3.782 billion in Q1-15. The company also annouced a further asset sale of Oklahoma producting assets to Newfield Petroleum for $470 milllion
  • Newfield reported a net loss of $626 million for Q1-16 compared to a loss of $480 million in Q1-15
  • Marathon Oil reported a loss of $407 million for Q1-16
  • EOG reported a net loss for Q1-16 of $471.8 million compared to a loss in Q1-15 of $169.7 million
  • Continental Resources reported a net loss for Q1-16 of $198.3 million compared to a loss in Q1-15 of $131.9 million
  • Tourmaline reported a net loss for Q1-16 of $38.4 million compared to a profit in Q1-15 of $22.2 million
  • Veresen reported a profit for Q1-16 of $18 million compared to a profit in Q1-15 of $27 million
  • Whitecap Resources reported funds flow and net income in Q1-16 of $67.7 million and $1.6 million respectively compared to $109.9 million and a loss of $29.4 million in Q1-15
  • Paramount reported funds flow and net loss in Q1-16 of $22.4 million and $46 million respectively compared to $15.7 million and a loss of $70.3 million in Q1-15
  • Pengrowth reported funds flow and net income in Q1-16 of $106.2 million and $25.0 million respectively compared to $113.0 million and a loss of $160.5 million in Q1-15
  • Enerplus reported funds flow and net income in Q1-16 of $41.7 million and $173.7 million respectively compared to $109.2 million and a loss of $293.2 million in Q1-15
  • Baytex reported funds flow and net income in Q1-16 of $45.6 million and $0.6 million respectively compared to $160.2 million and a loss of $175.9 million in Q1-15
  • Gibsons reported adjusted EBITDA in Q1-16 of $74.0 million compared to $114.6 million in Q1-15
  • Pembine Pipeline reported adjusted EBITDA for Q1-16 of $269 million compared to $241 million in Q1-15
• Canadian Western Bank and National Bank both annouced this week higher loan loss provisions with respect to their energy lending exposre, prompting selling pressure on both banks’ stock
• Enbridge has requested a three year extension to the sunset provision on the Northern Gateway pipeline permit which is set to expire at the end of this year
• TransCanada received the final permits it needed to start construction on it Coastal Gas Link pipeline from NE BC to the coast. It is now awaiting a Final Investment Decision from LNG Canada, the consortium led by Shell on whether the project will go ahead.
• Drumpf Watch – So it’s official I guess. Drumpf is the presumptive nominee for the soon to be extinct Republican party. There has never been a candidate with such elevated disapproval numbers. Too many people in the media are celebrating this and running stories about how you can’t “count out Drumpf” and look what he did in the primaries proving everyone wrong. I suppose if you can convince your self that there are no Hispanics, African American or female voters, then yes he has a chance. But if you look at the demographic makeup of the US, it’s a monster stretch. That said, the angry white guy vote is clearly in the bag – Get Off My Lawn!!!!!