EDMONTON (Alberta) • Dubbed Fort McMoney when its oil sands industry was flourishing and residents were among the richest in Canada, Fort McMurray had been haemorrhaging workers and wealth for 18 months before wildfires forced the evacuation of the city's 88,000 residents this week.
It was already crippled by a collapse in crude prices before flames raced into the once-booming city.
"Fort McMurray was really the ground zero of all that was happening related to oil and gas," said Professor Sandeep Agrawal, urban studies and regional planning professor at the University of Alberta.
Oil sands are naturally occurring deposits of sand, water and clay mixed with semi-solid oil known as bitumen, the crude form of which can be mined and refined to produce petroleum.
The Athabasca deposit in Canada's Alberta province is the biggest in the world, and vital for the economy of North America.
Fort McMurray was deeply reliant on its oil sands deposits. Its population ballooned to more than 120,000 last year, before a 70 per cent drop in oil prices slammed the door on growth, prompting an exodus. "Stores were closing, small businesses were closing," said 14-year resident Ria Dickason. "Lots and lots and lots of people lost their jobs."
While oil sands facilities are not in the fire's path, companies have curbed activities to allow workers and others to get to safety, leading to a decline in production. Some regional pipelines were hit. It was unclear what percentage of production has been affected by the fire. The wildfires' knock-on effects on oil sands operations escalated on Wednesday, with five companies reporting reduced production.
Suncor, whose oil sands operations are closest to the city, said it has shut its base plant operations - its largest oil sands mining site with a capacity of 350,000 barrels of oil a day. Its other thermal oil sands sites are running at reduced levels.
Oil prices jumped yesterday on the disruption in production. International benchmark Brent crude futures were at US$45.36 per barrel in early trade, up 1.7 per cent from their last close.