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Alberta wildfires hit Canada's gas flow to US, driving up prices

A Canadian Forces member from 41 Canadian Brigade Group (CBG) extinguishes a hot spot while fighting wildfires in Drayton Valley, Alberta, Canada May 15, 2023. (Canadian Armed Forces handout via Reuters)

Officials in Canada’s Alberta province say speeding wildfires have slowed the outflow of natural gas into the US, increasing prices.

They say the gas flow from Canada to the US has dropped to a fresh 25-month low as wildfires disrupted production. 

On Thursday, US natural gas futures gained about two percent to hit a two-week high on the reduction in imports from Canada. US gas futures have also gained about 13 percent over the past two weeks since imports from Canada started to decline.

There are currently about 92 active wildfires across Alberta, forcing over 10,000 people out of their homes. Officials have warned that more wildfires could spread in next few days due to record-high temperatures and tinder-dry vegetation.

Officials say nearly 2,700 firefighters, including personnel from Canadian and US agencies, and the Canadian army, are currently battling the wildfires and more are expected to join. 

The fires have forced oil and gas firms to cut at least 319,000 barrels of oil equivalent per day production, or 3.7 percent of the country's total output.

According to an estimation of consultancy firm Rystad Energy, nearly 2.7 million barrels per day of Alberta oil sands production in May is at risk in “very high” or “extreme” wildfire danger rating zones.

In western Canada, the wildfire season has gotten off to a fast this year due to record-high temperatures and tinder-dry vegetation, while the neighboring provinces of Saskatchewan, Manitoba, British Columbia and Saskatchewan, have all experienced an increase in wildfire activity.

The oil-rich province of Alberta, which is holding provincial elections on May 29, has been hit the hardest.

Forecasters do not expect things to get any better until at least next week.

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