Alberta fire count drops; PM tours devastation (Reuters)

SLAVE LAKE, Alberta (Reuters) – Damp weather helped crews douse the number of wildfires raging across northern Alberta on Friday as Canadian Prime Minister Stephen Harper toured the town of Slave Lake, where hundreds of homes, businesses and public buildings went up in flames.

A big volume of oil production in the region remained shut in due to the closing of a major pipeline as 56 fires continued to burn across the north of Canada's biggest energy producing province. Ten of the fires were out of control.

That is down from more than 100 fires burning at the start of the week. So far, 2,638 square km (1,019 square miles) have burned, an area about the size of Luxembourg.

Slave Lake's more than 7,000 residents remained evacuated and some structures still smoldered five days after two blazes, whipped by high winds, converged on the town, a center for the oil and gas and forestry industries.

After touring the region by military helicopter, Harper met with ash- and soot-covered firefighters and emergency personnel at their command center in Slave Lake and thanked them for their efforts.

"You have to look at the bright side -- it's a miracle that there was no loss of life," Harper said.

In a statement, he said the federal government would work closely with the other levels of government to help residents through the disaster. The amount of federal financial assistance is not yet known

The Alberta government has pledged an initial C$52 million ($53.6 million) to help with the immediate needs of evacuees from Slave Lake and the surrounding region.

PRODUCTION CUTS

The oil industry continued to be hit as more than 150,000 barrels a day of production from companies such as Cenovus Energy Inc, Penn West Exploration and Canadian Natural Resources Ltd was unable to flow.

Much of that was because Plains All American Pipeline LP's Rainbow crude line was shut down due to fire danger, and some was due to fires drawing close to oil fields.

The pipeline operator said late on Friday that its 187,000 barrel per day Rainbow pipeline could be closed for another two weeks after the wild fires damaged the lines power supply.

"Southbound crude oil flows on the 24" Rainbow pipeline from Nipisi to Edmonton remain closed due to electrical outages related to forest fires in the area. We have been advised that it could take up to two weeks (or longer) to restore service to the area," the company said in a statement.

Depending on conditions, crews are expected to return on Tuesday to a site on the northern section of the Rainbow line to finish cleaning up an oil spill that occurred in late April.

Husky Energy Inc, said on Friday that the closure of the pipeline and power problems at some northern Alberta production sites had cut its daily production by the equivalent of 17,000 bpd.

So far, the production outages have had minimal impact on Canadian crude markets, as the volume is a small fraction of Canada's 2.8 million barrels of daily output.

However, analysts have said fires will have a larger influence on the market if they prevent production for a much longer period or if they threaten oil sands production further to the east.

($1=$0.97 Canadian)

(Writing by Jeffrey Jones and Scott Haggett in Calgary and Jeffrey Hodgson in Toronto; Editing by Gary Hill)

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Canada oil output cut as Alberta wildfires rage (Reuters)

CALGARY, Alberta (Reuters) – Canadian oil production cuts could more than double by Wednesday as companies move to protect employees and property from wildfires raging through northern Alberta and cope with the shutdown of a key pipeline.

Oil companies had shut in close to 50,000 barrels per day of production Tuesday because of wildfires in the Western Canadian province, one of the largest suppliers of crude to the United States. Further cuts are expected as big fields are closed in because they cannot ship their oil to market.

Spurred by warm temperatures and gusting winds, 100 wildfires are burning in Alberta, with 23 considered out of control in a fire season unlike any seen before.

"We are facing something largely unprecedented," Colin Lloyd, executive director of the Alberta Emergency Management Agency, told reporters. "The situation overall is very dangerous."

Almost 260,000 acres (1,050 sq km) have burned since the emergency began over the weekend, more than the province lost to fire in all of 2010, officials said.

The worst damage is concentrated in the Lesser Slave Lake region of northern Alberta, about 200 km (125 miles) north of the provincial capital of Edmonton. There, fires destroyed 40 percent of the town of Slave Lake on the weekend, forcing officials to evacuate most of the 10,000 residents of the oil, gas and forestry hub.

There have been no official estimates of the cost of the fire damage yet.

For oil producers operating in the rugged, heavily forested region of northern Alberta, fires are a common threat. But the infernos seen over the past few days are surprising even seasoned industry veterans.

"I would think probably every year the industry has an issue with forest fires," said John Langille, vice-chairman of Canadian Natural Resources Ltd, the country's biggest independent oil producer. "I don't think any have been this dramatic -- certainly none have burned a town down."

The fires forced the closure of the southern leg of Plains All American Pipeline LP's Rainbow pipeline Sunday, the key conduit for oil producers in the region, shutting in tens of thousands of barrels of production.

Canadian Natural is slowing output at its Pelican Lake heavy oil field in Alberta, ahead of an increasingly likely shutdown, due to Rainbow's closure.

The company is filling up storage tanks at the 40,000 barrel a day facility and those are nearing capacity, President Steve Laut told reporters. When they fill, the field will have to be shut in, adding to the tally of production cuts.

Fire is threatening more of the company's northern Alberta properties as well. It evacuated 1,300 workers Monday from camps near its Horizon oil sands project when a blaze got within 150 meters (500 feet) of one facility.

As well, properties producing 3,125 bpd of oil and 8 million cubic feet of gas that are threatened by fire have been closed down.

Cenovus Energy Inc said Tuesday it is scaling back production at its 22,000 bpd Pelican Lake heavy oil field because of the Rainbow shutdown. Now pumping oil into storage, output at the field is down to 16,000 bpd and will be reduced further. Unless the line reopens, production will have to stop once storage tanks fill.

"We may reduce production even more tonight but we still anticipate our storage may be full sometime tomorrow," Rhona DelFrari, a spokeswoman for the company, said in an email.

Other producers that have suspended some operations include Penn West Petroleum Ltd, which has shut 25,000 to 30,000 barrels a day of oil production in north-central Alberta.

Royal Dutch Shell Plc also said Tuesday it has shut in its Cliffdale and Seal heavy oil properties in the Peace River region, which are served by the Rainbow line. The company did not detail how much those fields normally produce.

(Editing by Rob Wilson)

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