Canada oil output cut as Alberta wildfires rage

Tue May 17, 2011 3:44pm EDT
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By Scott Haggett and Jeffrey Jones

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.   Continued...

<p>A fire-fighter from the Strathcona fire department searches for spot fires in a destroyed neighborhood in Slave Lake, Alberta May 16, 2011. REUTERS/Todd Korol</p>