May 25, 2011 / 9:10 PM / in 6 years

Alberta oil output starts to ramp up as fires ease

CALGARY, Alberta (Reuters) - Oil companies restarted operations in northern Alberta on Wednesday as the threat of wildfires eased, and the short duration of the outages should limit any impact on their financial results.

<p>Canadian Prime Minister Stephen Harper (C) answers questions at a news conference in downtown Slave Lake, Alberta, May 20, 2011. REUTERS/Todd Korol</p>

More than 150,000 barrels a day of heavy oil production near Slave Lake, Alberta, has been shut down for about a week, most of it because wildfires caused a power outage that idled a segment of a regional pipeline that carries the crude.

Plains All American Pipeline LP said on Wednesday it had reopened the southern leg of its 187,000 barrel a day Rainbow line, which takes oil to the Edmonton refining and pipeline hub from the Pelican Lake production area.

The segment was flowing at about 136,000 bpd, an average rate for current supply and demand conditions, said Stephen Bart, vice-president of crude oil operations for Plains’ Canadian unit.

The northern part of the Rainbow line remained shut due to an April 29 rupture that was unrelated to the wildfires. It is awaiting regulatory approval to restart.

“We certainly haven’t had the combination of events that we’ve had here in the recent month, but the good news is we have an emergency response plan that’s on file with regulators that provides for most every contingency including the forest fire threat,” Bart said.

The fires, which destroyed large parts of the town of Slave Lake and forced an evacuation, have fallen in number to 43 from more than 100 last week as 2,000 firefighters battled the flames and damp weather moved into the area, the Alberta government said. Four fires are still classified as out of control.

Canadian Natural Resources Ltd said it was in the process of restarting its 40,000 bpd Pelican Lake heavy oil field and Cenovus Energy Inc began ramping up its 22,000 bpd operation in that region.

Shares of Canadian Natural rose 1.75 percent to close at C$41.38 on the Toronto Stock Exchange, while Cenovus climbed 2.55 percent to end at C$35.02.

The outages represent less than half a percent of those companies’ annual production, said Phil Skolnick, analyst at Canaccord Genuity.

In addition, traders said the situation had only a modest impact on the price of Canadian heavy crude in the cash market. The overall volume cut amounted to about 5 percent of total Canadian oil production.

“So it’s very minimal,” Skolnick said.

Houston-based Apache Corp resumed some production in the region after shutting down 6,200 bpd.

Husky Energy Inc said it was still trucking about 6,500 bpd of oil to its refineries in Alberta and British Columbia. Overall, the company’s production was reduced by 17,000 bpd.

In total, the infernos have burned 3,299 square km (1,274 square miles) of forest, an area about the size of Rhode Island, across energy-rich northern Alberta,

The 7,000 residents of Slave Lake, an oil and forestry hub, remained evacuated but could start returning in the coming days. Some of them have taken bus tours to survey the devastation caused when two fires whipped by high winds spread into town 10 days ago.

Canadian National Railway said on Tuesday it had restored service to the Slave Lake area as the fire threat eased.

($1=$0.98 Canadian)

Addition reporting by Scott Haggett; Editing by Frank McGurty and Peter Galloway

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