Energy, transport hit as fires sweep north Alberta

Energy, transport hit as fires sweep north Alberta

16 May 2011

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Canada — * Cenovus suspends 22,000 bpd production

                 * Rainbow pipeline fully closed on fire threat

                 * 39 wildfires out of control in Alberta

Cenovus Energy Inc (CVE.TO) is expected to suspend production at a large oil field in northern Alberta on Monday after wildfires that have swept Canada’s biggest energy-producing province forced the complete closure of a newly repaired pipeline.

Forest fires, which flared up quickly during a dry, windy weekend, destroyed about a third of Slave Lake, a northern Alberta town of 10,000 people, media reports said. There were no reports of injuries, but residents were under a mandatory evacuation order.

Cenovus said it was ready to halt production at the 22,000 barrel a day Pelican Lake heavy oil field field, 300 km (186 miles) north of Edmonton.

“Our facilities aren’t in jeopardy from the fires, but right now the Rainbow pipeline is shut down,” said Rhona DelFrari, a spokeswoman for Cenovus.

“We’re not able to transport our oil out unless it reopens. In the coming hours we’re planning to shut down our oil production at Pelican Lake.”

The fires forced the closure of the southern leg of Plains All American Pipeline LP (PAA.N) from the Nipisi terminal 80 km (50 miles) northwest of Slave Lake on Sunday. The northern leg, running from Zama in northwest Alberta to Nipisi, had been closed due to a 28,000 bpd oil spill on April 29.

Cleanup of the spill was suspended on the weekend as the fire threat forced workers to flee the area.

The situation also affected transport. Canadian National Railway Co (CNR.TO) said it shut down train service in the Slave Lake region.

As of early Monday, 116 wildfires were burning in Alberta, 39 of them out of control, the provincial government said. A total of 533 square km (206 square miles) had been burned.

Warm, dry and windy conditions were fueling the blazes, which were cutting a swathe across central Alberta.

The government deployed 1,000 firefighters, 100 helicopters and 20 water bombers to battle the blaze. In addition, 200 more firefighters were expected to arrive from other Canadian provinces.

Market sources said the fires had yet to move prices for Canadian heavy crude, but cautioned that lengthy outages could tighten supplies.

Western Canada Select heavy blend, a widely traded oil grade, was selling for about $17 a barrel under benchmark West Texas Intermediate, similar to Friday.

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