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Suncor, Shell pare production as wildfire forces 88,000 from oil sands region

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Suncor, Shell pare production as wildfire forces 88,000 from oil sands region

A wildfire that threatens to consume the northern Albertacity of Fort McMurray has led to an evacuation order for residents and causednearby oil sands operators SuncorEnergy Inc. and RoyalDutch Shell plc to slash production.

"We have successfully evacuated 88,000 people with noreports of injuries or casualties so far," the Regional Municipality of WoodBuffalo, or RMWB, which includes the city of Fort McMurray, said May 4 on itsTwitter feed. The fire was estimated at 7,500 hectares, or 18,533 acres, insize and 100 firefighters are in Fort McMurray supported by 10 helicopters and17 air tankers, said Chad Morrison a senior manager with the provincialwildfire department.

"We expect it to be a worse fire today than it wasyesterday with winds," Morrison said at a press conference at theprovincial emergency management center. "With hot, dry conditionsfirefighters will continue to be challenged all day."

Suncor, the biggest oil sands producer, said its plant 25kilometers north of Fort McMurray is not threatened but production has beenslowed to aid in the evacuation effort and to allow employees and theirfamilies to flee to safety. Shell said it shut its Albian Sands miningoperations approximately 95 kilometers from the city. The plant is capable ofproducing about 225,000 barrels of tar-like bitumen daily. Oil sands camps inthe Fort McMurray region are being used to house evacuees.

As of 12:30 p.m. MDT, RMWB reported that some Fort McMurrayneighborhoods had lost as many as 90% of their homes. The city is carved out ofthe boreal forest in northeastern Alberta and fire had spread to allneighborhoods, although the downtown commercial region was largely intact.Structural firefighters from across the province have been called in to helpwith the damage and to make a stand against the blaze before it consumes thedowntown core. Morrison said based on weather forecasts, the fire could sweepthe city's core by the afternoon of May 4.

"As things stand right now there has been fairlysignificant destruction of residences in Fort McMurray, we're looking atroughly 1,600 structures at this point," Alberta Premier Rachel Notleysaid at the May 4 news conference. "We know that the majority of evacueeshave successfully been able to begin making their way south or havesuccessfully found places south of the city. Roughly 10,000 citizens have movednorth and we are advised that they have found places in most of the camps northof the city."

The single road connecting Fort McMurray to the rest of theprovince, Highway 63, was gridlocked yesterday with fleeing residents.Imperial Oil Ltd., aCanadian unit of Exxon MobilCorp., said it was supplying fuel to residents stuck on the highwayto enable the evacuation. Travel in and around Fort McMurray is restricted toemergency vehicles. Notley said congestion on Highway 63 is thinning out andpeople are slowly making their way to receiving communities.

The evacuees have adequate levels of food and supplies,Notley said. The regional hospital in Fort McMurray was successfully evacuatedwith patients flown by Calgary, Alberta-based airline WestJet to hospitalsacross the province.

"WestJet has sent empty aircraft to YMM [Fort McMurray]today to recover guests and WestJet employees that couldn't get out of the areayesterday," spokeswoman Lauren Stewart said in an email. "Two of theflights have departed and one will be leaving imminently. We urge anyonein the area to cooperate with the evacuation order and keep safety above allelse. The airport is now closed and we are monitoring the situation toevaluate when we may begin regular commercial operations again. As you know,the situation is changing rapidly."

The oil sands shutdowns could lift prices for productionfrom the region, S&P Global Platts Manager of Energy Analysis for PlattsAnalytics Anthony Starkey said in a note. S&P Global Platts andS&P Global Market Intelligence are offerings of S&P Global Inc.

"We have fires raging in Canada again, near FortMcMurray, where some oil sands production is currently being scaled back as aresult," Starkey said.  "This is helping provide some near-termsupport to oil prices that are otherwise under pressure after rising somewhatprematurely over the past month, I would argue."