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Canadian oil production trickles back as wildfire threat eases

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(Reuters) — Oil sands companies around the Canadian energy center of Fort McMurray, Alberta, began to resume production on Tuesday after an out-of-control wildfire forced a shutdown a week ago, and energy executives met with province leaders who reported the town was less damaged than first feared.

The fire continued to grow on Tuesday, but it has moved far enough away from the oil sands' sites to allow companies to begin resuming production.

Royal Dutch Shell P.L.C. became the first company to resume its operation in the center of Canada's oil sands region, while Enbridge Inc. began inspecting its facilities and prepared plans to restart operations shuttered during the blaze.

Alberta Premier Rachel Notley met on Tuesday with executives from companies including Suncor Energy Inc., ConocoPhillips Canada and the Canadian Association of Petroleum Producers to discuss their plans.

"It's really just about collaborating and making sure we move forward together in harmony," Suncor Chief Executive Steve Williams told reporters in Edmonton, Alberta, on his way into the meeting.

About 90% of Fort McMurray's buildings survived, officials said after an inspection on Monday.

But its 88,000 residents, who were hurriedly evacuated last week as flames attacked the town, will not be able to return for weeks from temporary accommodation in the provincial capital Edmonton, 235 miles south, and elsewhere.

"These are difficult circumstances," said Al Monaco, Enbridge CEO, in a statement. "We have a well-trained and experienced team that has developed a detailed logistical plan to enable the safe restart of our pipelines and terminals."

Officials grappled with transportation problems for staff because the specialists who run the oil production sites were also among the residents displaced by the blaze.

Shell said it will fly staff in and out of the region, while Imperial Oil Ltd. said its Kearl oil sands mining project will remain shut until the company worked out the logistics of moving people and materials to and from the remote site.

Town still smoldering

The blaze grew moderately on Tuesday to 560,000 acres and spread east through terrain with no communities. It merged with another fire burning near Campbell Lake, some 30 miles east of Fort McMurray. The closest oil projects to Fort McMurray are about 12 miles north of the town and not in the fire's current path.

The inspection of Fort McMurray revealed blocks of homes reduced to blackened foundations, front steps and metal barbecues. Ms. Notley said 2,400 structures had burned within the city while almost 25,000 were saved.

Officials warned it was not safe for residents to return to the town, with parts still smoldering and large areas without power, water and gas. Ms. Notley said repair crews will need weeks to make the city safe.

Prime Minister Justin Trudeau told the House of Commons he would go to Fort McMurray on Friday. Canada's labor minister told reporters on Tuesday that the federal government would ensure that people put out of work by the blaze receive unemployment payments.

About half of Canada's crude output, or 1 million barrels per day, was taken offline by the blaze, according to a Reuters estimate.

Canadian crude prices slipped on Tuesday, trading below the U.S. crude benchmark, as signs of resuming production eased supply concerns.

Nearly all of Fort McMurray's residents escaped the fire safely, although two teenagers died in a car crash during the evacuation.