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Fires, Floods Force Western Canada Shut-Ins

Four Calgary-based oil and natural gas producers have shut in a portion of their production in north-central Alberta in the Slave Lake area due to wildfires and southern Manitoba and Saskatchewan as flooding wreaks havoc on the region.

Canadian Natural Resources Ltd. said a number of forest fires continue to burn in north-central Alberta and in the oil sands region near Fort McMurray, which are impacting the company's operations and current production. While none of the events have resulted in any injuries to Canadian Natural's employees or its contractors' employees, a forest fire near its Horizon Oil Sands site has encroached to approximately 150 meters from its Chelsea Lodge, one of three staff camps on site.

"A fire barrier has been put in place and to date has been successful in diverting the forest fire away from the lodge and the balance of the Horizon Oil Sands site," the company said earlier this week. "Approximately 1,300 camp residents and personnel have been evacuated from both the Chelsea Lodge and the Calumet Lodge."

In the Slave Lake area of north-central Alberta, Canadian Natural performed a controlled shut-in of various properties within the aerial extent of a major forest fire. Those properties were producing a daily average of approximately 3,125 bbl of oil and 8 MMcf of natural gas. In addition, the pipeline system that transports the production from Canadian Natural's Pelican Lake field was "systematically shut down" as tank capacity becomes limited with the Rainbow pipeline system currently not operating due to the forest fires. Pelican Lake field is currently producing approximately 40,000 b/d.

Penn West Exploration also reported that it is experiencing operations and production interruptions due to wildfires in the Slave Lake area and flooding in southern Manitoba and Saskatchewan.

"There are significant wildfires burning in north-central Alberta impacting the producing areas of Peace River, Red Earth, Otter, Swan Lake, Swan Hills and Mitsue as well as smaller producing areas," Penn West said. The company said it has been working with provincial government and local authorities in the Slave Lake area to reduce the risk associated with its producing oil and natural gas fields in the area of the wildfires.

"We are monitoring the spread of the fire and the potential for additional production shut-ins. Our operating staff and their families have been safely evacuated and Penn West is coordinating with Emergency Measures Alberta, Alberta Sustainable Resources Development, law enforcement and municipal authorities to review next steps and evaluate developments as they occur."

Penn West said the wildfires have resulted in the temporary suspension of drilling and completions activity in the South Swan Hills and Red Earth/Otter areas. Additionally, severe spring flooding in southern Manitoba and in portions of southern Saskatchewan has resulted in production shut-ins for the company. "We anticipate these interruptions to continue until flooding has subsided in the affected areas," Penn West said.

These temporary shut-ins have impacted Penn West's daily production by approximately 20% (35,000-40,000 boe/d).

Pengrowth Energy Corp. is also feeling the pinch from the fires as it has experienced a "temporary interruption" of production from two areas in north-central Alberta due to wildfires. The company reported that its personnel and facilities are safe, but the wildfires have resulted in the temporary shut-in of up to 5,000 boe/d of production net to Pengrowth. It is unclear at this time when production operations will recommence in these areas, and when production is resumed, it is expected to be restarted in incremental stages.

Cenovus Energy Inc. said that while the forest fires are not close enough to cause concern for its Pelican Lake oil operation facilities at this time, the shutdown of the section of Plains Midstream Rainbow pipeline used to transport oil to Edmonton from the Pelican Lake operation is affecting the company's business. Because storage was filling up, Cenovus started to shut down its production Tuesday.

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