Reuters International

An aerial view of Highway 63 south of Fort McMurray, Alberta. Canada, shows smoke from the wildfires taken from a CH-146 Griffon helicopter May 5, 2016. MCPL VanPutten/Canadian Armed Forces/Handout via Reuters

(reuters_tickers)

By Eric M. Johnson and Nia Williams

CALGARY (Reuters) - Firefighters battling a massive blaze in Canada's energy heartland were aided on Friday by a second day of light rain and winds that held flames back from oil sands facilities, as producers signalled a gradual increase in operations.

The wildfire in northern Alberta has blackened more than 500,000 hectares (1.2 million acres) of land, six times the size of New York City, since it erupted earlier this month.

It also triggered a prolonged shutdown that has cut Canadian oil output by a million barrels a day.

The footprint had already exceeded the total area burned during Alberta's entire 2015 fire season, and it jumped Thursday into the neighbouring province of Saskatchewan.

The fire's growth slowed on Friday as firefighters were helped by colder, damper weather that began a day earlier and vastly improved air quality, provincial authorities said.

"We expect to hold this fire in place over the weekend," Alberta Wildfire Manager Chad Morrison told a news conference.

Morrison said that fire crews hope to use the improved conditions to advance further against the blaze. Authorities plan to roughly double the number of firefighters over the next two weeks to about 2,100 personnel backed by bulldozers and aircraft dumping flame retardant.

CAUTIOUSLY OPTIMISTIC

The weather, which included winds pushing flames away from key oil sands assets, offered hope for crude operations with Statoil saying on Friday its Leismer project was producing 13,000 bpd, up from 9,000 bpd two days prior.

Imperial Oil has said it had restarted limited operations at its Kearl site, with a capacity of 194,000 bpd.

ConocoPhillips Canada said it was "cautiously optimistic" but gave no time frame on restarting operations.

Many operations remained shut due to the blaze, which comes on the back of a two-year slump in global crude prices. Syncrude told customers to expect no further crude shipments for May, trading sources said on Thursday.

On Friday, officials said the Suncor and Syncrude oil sands sites remained under mandatory evacuation orders along with 19 work camps north of Fort McMurray.

COULD BE COSTLIEST DISASTER IN CANADIAN HISTORY

Insurers say the fire could be the most expensive natural disaster in Canadian history, costing up to C$9 billion. The federal government in Ottawa is responsible for covering 90 percent of all eligible costs.

Federal Finance Minister Bill Morneau, though, played down the damage the blaze would have on overall growth prospects.

"We expect the economic impact to be largely contained to this quarter (and) to be relatively modest," he told reporters on a conference call from Japan.

"Importantly, the kinds of investments we'll be making in the next couple of quarters will help us to rebound from that economically," he said.

Some of the 90,000 evacuees who fled as the massive blaze breached Fort McMurray earlier this month may be allowed to return as soon as June 1, if air quality improves and other safety conditions are met.

Officials warned residents with asthma or heart conditions that medical care will be limited in the early days.

(Additional reporting by Ethan Lou in Toronto and David Ljunggren in Ottawa; Editing by Clarence Fernandez and Cynthia Osterman)

reuters_tickers

 Reuters International