Canadian forecasters say Bill to remain hurricane

CALGARY, Alberta (Reuters) - Hurricane Bill could enter Canadian waters still packing winds of more than 160 km/h (100 mph) as it passes over one of the country's key oil production regions.

Bill, the first Atlantic hurricane of the season, weakened to a category 2 storm, with maximum sustained winds of 175 km/h (110 mph) as it tracked between the U.S. East Coast and Bermuda on Friday.

However Canadian forecasters still expect Bill to be at hurricane strength when it reaches Eastern Canada early on Sunday.

"We are predicting that the storm will be losing some strength by the time it reaches us," Peter Bowyer, a program director at the Canadian Hurricane Center in Dartmouth, Nova Scotia, said on a conference call. "But because it's starting at such a high level of wind, it will still be definitely a hurricane when it reaches (Canadian) waters."

Officials from the Hurricane Center, said they expect the storm to pass along Nova Scotia's eastern shore on Sunday and hit southeastern areas of Newfoundland and Labrador on Sunday night or early Monday morning.

Bill's approach is coinciding with the highest tides of the year in Atlantic Canada and could produce waves up to 12 meters (39 feet) high, forecasters said, with coastal areas of Newfoundland seeing a chance of 8-meter waves and storm surges.

However Bowyer cautioned that Bill's path is not yet firm and forecasters will have clearer picture of its strength and direction by Saturday.

Energy firms, including Husky Energy Inc, Suncor Energy Inc and Exxon Mobil Corp, operate offshore oil projects in the Jeanne d'Arc Basin about 300 km (185 miles) southeast of St. John's, Newfoundland, capable of producing about 250,000 barrels per day.

The companies say they are monitoring the storm but have not yet evacuated staff from the region.

However Exxon said on Thursday it decided to evacuate personnel from the Sable Offshore Energy Project off the coast of Nova Scotia in advance of Bill's arrival. The project is undergoing maintenance and not producing natural gas.