All residents in the town of Slave Lake are being told to evacuate town immediately as raging forest fires overtake the city. Police say residents who don't follow evacuation orders will be arrested.

Officials have declared a state of emergency after raging forest fires have moved in. It's believed half of the town was engulfed by flames.

The town's high school, library, and the main mall have all burned to the ground. The hospital was evacuated as it's in danger of catching fire. A local hotel is being used as a temporary hospital.

The fire continues to burn uncontrolled in the east and north sections of the town, but it's believed the flames are slowing as the wind is dying down. A portion of the town south of the highway seems to be intact.

Slave Lake's town hall caught fire shortly after 8 p.m. Sunday night. There are no reported injuries but witnesses tell CTV News the scene is nothing short of chaos.

"It's horrible; it's just going to spread because houses are ten feet apart," said Myrna Franklin. "Our house is out of town, I don't know if it's gone yet or not."

A local shopping centre's parking lot has become a makeshift evacuation point for people trying to escape the flames and smoke. Displaced residents are also being sent to a Red Cross reception centre at Northern Lakes College. Two schools in the area are being set up as temporary shelters for evacuees.

"I feel bad for everybody," said Maurice Michaud. "I am not the only one; quite a few people lost their houses and everything else for that matter."

"I went driving and you couldn't' see anything," said Paul Michaud. "Everything was just under smoke and very hard to drive. I tried to get into a back street, and you can't, the flames are just shooting out as you are driving."

Slave Lake's mayor spoke to CTV News, urging residents to get out of town as soon as possible.

"We are asking people who are able to travel and have the fuel to get to Athabasca, to leave the community," said Karina Pillay. "If they do not have transportation or fuel we are asking them to come down to the Northern Lakes College and register with us."

A shelter has been set up in High Prairie for some evacuees if they can get there. Those that do are staying at the Gordon Buchanan Recreation Centre. If you are looking for family and friends in the area, you can contact the Centre at 780-523-3388.

Several highways coming in and out of Slave Lake were shut down, causing massive gridlock as vehicles tried making their way out of the affected areas.

Highway 2 to Edmonton has opened late Sunday night to help with the evacuation.

With files from CTV's Sean Amato...