Imperial Oil Ltd (TSE:IMO)(AMEX:IMO) said Friday it would proceed with a $2 billion expansion at its Cold Lake oil sands project to the east of Edmonton, Alberta.
The move will add 40,000 barrels per day of new production to Canada's largest oil sands development.
Imperial - part of Exxon Mobil Corp. (NYSE:XOM) - said the Nabiye project will tap into a further 280 million of reserves at the project. It will also include a 170-megawatt co-generation plant to produce steam and electricity and a facility to process the tar-like bitumen produced at the site.
The Cold Lake project currently produces about 160,000 barrels per day using thermal methods that involve steam being pumped into the ground to liquefy the bitumen deposits so they can be pumped to the surface.
The expansion is one of a number of multibillion-dollar projects aimed at boosting production from the region's oil sands, the world's third-largest natural crude reserve and the largest single source of US oil imports.
Imperial is Canada's second-biggest oil producer and refiner, and received regulatory approval for the expansion in 2004.
The company's shares were up 49 Canadian cents at C$47.49 by mid-morning Friday on the Toronto Stock Exchange.