Canadian group Husky Energy, BP's joint-venture partner, said on Monday that it was giving the go-ahead for the project's first phase.

A BP spokesman said the move was "a significant milestone" for the British company.

"We will now move forward ... leading to first production in 2014," he told AFP.

At an estimated 175 billion barrels, Alberta's oil sands are the second largest oil reserve in the world behind Saudi Arabia, but they were neglected for years, except by local companies, because of high extraction costs.

Since 2000, skyrocketing crude oil prices and improved extraction methods have made exploitation more economical, and have lured several multinational oil companies to mine the sands.

But environmentalists oppose extraction from sands, claiming it produces three to five times more carbon emissions than conventional oil production and pollutes waterways.

BP, which was at the heart of an environmental crisis earlier this year due to a massive oil spill in the Gulf of Mexico, has said that the oil or tar sands project is crucial in helping meet the world's energy needs up to 2030.

earlier related report
BP sells another $7 billion in assets
London (UPI) Nov 29, 2010 - BP said it's selling its $7 billion stake in an Argentinian energy company as the European oil giant is eager to off load some $30 billion in assets by the end of next year.

BP said it would sell its 60 percent stake, worth $7.06 billion, in the Pan American Energy, active in oil and gas exploration as well as production to Bridas Corp., which already owns 40 percent of PAE. Bridas is owned to half by China National Offshore Oil Corp.

"Today's agreement further demonstrates both the high quality and attractiveness of the assets throughout BP's portfolio, and also the company's ability to meet our significant financial commitments arising from the Gulf of Mexico tragedy," BP Chief Executive Officer Bob Dudley said in a statement.

The sale is part of a wider asset diversion strategy aimed at raising cash to pay for the Gulf of Mexico oil spill. BP this year unloaded assets in the United States, Latin America, Asia and Africa, with sales totaling an estimated $20 billion, the BBC reports. BP has said it wants to sell another $10 billion by the end of 2011.

The April 20 Deepwater Horizon oil rig accident killed 11 workers. The rig spilled an estimated 170 million gallons of crude into the gulf until it was capped July 15. BP estimates costs for the cleanup to total nearly $40 billion.

Dudley has begun to restructure BP to cut costs and increase profits after the spill, which has slashed the company's share value by around 35 percent.

He has launched a new safety and operational risk unit tasked with improving exploration safety, and has fired the head of operations responsible for offshore drilling in the gulf.

BP has recently benefited from rising oil prices and Dudley said he plans to resume paying dividends in early 2011 after the company has stopped doing so due to the spill.

The European oil major earlier this month reported a return to profit in the third quarter after record losses following the Gulf of Mexico oil spill.

Profit was $1.8 billion in the three months from July until September, compared with losses of more than $17 billion at the end of the second quarter.

"These results demonstrate that BP is well on track for recovery after the tragic accident on the Deepwater Horizon drilling rig and subsequent oil spill," Dudley said in a statement.

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