Singapore, 27 July (Argus) — South Korea's state-owned oil firm KNOC plans to start construction of an oil sands processing plant at its BlackGold project in Canada by October this year.

KNOC hopes to sign a contract with South Korean engineering firm GS Engineering and Construction next month for the facility, which will have a 10,000 b/d capacity by 2012 and will be eventually upgraded to 30,000 b/d. The project will use steam assisted gravity drainage technology, producing heavy oil or bitumen by injecting high pressure steam underground.

KNOC bought the 39km² BlackGold lease in the Athabasca oil sands region of northeast Alberta from US mining firm Newmont Mining in 2006. It estimates the recoverable bitumen reserves at about 250mm bl.
Canada will be a growing source of equity production for KNOC, following last year's acquisition of Canadian integrated energy trust Harvest Energy. The $1.7bn deal added upstream output of more than 50,000 b/d of oil equivalent, along with the 115,000 b/d refinery in Come-by-Chance, Newfoundland.

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