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Imperial Oil CEO Rich Kruger during an interview at the company's head office in Calgary, Alta., Wednesday, Oct. 16, 2013.

Imperial Oil Ltd. has applied to build a $7-billion steam-driven Alberta oil sands project during a period in which industry-wide costs are expected to climb because numerous major developments will be under construction.

Imperial, which started up its $12.9-billion Kearl oil sands mining project earlier this year, said its proposed Aspen development would produce up to 135,000 barrels of bitumen a day – putting it among the company's largest oil sources. The output would be achieved with three phases, and adjustments to the equipment it is installing could push volumes up even more, it said.

Aspen is located about 45 kilometres northeast of Fort McMurray, Alta. The project would include numerous wells, a bitumen plant and a co-generation electricity station.

It will be a steam-assisted gravity drainage, or SAGD, project, in which steam is injected deep into the ground to loosen up the tar-like oil so it can be pumped to the surface in wells. But the company may also use new technology for boosting production.

"We're evaluating the use of solvents to achieve enhanced recovery, which we're currently evaluating at a pilot at our Cold Lake operation," Imperial spokesman Pius Rolheiser said. "We haven't made the decision yet whether to apply solvent-assisted SAGD."

Mr. Rolheiser cautioned that the estimated capital cost could change as the company works through its engineering and market conditions evolve.

A decision to move forward could be made in 2017, with production starting three years later.

Several other major projects – from steam-driven oil sands to West Coast liquefied natural gas plants to an expansion of Imperial's own Kearl development – are scheduled to be under way at the same time as Aspen.

"This is a risk to be aware of toward the back end of the decade, as you have those two highly capital-intensive regions competing for the same market for materials and labour," said Chris Feltin, an analyst at Macquarie Capital Markets.

Imperial struggled with cost overruns at Kearl, though much of that was due to delays in transporting huge modules of imported equipment along northern U.S. roads as residents opposed the shipments. The company had to resort to cutting the equipment into smaller pieces.

Depending on how much production the company can eventually coax out of the Aspen lease, costs would be between about $43,000 and $52,000 a barrel of daily production, analysts said, putting it in line with other recent steam-driven projects.

"In terms of the initial cost estimates to sanction, we haven't seen a lot of overruns for those experienced SAGD developers. The question is more longer term, by the time it's built," said FirstEnergy Capital Corp. analyst Michael Dunn. "If $7-billion is the cost today, what's the estimate in 2020 terms?"