The costs of developing major oil sands projects in Alberta are spiralling ever higher, as a consortium led by Petro-Canada estimated yesterday that the first stage of its Fort Hills development will cost a huge $14.1-billion.

The project – the most expensive single development yet proposed in the oil sands – includes the construction of an oil sands mine and upgrader that will produce 140,000 barrels a day of synthetic crude by the second quarter of 2012. A later second stage, if approved, would be of a similar size and be operational in 2014, at a cost of $12.1-billion, Petro-Canada said.

“This marks a key milestone and a big step forward on the Fort Hills project,” said Petrocan CEO Ron Brenneman. “This step puts us on a path for a final go-ahead project decision in the third quarter of 2008.”

Despite the high total figure, the development outlay to bring a project of this nature on stream in the present climate is in line with analyst expectations of about $100,000 per barrel a day of flowing crude production.