CALGARY, Alberta, May 11 (Reuters) - The Canadian and Alberta governments and three energy companies said on Thursday they will spend C$70 million ($51.14 million) to develop three new clean technology projects, aimed at cutting costs and carbon emissions in the country's oil sands.
Northern Alberta's vast oil sands hold the world's third-largest crude reserves but are costly to operate and require carbon-intensive production methods, factors that have prompted a number of international oil majors to pull back from the patch in recent months.
The sector is now concentrated in the hands of a smaller pool of domestic players, who have repeatedly said technology will be the key to remaining competitive.
Canada's Ministry of Natural Resources is contributing C$26.2 million in funding under its previously announced Energy Innovation Program, which has C$50 million over two years to support the development of clean oil and gas technologies.
Provincial government-funded agency Alberta Innovates will invest C$5.2 million, while the three companies involved - Cenovus Energy Inc, MEG Energy Corp and privately held Field Upgrading - will provide the additional C$43.3 million.
"Innovation like this is critical because while the transition to a low carbon future is well underway the world will continue to rely on fossil fuels for years to come. Our responsibility is to make them cleaner," said Canada's Minister for Natural Resources Jim Carr.
The funding will help take all three technology projects towards the commercial demonstrations stage.
Field Upgrading is working on front-end engineering and design of a 2,500 barrel per day partial upgrader, which would process oil sands bitumen into a lower sulphur marine fuel.
Cenovus Energy and MEG Energy are testing out enhancing production by adding solvents to the steam pumped into underground reservoirs to melt sticky bitumen.
"We are looking at testing how these reservoirs behave when you put a lot of solvent in there at a lower temperature, and that will ultimately drop the steam-to-oil ratio, drop emissions, the footprint, water usage," said Harbir Chhina, Cenovus executive vice-president of oil sands development.
"It impacts everything and it also improves the economics of the project." ($1 = 1.3689 Canadian dollars) (Reporting by Nia Williams; Editing by Marguerita Choy)