01/09/2014 09:58 EST | Updated 03/11/2014 05:59 EDT

Husky approves two new heavy oil projects in Saskatchewan, completed by 2016

CALGARY - Husky Energy Inc. has given the green light to two new heavy oil projects in Saskatchewan that will together churn out 20,000 barrels of crude per day.

Engineering is underway on the Edam East and Vawn projects with construction set to begin later this year. First oil is expected in 2016.

The company (TSX:HSE) says the projects build on the success it's had in the Lloydminster region, near the Alberta border, using heat to get the thick crude out of the ground.

Husky says the two projects are part of the company's plan to produce 55,000 barrels per day from its thermal heavy oil projects by 2016 — a year sooner than a target set out in December 2012.

Husky is majority-owned by Hong Kong billionaire Li Ka-shing and has a 2014 capital budget of $4.8 billion.

"Three years ago, with heavy oil production fighting to remain flat, we implemented a strategy to transform and rejuvenate the business. We are seeing the results of that today," CEO Asim Ghosh said in a release.

"Steady performance from our existing thermal facilities and these two new plants, along with projects currently under construction at Sandall and Rush Lake, will add another 33,500 barrels per day of new production over the next three years, more than offsetting declines in non-thermal production."

Note to readers: This is a corrected story; An earlier version said construction had begun on the Edam East project.