CORRECTED - UPDATE 1-Imperial to go ahead with C$8 bln Kearl project

(Corrects final paragraph to remove reference to using thermal techniques)

CALGARY, Alberta, May 25 (Reuters) - Imperial Oil Ltd (IMO.TO: Quote, Profile, Research) on Monday said it would go ahead with its C$8 billion ($7.1 billion) Kearl oil sands project, the first major new development to be approved in the region of northern Alberta since the recession forced a spate of cancellations.

Imperial, Canada's biggest oil exploration and refining firm, said it expects to complete the project's first 110,000 barrel per day stage by late 2012.

Future expansions could boost production from the site north of Fort McMurray, Alberta, to 300,000 barrels a day.

Imperial, 69.9 percent owned by supermajor Exxon Mobil Corp (XOM.N: Quote, Profile, Research), was widely expected to proceed with Kearl despite an industry downturn that forced the cancellation of at least C$90 billion worth of rival projects.

Alberta's oil sands contain more than 170 billion barrels of recoverable crude but the resource is technically difficult and expensive to extract.

The tar-like bitumen stripped from the sand must also be upgraded before it is usable. Most major projects include upgraders to turn the bitumen into refinery ready synthetic crude but Imperial plans to sell the bitumen directly to refineries.

The Kearl project will employ mining methods most other major projects in the region rely on.

($1=$1.13 Canadian) (Reporting by Scott Haggett; editing by Rob Wilson)