Husky Energy Inc. is going ahead with two new heavy oil thermal projects in the Lloydminister, Sask., region that will deliver 20,000 barrels per day.

Calgary-based Husky  said it has begun engineering on the Edam East project and will start on the  Vawn project later this year. It expects both to be in production by 2016.

Husky said it has success in the Lloydminster region in using thermal technology to access longer life heavy oil deposits.

Although oil prices appear to be in decline, the company said it reduced its production costs in 2013 to under $10 a barrel at its existing plants.

"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.

"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," he said in a statement.

Husky, which is majority-owned by Hong Kong billionaire Li Ka-shing, has set a target of 55,000 barrels a day of production from thermal projects by 2017 and has several other projects on the go, including Sandall, which will begin producing this year and Rush Lake, which is set for commercial production in 2015.