Imperial Oil Ltd. will go ahead with the $8.9-billion expansion of the Kearl oilsands project, the company said Wednesday.

The expansion will add production of 110,000 barrels a day at the surface mining operation being built northeast of Fort McMurray, Alta., by late 2015.

The expansion will double the output of the Kearl project. The initial $10.9-billion development is 80 per cent complete. Projected to start up late next year, it will initially produce 110,000 bbl/d, with potential to reach 145,000 bbl/d.

The original project and the expansion will develop 3.2 billion barrels at a cost of about $6.20 a barrel, Imperial said.

"Future debottlenecking of both phases will increase output to reach the regulatory capacity of 345,000 barrels per day to fully develop the 4.6 billion barrel resource."

The price of the initial Kearl development, approved in 2009, was increased by $3 billion in mid-2011 to $10.9 billion. .

With the approval of the expansion, Imperial said it has appropriated about two-thirds of the estimated development costs to reach 345,000 barrels a day capacity. About half of the money has been spent to date, and the company expects to rach the output target in 2020.

Imperial's share of Kearl oilsands is 71 per cent. U.S. energy giant ExxonMobil, which owns about 70 per cent of Imperial's stock, holds the rest of Kearl.

Imperial shares closed up 66 cents to $43.73 in TSX trading Wednesday.

Imperial is a major producer of crude oil and natural gas, Canada's largest petroleum refiner, makes petrochemicals and has a coast-to-coast supply network of about 1,850 service stations.