July 10 (Reuters) - Canadian oil producer Strathcona

Resources ( STHRF ) said on Wednesday it has partnered with

Canada Growth Fund (CGF) to build carbon capture and

sequestration (CCS) infrastructure in Saskatchewan and Alberta

provinces.

Strathcona and CGF, a federal clean-tech financing agency,

will each invest up to C$1 billion ($734.38 million) to fund the

project that will seek to capture and permanently store up to 2

million tonnes of carbon dioxide annually.

Carbon capture is a process through which carbon dioxide

generated from industrial activity is stored underground.

CONTEXT

CGF will initially commit C$500 million in funding the

project, with the option to upsize its commitment to C$1

billion.

The partners will each fund 50% of the capital costs to

build CCS infrastructure on the energy producer's oil sands

facilities.

Strathcona will build, own and operate the CCS projects and

receive all investment tax credits. The company expects to

eliminate a substantial part of its future carbon tax liability

through this project.

WHY IT'S IMPORTANT

Last year, Canada said it will finance investment tax

credits for CCS and net-zero energy technologies, following

through on previously announced subsidies meant to attract more

green investment.

Canada, the world's fourth-biggest petroleum producer, sees

the process as the key to decarbonizing the country's oil sands.

Last year, Prime Minister Justin Trudeau had said he wanted

his country to be a leading global supplier of green technology.

($1 = 1.3617 Canadian dollars)