WINNIPEG, Manitoba, March 7 (Reuters) - Canada's

second-biggest oil producer, Suncor Energy ( SU ), has signed a

memorandum of understanding with Fort McKay First Nation to

assess a potential oil sands lease on the Indigenous community's

land, the First Nation and company said on Thursday.

WHY IT'S IMPORTANT

Some First Nations like Fort McKay, located 50 km (31 miles)

north of Fort McMurray in northern Alberta, have become involved

with oil and gas development on their lands to attract jobs and

revenues, while others oppose such projects for environmental

reasons.

Suncor's Base Plant and Syncrude have been operating for

decades and are the oldest mines in the oil sands. The agreement

could give Suncor an option for additional supply after 2040 as

Base Plant nears the end of its life in the mid-2030s.

KEY QUOTE

"With this agreement, we are creating the conditions for

sustainable prosperity, growth and health for our nation for

generations to come, while leading the way on protecting our

land and water," said Fort McKay Chief Raymond Powder.

CONTEXT

Canada, the fourth-largest global oil producer, produces

most of its crude from the oil sands in an energy-intensive

process involving either mining or steam injection.

Suncor, like other major oil sands producers, is working to

reduce high greenhouse gas emissions from production and has set

a goal of reaching net-zero emissions by 2050 through projects

such as carbon capture.

WHAT'S NEXT

Suncor is conducting early-stage technical and commercial

feasibility assessments to determine the quality and quantity of

recoverable ore on the Fort McKay land.