* Phase expected to produce 40,000 bpd next year
* Developed at cost of C$22,000 per flowing barrel
* Shares rise 2 pct to C$32.77
CALGARY, Alberta, Aug 22 (Reuters) - Cenovus Energy Inc (CVE.TO) has started up the third phase of its Christina Lake oil sands project as part of its long-term expansion of steam-driven developments, it said on Monday.
Cenovus said Christina Lake phase C is producing 5,000 barrels a day and is expected to ramp up to 40,000 some time in 2012. That will push overall output at the northern Alberta project to 58,000 barrels a day.
The company said it could develop the phase at C$22,000 per daily barrel of production, which suggests overall cost of around C$880 million for the project, which is 50 percent owned by ConocoPhillips (COP.N).
However, phase C included installation of some infrastructure for future phases as well, which would raise costs, spokeswoman Rhona DelFrari said.
The partners' other major producing oil sands project is Foster Creek, which is expected to pump 112,000-114,000 bpd in the current quarter.
Both employ steam-assisted gravity drainage technology, in which steam is pumped into the ground to liquefy the extra-heavy oil so it can be pumped to the surface in wells.
Cenovus shares rose 60 Canadian cents, or nearly 2 percent, to C$32.77 on the Toronto Stock Exchange.
$1=$0.99 Canadian Reporting by Jeffrey Jones; editing by Rob Wilson