UPDATE 1-Aecon shares surge on oil sands contract win

* Contract is for construction at Suncor's Firebag project

* Analysts estimate contract size at up to C$200 mln

* Shares up as much as 8 pct to C$14.19 (Recasts with stock price rise, analyst comment)

VANCOUVER, British Columbia , Nov 16 (Reuters) - Shares in Aecon Group Inc (ARE.TO) surged as much as 8 percent to a new year high on Monday after the construction company said it had been awarded one of its biggest contracts yet in Canada's oil sands.

Aecon's Lockerbie & Hole unit announced it will build infrastructure at Suncor Energy Inc's (SU.TO) Firebag thermal oil sands project in northern Alberta, which the oil company revived last week after the economic crisis had forced a halt to construction.

Aecon, Canada's biggest publicly traded construction company, didn't reveal the contract's value but analysts pegged it at between C$120 million ($114 million) and C$200 million. It will make up around 8 percent of Aecon's backlog of work.

"The contract confirms our investment thesis on Aecon -- the company has one of the highest and most direct levers to positive oil sands developments," said Genuity Capital Markets analyst Maxim Sytchev in a research note to clients.

The oil sands have the largest crude reserves outside the Middle East. While plentiful, the oil trapped in the sands of northern Alberta is expensive and technically challenging to produce.

The project includes the completion of piping, electrical, and insulation work, as well as some smaller civil and mechanical work for five of the 10 Firebag process units.

Work is scheduled to begin in January 2010 and is expected to be finished by the end of the third quarter.

The announcement is also an indication that Aecon's acquisition of Edmonton, Alberta-based Lockerbie & Hole earlier this year was a worthwhile purchase as activity in Canada's oil sands sector continues to pick up, Macquarie analyst Avi Dalfen said.

Aecon's shares rose as high as C$14.19 on the Toronto Stock Exchange in early dealings on Monday, its highest level since Sept. 9 last year. By late morning the stock was off its highs at C$13.88 for a gain of 5 percent, or 70 Canadian cents.

($1=$1.05 Canadian) (Reporting by Nicole Mordant; editing by Peter Galloway)