UPDATE 1-UTS shares plunge on oil sands financing worries

(Updates with closing share price)

CALGARY, Alberta, Sept 16 (Reuters) - Shares in UTS Energy Corp (UTS.TO) plunged 19 percent on worries that the oil sands developer would have trouble financing its share of the C$14 billion ($13.1 billion) Fort Hills project.

Shares in the company, whose major asset is a 20 percent stake in Petro-Canada's PCA.TO planned Fort Hills oil sands mine and upgrader, fell 55 Canadian cents to C$2.40. Volume was 21.7 million, almost six times the usual level over the past three months, making UTS the second most active issue on the Toronto Stock Exchange.

It was the lowest price for the shares since June 2005.

UTS has to come up with C$350 million for its part of the first C$7.5 billion in costs for the Fort Hill project and pay its 20 percent share of costs past that milestone, a figure it recently estimated at C$1.54 billion.

Its financing strategy includes raising the cash with a combination of bank debt, the term loan market and high-yield financing.

However, Will Roach, the company's chief executive, said in an interview that he believes the market is questioning UTS's ability to come up with the funds.

"Obviously it's increased risk on the financing, given the financial turmoil," Roach said in an interview. "Obviously the market is giving us some advice that they think it's going to be more difficult."

Petro-Canada has a 60 percent stake in the Fort Hills development while Teck Cominco (TCKb.TO) also has a 20 percent holding. ($1=$1.07 Canadian) (Reporting by Scott Haggett; editing by Rob Wilson)