Biggest rig in Canada will drill in Liard Basin
CALGARY – Trinidad Drilling Ltd. is pleased to announce that it has signed a contract to build one of Canada’s largest and most technically-advanced land rigs. The rig is being constructed to drill natural gas in the Liard Basin, an area that is being developed to supply gas for the future liquefied natural gas (LNG) plants proposed for the west coast of British Columbia.
The new rig will be constructed at Trinidad’s in-house manufacturing facility in Nisku, Alberta, and will be equipped with the Company’s latest advancements in high-performance drilling technology, including an automated rig moving system. The rig will be a 1.25 million pound hook load, 3,000 horsepower AC rig with a depth capacity of 8,000 metres (26,250 feet). The rig will be operating under a five-year, take-or-pay contract with a minimum of 350 days per year and is expected to be delivered in to operations in the second half of 2014.
“Trinidad’s reputation for designing, building, and operating high-performance drilling equipment, along with its strong safety culture and well-trained crews are the reasons we were successful in being awarded this contract,” said Lyle Whitmarsh, Trinidad’s Chief Executive Officer. “We have made a name for ourselves drilling deep, technically-challenging wells throughout North America and this is exactly the type of experience needed to be successful in the growing LNG development opportunity in Canada. We look forward to further developing our partnership with this customer who has shown long-term commitment to the advancement of LNG in Canada.”
“We have shown continued focus and discipline over the past few years by lowering our debt levels significantly and we are now emerging with high levels of free cash flow and strong growth opportunities to add value for our shareholders”, continued Mr. Whitmarsh. “As we near our leverage targets, we are in the enviable position of evaluating a number of exciting opportunities and selecting those that provide the strongest returns and best fit our future strategic direction.”
There are several current proposals to build LNG plants along the British Columbia coastline with anticipated start up time lines from 2015 and beyond. These plants are expected to produce LNG for export to Asian markets where natural gas is sold at a premium to North American prices. While all of these proposals may not be completed, those participants further along in the process are looking to prove their supply of natural gas by developing a number of plays in north-western Canada including the Montney, Duvernay, Horn River, and Liard Basin. This added interest is driving increased demand for deep, modern drilling equipment in Canada.
In addition to this new build opportunity, Trinidad has also received numerous requests from customers for upgraded equipment. In response to these requests and its new rig construction program, Trinidad is expanding its 2013 capital expenditure program to approximately $140 million which the Company expects to fund from cash flow from operations.
Lisa Ciulka, vice president of Investor Relations with Trinidad Drilling, speaking to CBC Daybreak’s Betsy Trumpener could not give a cost figure for the new rig, but said it would be about double the cost of a regular rig which is about $20 million.
The well will drill to a depth of 8,000 metres compared to the ones in the Trinidad fleet that drill to a depth of 6,000 metres. It will be 56 metres tall, equivalent to a 17 storey building. “It will be the largest rig on land in Canada,” Ciulka said.
Once the drilling is complete another company will come on site and frack the gas.
The need for such a deep drilling rig is because the gas in the Liard Basin is deep underground.
Once installed it will drill for 365 days a year and assuming a 120 day drill program, three wells a year. Apache and Nexen are operating in the Liard Basin.
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