CanElson Drilling Inc. (CDI) announced a long-term contract for a new $8 million bi-fuel (natural gas and diesel) drilling rig and provided an update for its Canadian and US operations in July and August 2012. President and CEO Randy Hawkings stated “Given our modern fleet of deep capacity drilling rigs and our growing bi-fuel capability on our drilling rigs we expect to continue outperforming the industry and contracting new build rigs as we move forward.”
Bi-Fuel Rig Details
The new CanElson bi-fuel drilling rig will have three diesel engines capable of operating on a combination of natural gas and diesel fuel or on diesel fuel only, in the event that natural gas is either unavailable or becomes uneconomic. In bi-fuel mode, natural gas displaces a significant amount of the diesel fuel that would otherwise be consumed. CanElson expects that the displacement of diesel fuel will result in significant fuel cost savings for bi-fuel drilling rigs.
The new bi-fuel drilling rig will be the second new rig with bi-fuel capacity to be assembled by CanElson at its facility in Nisku, Alberta. The first new build bi-fuel rig (Rig #32 in CanElson’s fleet) was delivered last month. The new rig (Rig #34) is scheduled for delivery in December 2012. For each of the new bi-fuel rigs, CanElson’s wholly owned subsidiary, CanGas Solutions Inc. (“CanGas”) is investing approximately $0.2 million for bi-fuel capability. This $0.2 million bi-fuel investment is incremental to the $7.8 million it costs for a diesel fuel drilling rig (excluding top drive). CanElson’s investment in each of its two new bi-fuel rigs is underpinned by long term committed contracts. CanElson will arrange to truck compressed natural gas (“CNG”) to the bi-fuel rigs using trailers owned by CanGas.
Other New Rigs
As previously disclosed, CanElson is also assembling two additional rigs (Rig #33 and Rig #35), both for delivery to West Texas under long term contracts with producers there. Rig #33 is scheduled for delivery in October 2012 and Rig #35 is scheduled for delivery in January 2013. Beyond that, CanElson has ordered long lead items for another new rig (Rig #36). Pending a signed contract, construction of Rig #36 is possible in Q1, 2013. CanElson continues to require committed contracts prior to full assembly of additional rigs.