A Calgary-based gas-drilling contractor has signed up to build what it believes will be Canada’s biggest land-based drilling rig, which will be put to work plumbing the depths of British Columbia’s far northeast in support of the province’s nascent liquefied natural gas industry.

Trinidad Drilling Ltd. on Tuesday said it had signed a contract to build a 3,000-horsepower rig capable of drilling wells to a total length of eight kilometres, which will be deployed in north of Fort Nelson in B.C.’s Liard Basin shale gas formation.

It will take year to build the rig at Trinidad’s manufacturing plant just south of Edmonton and it should be at work by September or October of 2014, said Lisa Ciulka, the company’s vice-president of investor relations.

Ciulka added that Trinidad isn’t disclosing who its customer is. She would only say the customer wants to drill for gas in support of potential sales contracts for an LNG proposal.

“It’s almost a chicken-and-egg thing,” Ciulka said. “You have to prove up your (gas) reserves before you can get contracts for offtake (sales) of LNG once it’s processed on the coast of B.C.

And contracts are an important factor in justifying construction of plants.

“You almost need to prove the reserves before you can put the plant in place,” she added.

There are four major proposals at various stages of the planning process to build liquefied natural gas export plants in either Kitimat or Prince Rupert, though none has made a financial commitment to build.

In recent years, a boom in shale gas production in the United States has flooded North American markets with cheap natural gas, which has made it unprofitable for producers in northeastern B.C. to drill new wells.

The result has been a slowdown in drilling in the province, with B.C. Oil and Gas Commission statistics showing drilling hitting a low of 483 wells in 2012 compared with the decade high of 1,435 wells in 2006.

In recent months, however, the commission has seen an increase in applications and authorizations to drill wells compared with 2012, with much of the activity pinned to B.C.’s LNG potential.

Industry analyst Gordon Currie told The Sun recently that it doesn’t make sense to drill new wells with current low gas prices. It is more likely LNG proponents are drilling to prove that they have the necessary reserves to support their projects.

Companies also risk losing the land leases they’ve spent millions of dollars to secure if they don’t start exploration within a prescribed period of time.

The rig that Trinidad has contracted to build stands out as one of the more powerful rigs, capable of drilling deeper than typical wells; however, it fits the industry trend, said Cindy Soderstrom, communications manager for the Canadian Association of Oil Well Drilling Contractors.

Ciulka wouldn’t confirm how much it will cost to build the rig, but machines that are built to half its horsepower typically cost $20 million. She added that the rig will be under contract for five years during which time it will be expected to operate for at least 350 days per year, which is longer than the 250 days that is more typical for drilling contracts.

depenner@vancouversun.com