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TRANSPORTATION: CN deepens oil sands ties with railway purchase
        (AlbertaIndex, January 2, Wednesday) --- Canadian National Railway (CN) has announced that it will acquire the Athabasca Northern Railway Ltd. (ANY) to preserve a critical rail link to the oil sands region of northern Alberta.
        CN will pay C$25 million for ANY and invest C$135 million in rail-line upgrades over three years to improve transit times and service consistency.

The company said its purchase and rail-line rehabilitation plan are premised on long-term traffic volume guarantees that it has negotiated with shippers Suncor Energy Inc, OPTI Canada Inc and Nexen Inc.

The 202-mile ANY connects with CN at Boyle, Alta., located 101 miles north of Edmonton. CN’s plans for the line will preserve market access to existing and potential receivers along the rail corridor – today sulphur and petroleum coke move southbound on the ANY, and increased volumes of these commodities are expected to move over the line in future.

Without a new owner, the ANY rail line was to have been abandoned last month. The result would have been a significant increase in truck traffic on Highway 63, generating increased congestion and safety concerns on the busy road. Rail is also a much more efficient way to move freight traffic compared to truck, with significantly reduced greenhouse gas (GHG) emissions.

E. Hunter Harrison, CN president and CEO, said: “CN’s investment and partnership agreements with key shippers will allow the parties to maintain important rail service to Lynton, Alta, a point near Fort McMurray, home of existing and future oil sands development.

“CN is focused on the future. While ANY’s current traffic volumes are too low to keep it going as a stand-alone operation, we and our shipper partners see the ANY playing a critical role in one of the world’s largest construction projects – the oil sands reserves in northern Alberta are second only to Saudi Arabia’s, and industry is expected to invest more than C$100 billion over the next decade in oil sands development, construction and infrastructure upgrading.”

CN’s line rehabilitation, including upgraded rail, ties, bridges and new ballast, will allow greater volumes of northbound shipments of construction materials and machinery to support oil sands development.

“Suncor has a long history with the Athabasca Northern and, with this announcement, we’re looking forward to the line’s future with upgraded operations,” says Mike Ashar, Suncor executive vice president. “Moving oil sands freight by rail and relieving highway traffic has significant safety and environmental benefits that we strongly support.”

ANY marks CN’s third short-line transaction in economically vibrant northern Alberta in the past two years. In January 2006, CN purchased the Mackenzie Northern (MKNR) Railway and Lakeland & Waterways Railway for C$26 million, and in December of that year it acquired the Savage Alberta Railway Inc (SAR) for C$25 million.

In 2006 and 2007, CN spent C$58 million to upgrade the rail infrastructure of the former MKNR and SAR and is planning C$22 million in further improvements in 2008.

CN is well positioned to capitalize on energy opportunities in the northern Alberta, with a strategically located network close to the action. CN also has a team of experts to support economic development in the oil sands area as well as in the Alberta Industrial Heartland near Edmonton that will see construction of C$20-billion worth of heavy oil upgraders in the coming decade.

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