CN Acquires ANY and Rail Link to Oil Sands

25 December 2007

CN (Canadian National Railway Company) is acquiring the Athabasca Northern Railway Ltd. (ANY), which has the rail link to the oil sands region of northern Alberta. CN’s purchase and rail-line rehabilitation plan are premised on long-term traffic volume guarantees that the company has negotiated with shippers Suncor Energy Inc., OPTI Canada Inc., and Nexen Inc.

CN rail network and acquisition of the Athabasca Northern Railway. Click to enlarge.

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 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 sulfur and petroleum coke move southbound on the ANY, and increased volumes of these commodities are expected to move over the line in future. 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.

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.

—E. Hunter Harrison, CN president and CEO

Without the commitment and investments being made by Suncor, OPTI Canada, Nexen and CN, the rail line faced abandonment this month.