CN Buying Athabasca Northern Railway

The Athabasca Northern Railway Ltd. (ANY) which provides a critical link to the Athabasca oilsands of northern Alberta and which was to shut down Dec. 31 has been given a reprieve.

Canadian National Railway Company (CN) has announced it will pay $25 million for the privately owned line and invest C$135 million in rail-line upgrades over three years to improve transit times and service consistency. The purchase and rail-line rehabilitation plan is premised on long-term traffic volume guarantees that the company has negotiated with shippers Suncor Energy Inc., OPTI Canada Inc., and Nexen Inc., said the rail company.

Athabasca Northern Railway had said it would have to cease operations because it could not afford to spend money on needed upgrades. CN’s investment and partnership agreements with key shippers will allow the parties to maintain important rail service to Lynton about 25 kilometres south of Fort McMurray, Hunter Harrison, CN president and chief executive officer, said in a news release.

The 202-mile ANY connects with CN at Boyle, Alberta, 101 miles north of Edmonton. CN’s plans for the line will preserve market access to existing and potential receivers along the rail corridor. Sulphur 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.

“CN is focused on the future,” said Harrison. “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 $100 billion over the next decade in oil sands development, construction and infrastructure upgrading.”

OPTI and Nexen had built a 5.1 kilometre rail connection between their Long Lake thermal in situ project and the railway’s mainline at Lynton. The line was used extensively during project construction, including the shipment of its 675-tonne reactor. OPTI also had planned to use the line to haul out the 220,000 tonnes of sulphur per year it produces and trucking it out.

Suncor also has been using the railway to ship out sulphur after trucking it to Lynton.