CN spending 1 Billion dollars on Western infrastructure

Business Edge magazine is running an article on its website examining the spending plans of CN Rail, as it moves to capitalize on the progress of the Fairview container port and the expansion of development in the Alberta tar sands.

Those two projects have CN telling the world that the growth for the foreseeable future is in Western Canada and to that point they plan on spending some 1 Billion dollars on equipment, facilities and other infrastructure. the bulk of which will be found in Alberta and BC.

Of interest to Rupertites will be CN's thoughts on phase two of the container port, as seen through the eyes of CN's CEO Hunter Harrison.

"Financing for the terminal's second phase, which will see the initial annual throughput capacity of 500,000 TEUs (twenty foot-equivalent containers) rise to a capability of two million TEUs per year, is already in place, said Harrison.

"There are some other hurdles, but not financing hurdles. From a financing standpoint it's a done deal," said Harrison."

The article examines the number of spin off effects of the CN investment in both BC and Alberta and how many towns and cities stand to benefit from the expansion of trade through Prince Rupert.

CN opens wallet for Western infrastructure

Prince Rupert, oilsands deliver opportunities
By Laura Severs - Business Edge

Published: 06/29/2007 - Vol. 7, No. 13

British Columbia and Alberta will play key roles as the Canadian National Railway Co. spends $1 billion on infrastructure, including new equipment and new facilities, in Western Canada.

The spending comes as CN prepares for increased opportunities arising from B.C.'s Port of Prince Rupert - North America's closest port to Asia - and Alberta's oilsands.

"For the near future, we know the growth is in Western Canada," CN president and CEO Hunter Harrison told a recent Edmonton Chamber of Commerce meeting.

Business levels are flat for CN in the U.S. and down slightly - between one and two per cent - in Eastern Canada, Harrison said. But in Western Canada, growth is up by eight per cent, year-over-year, for the period of 2007 to date compared to the same 2006 time frame.

CN, which has approximately 20,264 route-miles of track in Canada and the United States, serves ports on the Atlantic, Pacific and Gulf coasts and earned $7.7 billion in revenue last year.

This year, CN's plans are to invest nearly $350 million in track infrastructure to take advantage of growth prospects in North American trade with Asia and the boom in the West.

In Edmonton, home to CN's network centre operations and the company's western region headquarters, the railway will open the Bissell CargoFlo facility at a cost of $1.6 million later this year, providing streamlined services for the transfer of bulk liquid chemicals from rail to truck.

To be operated by CN WorldWide North America, it will handle products such as methanol, sodium hydroxide, drilling mud, ethanol and biodiesel.

In neighbouring Fort Saskatchewan, it's constructing a $32-million oil and gas distribution centre.

In B.C., CN expects the first phase of its Port of Prince Rupert container terminal to be sold out even before it opens this fall. The Port of Prince Rupert is 36 hours closer in sailing time to Shanghai than Vancouver and 68 hours closer than Los Angeles.

Financing for the terminal's second phase, which will see the initial annual throughput capacity of 500,000 TEUs (twenty foot-equivalent containers) rise to a capability of two million TEUs per year, is already in place, said Harrison.

"There are some other hurdles, but not financing hurdles. From a financing standpoint it's a done deal," said Harrison.

CN is also investing $20 million in its new Prince George distribution centre, located about 800 km east of the Port of Prince Rupert. Scheduled to open this fall and designed to handle 25,000 containers, there is also the potential for further expansion of the facility.

These moves will enable both Edmonton and Prince George to become major transportation hubs, Harrison said.

For Edmonton, it could even put the city on the same footing as Chicago - but without the gridlock CN faces there.

"The difference between Edmonton and Chicago is we can get through Edmonton and we can't get through Chicago," said Harrison.

Greg Christenson, chair of the board of directors of the Edmonton chamber, also played up the Chicago angle at the June event.

"Edmonton has an opportunity with this growth in the north and the eight-per-cent growth from the CN line in Western Canada to re-leverage that, to make Edmonton into a distribution-based city or community, much like Chicago on the Great Lakes," he said.

"Our access is through Prince Rupert to China and Asia. So we see Chicago as two things: A great commercial city with a transportation base and also a high quality of life for its residents - so that's the analogy."

For Prince George Mayor Colin Kinsley, also in attendance at the chamber function, CN's Prince George distribution centre is the just the beginning of building a key transportation centre.

"Actually it's a tremendous move forward in establishing Prince George as a transportation hub for British Columbia, and perhaps over the many coming years, as a great entry point for distributions throughout North America. It's well positioned in that it's the first major centre from the port of Prince Rupert," said Kinsley.

Prince George is also expanding its airport - it now has international status and full Canada Customs and Immigration service - and hopes that in about 18 months, the facility's runway will be upgraded so it can accommodate heavy air transport planes.

This would enable it to become a first point of entry into North America.

"The growth in that type of transportation is something in excess of seven per cent per year and Anchorage, Alaska - which is now the entry point for these heavies coming in from Asia as a first stop for fuel - is at capacity," says Kinsley. "So that opens up a huge opportunity for Prince George because it's on the same (what they call the) circle route and the difference in time is a couple of minutes, I understand."

Meanwhile, the rail opportunities - both for Prince George and Edmonton - arise out of back-haul possibilities.

"It's common knowledge that there's a lot empty containers going back to Asia because of the extreme amount of product that's coming to North America," says Kinsley.

"We now can stuff those containers with pulp. We have three very large, highly efficient pulp mills in Prince George itself - plus two more 70 miles south in Quesnel, another one north of us at Mackenzie - so those pulp products and paper products that were shipped by truck to Vancouver for access to ships will now be stuffed right in Prince George at this facility and sent to Prince Rupert."

A recently signed memorandum of understanding between Prince George, the Port of Prince Rupert and Edmonton to market this new corridor will ensure that all three parties benefit.

"Each of us will have a role to play in promoting each other's advantages for shippers, both leaving the country on back haul and coming into the country," said Kinsley.

"The discussions with (Edmonton) Mayor (Stephen) Mandel and myself are about the fact that we're not in competition with one another, we're here to complement one another and grow this transportation link. There's enough for all of us, if not more."