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Apr 30, 2019

CN never saw crude-by rail having 'long-term role' in Alberta: Ruest

Crude-by-rail not a long-term driver for our business: CN Rail CEO


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The chief executive of Canada’s largest railway says he never expected crude-by-rail to be a long-term solution for the nation’s energy sector.

“We’ve always assumed that eventually pipelines will be built, and the role of the railroads – including CN – is to be a bridge role, a role to move products to market until the time that the pipeline would have capacity sufficient to move what was produced in Alberta,” Canadian National Railway Co. CEO Jean-Jacques Ruest told BNN Bloomberg in a Tuesday interview.

“We’ve never believed our role to be a long-term role,” he added. “In our view it is a role for the next three years and after that we assume that the pipeline issues are resolved, and the pipelines will be in operation, moving product to market, including maybe to Asia.”

Newly-sworn-in Alberta Premier Jason Kenney targeted Canada’s railroads during his election campaign – and specifically the $3.7-billion deal signed by his predecessor to boost crude-by-rail capacity out of the province – going so far as to call Rachel Notley’s plan “a catastrophic mistake.”

Ruest said that even if the deal with the province is struck down, some of the sector’s producers will likely want to sop up the excess capacity on the rails.

“Last year from sometime in the spring or summer we started to really crank up and ramp up capacity to be able to move natural resources, including crude by rail,” he said. “We obviously do that typically for private companies, which is what we did last year, and the capacity we created is available to any players in Alberta who want to restart moving crude by rail, including the government.”

“It’s an opportunity for Alberta to consider.”

Along with the opportunities he sees for crude-by-rail trainsport, Ruest said the railway is doing a better job making room for Canada’s other commodity producers, including grain and lumber.

Both industries cried foul in 2018 over a perceived preference on the railway’s end for crude shipments, but Ruest said CN is already improving on a year-to-date basis.

“Last year, grain and forest products were two segments of our customer base who weren’t very satisfied,” Ruest said, before saying the railroad has moved 1.9 million metric tonnes more in the crop-year-to-date than the same point a year ago.

“This year grain’s been moving very well, despite the seven weeks of very cold temperatures on the prairies and on the forest product side we did a much better job making sure that the lumber can get to market,” he said.

CN reported lower-than-expected first-quarter profits on Monday, which it blamed on a “very, very cold, bitter winter.” Ruest said Monday that the brutal weather hindered train lengths and added significant costs to clearing snow.