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Owner of railroad in Lac-Megantic crash plans to ship oil after track fixes

PORTLAND, Maine - The company purchasing the assets of a railroad responsible for a fiery oil train derailment that claimed 47 lives in Quebec plans to resume oil shipments after track safety improvements are made, the firm's top executive said Friday.

John Giles, president and CEO of Central Maine and Quebec Railway, said he hopes to have an agreement with officials in Lac Megantic, Que., within 10 days that would allow the railroad to ship nonhazardous goods, restoring the vital link between the railroad's operations to the east and west of the community.

The company plans to spend $10 million on rail improvements in Canada over the next two years with a goal of resuming oil shipments in 18 months, he said.

"In the interest of safety, and I think being sensitive toward a social contract with Lac Megantic, we have chosen not to handle crude oil and dangerous goods through the city until we've got the railroad infrastructure improved, and made more reliable," he told The Associated Press.

The oil industry is relying heavily on trains to transport oil in part because of oil booms in North Dakota's Bakken region and Alberta's oil sands.

In July, a train transporting oil from the Bakken region was left unattended while parked near Lac-Megantic. The train came loose and sped downhill into the town, where more than 60 tank cars derailed and several exploded. The accident killed 47 people and destroyed much of the town.

Three men now face 47 charges of criminal negligence causing death in connection with the accident. Thomas Harding, Jean Demaitre and Richard Labrie each had to post $15,000 bail this week and were freed on various conditions pending their next court appearance on Sept. 11.

Mayor Colette Roy-Laroche previously told the new operator that she wanted the railroad to be re-routed around the downtown.

But Giles said the company can transport that crude safely — and he intends to convince the people of Lac Megantic.

"I want to get the railroad in position that by January 2016 that I can at least begin to compete for potential crude business moving east-west," Giles said.

New York-based Fortress Investment Group was the winning bidder for the assets of Hermon, Maine-based Montreal, Maine and Atlantic Railway, which declared bankruptcy after the disaster. The new railroad, Central Maine and Quebec Railway, closed on the sale of U.S. assets on Thursday and it is expected to close of the Canadian assets in a couple of weeks.

Giles made his comments Friday in a telephone interview from Bangor, where his company had called former Montreal, Maine and Atlantic workers for a two-day meeting to talk about safety and operations.

He said the rail is in tough shape, with speeds reduced to 10 mph in many sections in Canada. He said the goal is to improve the track to safely increase train speeds to 25 mph. He also said he has no plans to operate trains with a single crew member.

He said he intends to move slowly, working with Lac Megantic leaders, because he understands the community's concerns.

He said he hopes to convince the people of Lac Megantic that the rail is safe enough for shipments of so-called "dangerous goods" by this fall. He said he wouldn't press for crude oil shipments until later.

"The railway is important to the community, people, jobs and commerce. We believe and we've proven ... that we can handle every type of commodity safely and efficiently," he said.


--With files from The Canadian Press

The Canadian Press

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