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Updated: Fri, 16 May 2014 16:14:44 GMT | By The Canadian Press, cbc.ca

Lac-Mégantic new rail owner plans to restart oil shipments



Smoke rises from railway cars that were carrying crude oil after derailing in downtown Lac-Mégantic, Que., on July 6, 2013. DOT-111 tanker cars, older models of which are known to puncture or leak during crashes, were involved in the crash. Paul Chiasson/Canadian Press

Smoke rises from railway cars that were carrying crude oil after derailing in downtown Lac-Mégantic, Que., on July 6, 2013. DOT-111 tanker cars, older models of which are known to puncture or leak during crashes, were involved in the crash. Paul Chiasson/Canadian Press

The new owner of the railroad responsible for a fiery oil train derailment that claimed 47 lives in Quebec says he plans to restart oil shipments after making safety improvements.

John Giles, CEO of the Central Maine and Quebec Railway, hopes to have an agreement with Lac-Mégantic, Quebec, within 10 days to resume shipments of non-hazardous goods, restoring the vital link between rail to the east and west. 

Giles' company closed on the sale of U.S. assets of the bankrupt Montreal, Maine and Atlantic Railway on Thursday. The firm is expected to close of the Canadian assets in a couple of weeks.

The company plans to spend $10 million on rail improvements in Canada over the next two summer construction periods before resuming oil shipments in 18 months, he said.

"In the interest of safety, and I think being sensitive toward a social contract with Lac-Mégantic, 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 rail industry is relying heavily on trains to transport oil in part because of oil booms in North Dakota's Bakken region and Alberta's oilsands.

"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.

Giles' company closed on the sale of U.S. assets of the bankrupt Montreal, Maine and Atlantic Railway on Thursday. The firm is expected to close of the Canadian assets in a couple of weeks.

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 oilsands.

In July, a train transporting oil from the Bakken region was left unattended while parked near  Lac-Mégantic. 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.

3 employees face charges

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 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-Mégantic.

In an email to The Canadian Press, a spokesman for the Prime Minister's Office said, "Any plan the company has should take into account the tragedy the people ofLac-Mégantic have gone through and should be done in collaboration with the administration of the city."

A spokesman for Lac-Mégantic said Roy Laroche would have no comment.

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.

Safety talk by railway

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 about 15 km-h in many sections in Canada. He said the goal is to improve the track to safely increase train speeds to 40 km/h. 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-Mégantic​ leaders, because he understands the community's concerns.

He said he hopes to convince the people of Lac-Mégantic 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.

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