Davies Transportation Consulting Inc., in collaboration with Hooper Engineering and Wave Point Consulting Ltd. was engaged by Sturgeon County to assist in evaluating the option of purchasing the Athabasca rail spur (Morinville to Legal) from CN Rail. Pursuant to Section 145 of the Canada Transportation Act, the railway line was offered for sale to local governments (Sturgeon County, the Town of Morinville, and the Town of Legal) with a tight deadline for completion in time for the County to respond to CN’s offer.
The consulting team reviewed the history of the rail line, reviewed the ASR’s track structure, estimated capital and operating costs to maintain rail operations, provided a high level assessment of net salvage value of the rail line, and undertook financial analysis of potential operating results for two acquisition cost scenarios. In addition, we provided advice on regulations governing rail line abandonment and options for determination of net salvage value; a review of obligations for the owner of a provincially regulated railway under the Alberta Railway Act, and commercial requirements from CN for concluding an operating agreement governing operations and commercial relationships between CN and the shortline operator; and a review of municipal involvement in shortline railways elsewhere in Canada, including key success factors. On the basis of this analysis, it was concluded that without substantially more rail traffic there is little probability that purchase of the line for the purposes of continuing rail operations would be commercially viable.