Tuesday, December 04, 2012

CP to explore options for DM&E west end

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Canadian Pacific on Tuesday announced its intention to explore strategic options for its main line track from Tracy, Minn., west into South Dakota, Nebraska, and Wyoming, and is inviting expressions of interest from prospective partners.

On Monday CP said it intended "to defer indefinitely plans to extend its rail network into the Powder River Basin coal mines based on continued deterioration in the market for domestic thermal coal, including a sharp deterioration in 2012," and would take a fourth-quarter write-down on its option to extend Dakota, Minnesota & Eastern (DM&E) right-of-way into the Powder River Basin.

The current routes identified by CP Tuesday include approximately 660 miles of track, which encompasses CP's current operations between Tracy, Minn., and Rapid City, S.D., north of Rapid City to Colony, Wyo., south of Rapid City to Dakota Jct., Neb., and connecting branch lines. CP has operated the rail line in this area since it assumed operational control of DM&E in 2008. A number of grain, ethanol, clay and merchandise customers are rail-served in the area.

"This portion of the CP network would be an attractive and highly viable opportunity for a low-cost operator. There is a strong long-term franchise here for an operator willing to maintain high quality service and explore growth opportunities with existing and future customers," said CP President and CEO E. Hunter Harrison. "CP has successfully built many partnerships with shortline and Class 1 railroads throughout its system and we look forward to assessing the ways interested parties could work together with us to deliver quality service to customers on the west end of the DM&E through an innovative partnership."

"CP will continue to fully serve customers along this rail line as we work with interested parties and evaluate proposals," Harrison added. "We have undertaken similar reviews on other portions of our network in the past that have resulted in positive outcomes for shippers, employees, and operators."