MONTREAL — CN Rail says it will acquire the Athabasca Northern Railway in an effort to preserve a critical rail link to the oil sands region of northern Alberta.

CN’s purchase and rail-line rehabilitation plan are premised on long-term traffic volume guarantees that the company has negotiated with shippers Suncor Energy Inc., OPTI Canada Inc., and Nexen Inc.

CN will pay $25 million for ANY and invest $135 million in rail-line upgrades over three years to improve transit times and service consistency.

“CN’s investment and partnership agreements with key shippers will allow the parties to maintain important rail service to Lynton, Alta., a point near Fort McMurray, home of existing and future oil sands development,” said E. Hunter Harrison, CN president and CEO.

While ANY’s current traffic volumes are too low to keep it going as a stand-alone operation, Harrison said the rail way and its shipper partners see it as playing a critical role in the oil sands reserves in northern Alberta, which is expected to see more than $100 billion in investment over the next decade.

The 202-mile ANY connects with CN at Boyle, Alta., located 101 miles north of Edmonton. CN’s plans for the line will preserve market access to existing and potential receivers along the rail corridor. Sulphur and petroleum coke move southbound on the ANY, and increased volumes of these commodities are expected to move over the line in future. CN’s line rehabilitation, including upgraded rail, ties, bridges and new ballast, will allow greater volumes of northbound shipments of construction materials and machinery to support oil sands development.