UPDATE 6-At least one dead in freight train explosion in Canadian town
* Canadian minister indicates death toll will rise
* Runaway train jumped rails early in morning
* Transporting crude oil from North Dakota to eastern Canada
* Disaster could figure in debate on Keystone XL pipeline
LAC-MEGANTIC, Quebec, July 6 (Reuters) - A fast-moving, driverless train carrying tankers of crude oil derailed and exploded into an enormous fireball in the middle of a Canadian town early on Saturday, destroying dozens of buildings and killing at least one person, a toll officials said was likely to rise.
The disaster occurred shortly after 1 a.m. (0500 GMT) when the runaway freight train with 73 cars sped into Lac-Megantic, a lakeside town of about 6,000 people in the province of Quebec near the border with Maine, and came off the rails.
Witnesses said the town center, which included bars as well as stores, a library and residential streets, was crowded with weekend partygoers.
Four of the cars caught fire and blew up in a huge fireball that mushroomed many hundreds of feet up into the air. It destroyed dozens of buildings, many of them totally flattened, included the popular Musi-Cafe music bar, eyewitnesses said.
Police spokesman Michel Brunet told a briefing that at least one person had died.
He said he could not say how people many were missing. But Industry Minister Christian Paradis, who handles Quebec affairs for the federal government, indicated the death toll was likely to rise.
"I hope there are not too many dead," a clearly shocked Paradis told public broadcaster Radio-Canada. "It's really terrifying. I think the worst is yet to come."
Officials said they had few reports of injured victims, suggesting that people caught up in the blast either died on the spot or managed to escape.
The train was transporting crude oil from North Dakota to eastern Canada, likely to New Brunswick, news that is bound to revive questions about the safest way to carry the oil needed to service North America's economies.
Rail company Montreal, Maine & Atlantic said the train had been parked some distance from the town, and no one was on board when it derailed.
"We're not sure what happened, but the engineer did everything by the book. He had parked the train and was waiting for his relief ... somehow, the train got released," company vice president of marketing Joseph R. McGonigle told Reuters.
Late on Saturday, firefighters, some of them from the United States, were still spraying cold water on five unexploded tanker cars they said posed a particular danger. Town Mayor Colette Roy-Laroche urged residents to use water sparingly to help the fire services.
The rail tracks pass next to the Musi-Cafe, which is popular with young people. Eyewitness Yvon Rosa said he had just left when he saw the train speeding into the middle of the town.
"I have never seen a train traveling that quickly into the center of Lac-Megantic," he told Radio-Canada, saying he watched as the train hurtled around a bend.
"I saw the wagons come off the tracks ... everything exploded. In just one minute the center of the town was covered in fire."
Residents said they had heard five or six large blasts. More than 15 hours after the derailment, one car was still burning.
"Many parents are worried because they haven't been able to communicate with a member of their family or an acquaintance," Roy-Laroche told Radio-Canada.
CENTER OF TOWN 'ALMOST DESTROYED'
Police imposed a 1/2-mile (1-km) security zone around the blast and evacuated about 1,000 people from their homes.
"When you see the center of your town almost destroyed, you'll understand that we're asking ourselves how we are going to get through this event," a tearful Roy-Laroche told a televised news briefing earlier in the day.
Police said some of the tanker cars had spilled their contents into the river that runs through the town. The Canadian Transportation Safety Board, which probes all accidents, said it was looking for the train's "black box" voice recorder.
Prime Minister Stephen Harper promised a full investigation.
"Tragically, it is clear there has been loss of life but we do still not know how extensive that is," he told reporters in Calgary, Alberta.
Lac-Megantic is part of Quebec's Eastern Townships region, an area popular with tourists that borders both Maine and Vermont. Quebec is a predominantly French-speaking province in the eastern half of Canada.
Montreal, Maine & Atlantic owns some 510 miles (820 km) of track in Maine and Vermont in the United States and in Quebec and New Brunswick in Canada.
The debate over shipping oil by rail is becoming increasingly topical as U.S. President Barack Obama decides whether to approve TransCanada Corp's proposed Keystone XL pipeline from the oil sands of Alberta to the Texas coast.
Backers of Keystone XL - a project that environmentalists strongly oppose - say transporting oil by pipeline is safer than using rail cars.
There have been a number of high-profile derailments of trains carrying petroleum products in Canada recently, including one in Calgary, Alberta, last week when a flood-damaged bridge sagged toward the still-swollen Bow River. The derailed rail cars were removed without spilling their cargo.
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