CALGARY Feb 18 Canadian Pacific Railway Co
, the country's second-biggest rail operator, is
considering what to do with C$2 billion ($1.83 billion) in
surplus real estate, its chief executive said on Tuesday as he
defended plans to impose a surcharge on oil tankers he considers
Hunter Harrison said at a Calgary event that he has begun
talking to the railway's board of directors about options for
"We're not real estate people," Harrison told the business
audience. "We're not going to go out and sell that. We are
however, as we speak, having a dialogue with the board about
putting a model in place on what is the best way to optimize,
monetize those assets."
Harrison, the railway turnaround expert appointed as chief
executive of CP Railway in 2012 following a bitter proxy battle
led by activist investor William Ackman, said he expects the
sale process to last as long a three years once the board
identifies a method for the dispositions.
However, he spent much of his speech condemning the use of
older rail tankers for transporting crude oil. Canadian Pacific
levied a $325 surcharge on each DOT-111 tanker, the car type
that derailed and spilled explosive crude in Lac-Megantic,
Quebec last summer, killing 47 people.
Railroads, shippers and regulators across North America have
acknowledged that older DOT-111 tank cars, manufactured before
higher standards were adopted in 2011, often fail during
accidents, making them more likely to spill their cargo and
Harrison said the railway has no choice but to accept the
cars because they are approved for use by regulators and the
surcharge, condemned by some shippers as way to boost revenue,
was solely a way to encourage customers to use safer tankers.
"We're just trying to discourage people from using DOT-111
tank cars," he told reporters. "That's what it's about. ... It's
not a cash grab."
Shipping crude by rail has boomed over the past few years
because of squeezed pipeline capacity in Canada and the United
States. But in the wake of the Lac-Megantic tragedy, Canadian
Pacific debated whether it wanted to be in that business.
In the end, because it cannot refuse shipments as a common
carrier, it decided to encourage customers to use safer tank
"Oil can be shipped safely," Harrison said. "If we get the
right vessel and if we do it in the proper manner."