EDMONTON, Sept. 27, 2012 - CN (TSX: CNR) (NYSE: CNI) has announced it is testing two mainline diesel-electric locomotives fuelled principally by natural gas in revenue service in northern Alberta.

Keith Creel, executive vice-president and chief operating officer, said: "CN launched this locomotive test to explore the use of natural gas as a potential alternative to conventional diesel fuel. This reflects CN's continuing drive to look for ways to improve operating efficiency and advance the company's sustainability agenda.

"Natural gas has a lower carbon content compared with diesel fuel, so that locomotives using natural gas - if the railway technology employing this form of energy ultimately proves viable - would produce significantly fewer carbon dioxide emissions."

CN retrofitted the diesel engines in two 3,000-horsepower Electro-Motive Diesel (EMD, a subsidiary of Progress Rail Services, a Caterpillar Company (NYSE: CAT)) -- SD40-2 locomotives to run on natural gas using conversion kits supplied by Energy Conversions Inc. (ECI) of Tacoma, Wash.

ECI says the hybrid fuel locomotive will reduce carbon dioxide emissions by 30 per cent and nitrogen oxide emissions by 70 per cent over a locomotive duty cycle. Click on here to view the locomotive set.

The retrofitted locomotives, using 90 per cent natural gas, with 10 per cent diesel fuel for ignition, are paired with a natural gas fuel tender, or specially equipped and protected tank car, between them. The tender was upgraded by a unit of Chart Industries, Inc., (NASDAQ: GTLS), located in New Prague, Minn. Natural gas fueling is being provided by Encana Corporation (TSX: ECA) (NYSE: ECA).

The natural gas fuelled locomotives are testing on the 300-mile run north of Edmonton to Fort McMurray, rail gateway to the oil sands region of northern Alberta. Fueling and maintenance take place in Edmonton.

CN is also working with EMD, Westport Innovations Inc. (TSX: WPT) (NASDAQ: WPRT) and Gaz Métro Transport Solutions (GMTS), a wholly owned subsidiary of Gaz Métro, on a longer term project to explore a state-of-the-art natural gas railway engine and a standardized railway tender.

CN will provide two 4,300-horsepower SD70M-2 EMD locomotives for the test program. EMD, in addition to the engine conversion, will supply technical expertise to integrate the natural gas engine, related components and controls into the locomotive, including Westport™ high-pressure direct injection (HPDI) technology and natural gas fuel system technologies. GMTS will develop natural gas liquefaction requirements and distribution systems. An innovative natural gas tender for this initiative will be jointly developed by the project partners.

The CN-led group expects to conduct engine laboratory tests in 2013 and to roll out the prototype main-line locomotives for road tests in 2014.

As part of the project, Westport secured a funding commitment of C$2.3 million from the Canadian government's Sustainable Development Technology Canada program to develop the HPDI technology for high-horsepower applications.

CN leads the North American rail industry in fuel efficiency, consuming close to 15 per cent less fuel per gross-ton-mile overall than the industry average. CN's lower fuel consumption results in significantly fewer greenhouse gas emissions.