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CN tests natural gas/diesel fuel powered locomotives between Edmonton and Fort McMurray, Alta.

EDMONTON, Sept. 27, 2012 — CN (TSX: CNR) (NYSE: CNI) announced today 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.

Forward-Looking Statements

Certain information included in this news release constitutes “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws. CN cautions that, by their nature, these forward-looking statements involve risks, uncertainties and assumptions. The Company cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company or the rail industry to be materially different from the outlook or any future results or performance implied by such statements.

Important risk factors that could affect the forward-looking statements include, but are not limited to, the effects of general economic and business conditions, industry competition, inflation, currency and interest rate fluctuations, changes in fuel prices, legislative and/or regulatory developments, compliance with environmental laws and regulations, actions by regulators, various events which could disrupt operations, including natural events such as severe weather, droughts, floods and earthquakes, labor negotiations and disruptions, environmental claims, uncertainties of investigations, proceedings or other types of claims and litigation, risks and liabilities arising from derailments, and other risks detailed from time to time in reports filed by CN with securities regulators in Canada and the United States. Reference should be made to “Management's Discussion and Analysis” in CN's annual and interim reports, Annual Information Form and Form 40-F filed with Canadian and U.S. securities regulators, available on CN's website, for a summary of major risks.

CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable Canadian securities laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related maters, or any other forward-looking statement.

About CN

CN – Canadian National Railway Company and its operating railway subsidiaries – spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the key metropolitan areas of Toronto, Buffalo, Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, St. Louis, and Jackson, Miss., with connections to all points in North America.

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