Northern Alberta Railways
In 1928 the provincial government grouped the ED&BC, CCR, AG&W, and PVR under the collective name Northern Alberta Railways (NAR), which received a federal charter in March 1929. Under UFA Premier Brownlee, the NAR was sold to both the CNR and CPR in equal portions with both companies agreeing to maintain the NAR as a joint subsidiary. At that time, the NAR was the third-largest railway in Canada. In 1937 the NAR began to show a profit for the first time. In summer 1942, following the entry of the United States into the Second World War, the Alaska Highway civil defence project resulted in tremendous growth for the NAR, as the system was the only railway to service Alaska Highway mile 0 at Dawson Creek, British Columbia.
NAR also saw increased traffic from defence spending in both the Peace River and Fort McMurray regions as Royal Canadian Air Force training bases for the British Commonwealth Air Training Plan were established.
In 1958 the Pacific Great Eastern Railway (PGE), owned by the province of British Columbia, built east to Dawson Creek and then north to Fort St. John. Traffic from Dawson Creek which used to run on NAR now mostly ran on PGE.
NAR's locomotive fleet was completely dieselized by October 1960 with EMD GP9's 201–210 (208 was wrecked, rebuilt and renumbered 211 in 1972.), and GMD GMD1's 301–305. NAR also purchased two Canadian National GMD1's, numbers 1072 and 1077, in January 1962, and renumbered them 311 and 312 respectively. A final locomotive purchase was made in December 1975 from General Motors Diesel Division of London for GMD SD38-2's 401–404. The only Canadian built SD38-2's.
Beginning in the 1960s, Alberta's nascent oil and gas industry began to affect the NAR as traffic began to increase on both the Dawson Creek and Fort McMurray branches. In 1964, the federal government built the Great Slave Lake Railway north from the NAR at Grimshaw, Alberta, to Hay River, Northwest Territories, to carry cargo which could then be transferred to barges and continue down the Mackenzie River.
In 1966, the passenger train to Waterways was replaced by Budd Rail Diesel Cars, but the experiment was unsuccessful, and it was replaced in 1967 by a mixed train. On June 1, 1974, the passenger train to Dawson Creek was discontinued.
During the 1970s, significant investments also began in the Fort McMurray region as the Athabasca Oil Sands deposits began to be exploited.