NEW YORK/CALGARY March 27 (Reuters) - A mile-long train hauling oil from Canada derailed and leaked 30,000 gallons of crude in western Minnesota on Wednesday, as debate rages over the environmental risks of transporting tar sands across the border.

The leak - the first major spill of the modern North American crude-by-rail transit boom - came when 14 cars on a 94-car Canadian Pacific train left the tracks about 150 miles north west of Minneapolis near the town of Parkers Prairie, the Otter Tail Sheriff's Department said.

Canadian Pacific Railway Ltd, the country's second-largest railroad, said the company was investigating the incident. CP Spokesman Ed Greenberg said only one 26,000-gallon tank car had ruptured, adding it was a mixed freight train carrying crude and other materials.

The company did not comment as to what kind of crude the train was carrying.

But Minnesota Pollution Control Agency spokesman Dan Olson said up to three tank cars were ruptured and an estimated 20,000 to 30,000 gallons - or 475 to 715 barrels - leaked out.

Cold weather had also made the crude thicker, hindering the ability to recover the oil, Olson said, adding the initial cleanup was expected to continue for a day or two.

"We are focusing on drawing up the loose (oil) ... and once that has been taken up, they will then pump up the remaining oil in the tanks," Olson said. "Because of the winter conditions, the ground is frozen and there is not any damage to surface water or ground water."

A photo on the website of a local paper, the Duluth News Tribune, showed two large tank cars lying on either side of the railroad tracks in snow-covered fields.

The derailment is the first major spill of the massive expansion of crude shipment by rail, which has increased rapidly in the last three years as booming North American oil production has outgrown existing pipeline capacity.

Canada is the top exporter of crude to the United States, due to rising output of crude from its vast tar sands deposits.

Growing volumes of that oil have crossed the border via train as production bumps up against pipeline constraints, with around 40,000 barrels per day (bpd) on average shipped to the United States in 2012, according to data from Canada's National Energy Board.

Environmentalists have complained about the impact of developing the reserves, and have sought to blocked TransCanada Corp's controversial Keystone XL project, which would carry oil produced from the oil sands to the U.S. Gulf Coast refining center.

Some experts have argued oil-by-rail carries a higher risk of accidents and spills.

"It is good business for the rails and bad safety for the public," said Jim Hall, a transportation consultant and former chairman of the National Transportation Safety Board.

"Railroads travel through population centers. The safest form of transport for this type of product is a pipeline. This accident could - and ought to - raise the issue for discussion," he added.

Others note that spills from rail cars are rare, and that delivering crude by rail has opened up opportunities in recent years for producers to develop huge volumes of oil production in areas of the United States that are not connected to markets by pipeline.

"It's not very good publicity, but railroads are incredibly safe, they don't spill often," said Tony Hatch, independent transportation analyst with ABH Consulting in New York who has done work for major railroads. "It should not change the opportunity railroads have to make us more energy independent."

Supporters of the Keystone XL pipeline were quick to jump on the derailment as a reason to build the line.

"It should be clear that we need to move more oil by pipeline rather than by rail or truck," said Don Canton, spokesman for North Dakota Senator John Hoeven, who has been one of the chief political proponents of the line. "This is why we need the Keystone XL. Pipelines are both safe and efficient."

Shipments of petroleum on U.S. railroads rose more than 46 percent last year to 540,000 carloads, the Association of American Railroads said in January.

A spokesman for the Federal Railroad Administration said two representatives of the U.S. rail regulator are investigating the incident.

The Otter Tail Sheriff's Department said the train was approximately 5,700 feet in length, or 1.7 kilometers (1.05 miles) long.

"Once our crews were able to get closer to the rail cars that were involved in the incident, it was determined that only one had been formally compromised," Canadian Pacific's Greenberg said. "We have options to reroute traffic, so we've been able to continue to move trains while we do the thorough job of cleaning up the area."

He also said he did not know if the crude oil was from Canada's oil sands or the originator of the train.

Shares in Canadian Pacific ended down less than half a percent at C$129.06 on the Toronto Stock Exchange.