Part of the community's downtown was destroyed and 47 people were killed when a runaway freight train loaded with volatile fuel oil derailed from the tracks and exploded last July.
Municipal leaders and townsfolk have argued the line should be moved away from the centre of town so a similar tragedy doesn't happen again.
A committee studying the relaunch of Lac-Megantic says the wisdom of having a rail line running through the centre of town again needs to be evaluated.
Municipal Affairs Minister Pierre Moreau said Monday a feasibility study will look at various factors, including the volume of traffic and the type of materials to be transported.
He said the study is needed because the cost estimates of any rail bypass around the town range from $50 million to $175 million.
The committee will also look at potential locations for the bypass and should submit its final conclusions by the fall or the end of the year, Moreau said.
"We're not blowing hot and cold," Moreau said in an interview with The Canadian Press. "We're breathing fast so we can help everyone."
The cost of the study is estimated at $2.5 million and would be shared among the provincial government, the town and Fortress Group.
Fortress is the new owner of Montreal, Maine and Atlantic Railway, whose train was involved in the tragedy.
The federal government has not confirmed its involvement in the study but Moreau said he is confident Ottawa will participate.
Colette Roy Laroche, the mayor of Lac-Megantic, pointed out that the human factor must be considered as well because many townsfolk suffered psychological trauma from the tragedy.
"Our citizens have been greatly affected by this tragedy," she told a news conference in Lac-Megantic. "Almost a year later, we're really seeing the consequences and the impacts."
Quebec Health Minister Gaetan Barrette responded by saying the needs would be addressed.
In a process parallel to the feasibility study, the town must submit a preliminary version of its urban plan in June with final plans to be ready by September.