Feb. 13 - The U.S. political fight over the Keystone XL pipeline rages on. But Canadian PM Stephen Harper isn't waiting patiently at the alter. He's got his eyes on China. Jon Gordon reports.
EDITOR'S NOTE: THIS EDIT CONTAINS CONVERTED 4:3 MATERIAL. Canada: America's most loyal ally and trading partner. The long-running love affair is starting to show cracks, though, with Canadian Prime Minister Stephen Harper knocking on China's door with a 50-strong trade delegation. Top of the agenda? Oil. Right now, 99 percent of Canada's crude heads south to U.S. refineries. Canadian production is ramping up, but nearby refining capacity is already maxed out. One solution - ship the crude further South to Texas. That would be via the proposed Keystone XL transnational pipeline. Approval for that project though was pulled by Obama after green protests last month. Republicans are fighting to ram it through, but from the Canadian perspective, as Harper told a ballroom full of Chinese businessmen in Guangzhou, the damage is done. (SOUNDBITE) (English) CANADIAN PRIME MINISTER, STEPHEN HARPER, SAYING: "It is increasingly clear that Canada's commercial interests are best served through diversification of our energy markets. To this end, our government is committed to ensuring that Canada has the infrastructure necessary to move our energy resources to those diversified markets.' The leading proposal for that new infrastructure: the Northern Gateway pipeline. Built by Enbridge, it would pump oil to the west coast of Canada, where super tankers will fill up and sail for Asia's mega-refineries. (SOUNDBITE) (English) REUTERS REPORTER, JONATHAN GORDON, SAYING: "The heavy output from Canada's oil sands is more difficult and complex to refine than the other crudes on the market. But industry sources here in China tell me regional refineries will be happy to retool to process it once this pipeline is built." So just how much crude will make it to China? Canada's natural resource minister Joe Oliver says plenty. (SOUNDBITE) (English) CANADIAN NATURAL RESOURCES MINISTER, JOE OLIVER, SAYING: "We're talking about in excess of 500,000 barrels a day.. and of course that's one pipeline, and there will be others. We are sitting on 174 billion barrels of proven oil reserves." Chinese oil majors like PetroChina already have a heavy hand in the Canadian oil sands, pumping in nearly six billion dollars in the last six months alone to buy stakes in local producers. These producers stand to benefit as well from the pipeline, according to the Enbridge CEO Pat Daniel, with expanded demand bidding up the price on oil sands crude (SOUNDBITE) (English) PRESIDENT AND CEO OF ENBRIDGE INC, PATRICK DANIEL, SAYING: "They currently sell into one market only, and that's the U.S. market. And in so doing, they don't get full world price for Canadian crude oil." Daniel says if his Northern gateway pipeline is approved as expected, it should be up and running within five years. That would see Canadian oil flowing to Asia by 2016, right at the close of a potential second term for Obama's presidency. A fitting book-end for what may be a major turning point in U.S./Canadian economic relations. Jon Gordon in Guangzhou, China.