Canada's oil and gas reserves are the second largest in the world, after those in Saudi Arabia, and the bulk of them are located, by a quirk of geology, in the western province of Alberta. It is the Texas of Canada: politically conservative, dominated by oil interests and feels chronically misunderstood by the rest of Canada.
Oil and gas wells appear like pinpricks across the map of Alberta, but the mother lode is located around the northern community of Fort McMurray. In a boom driven by rising oil prices, the city's population is growing so rapidly that a housing shortage has workers renting little more than a bed for C$1,000 ($6,600) a month. The oil there occurs in near-surface deposits called tar sands. Thicker than molasses, it is extracted with hydraulic shovels from open-pit mines so large that they can be seen in most satellite photos. Until about 15 years ago, only two major mines were operating: extraction technology was troublesome and the cost was nearly prohibitive. But rising oil prices have changed all that. Suddenly, oil-hungry nations around the world - especially China - want a piece of these vast deposits. Some C$90 billion in new tar-sands projects are either under way or in development stages.
All of which has rung alarm bells in the United States. Vice-President Dick Cheney was scheduled to visit Fort McMurray in September, before the hurricanes made a mess of his travel plans.
Roughly a million barrels of oil a day is being extracted from the sands. Most of that is exported, to feed the bottomless appetites of American consumers. The new projects would double production, and Beijing is quietly buying into a number of oil-sands projects. A new C$2.5 billion pipeline to carry oil from the sands to the west coast is in the planning stages, and a majority of its oil will end up in China, its owner says.
An Alberta politician recently told me that in the past, Chinese delegations toured the province simply to discuss various resource projects. But now, he says, the delegations are arriving not to talk, but to invest. They are in a hurry, and that is making the US administration anxious.
Canada is part of a North American free-trade arrangement, which gives the US preferential access to Canadian resources. But protectionist elements in the US administration have overridden the terms of the trade deal in a dispute about lumber, and this week American officials said that no treaty would be allowed to trump US law. So China's bold march into US President George W. Bush's backyard is an astute geopolitical strategy. It places Canada in an ideal position, between competing economic powers, seeking the highest bidder.