A Chinese oil company recently purchased a small but significant player in the development of Canadian oil sands, the third largest deposit of accessible oil in the world and the source of more than a quarter of U.S. oil imports.
The sale of Nexen to the Chinese National Offshore Oil Company (CNOOC) for $15.1 billion was the largest Chinese overseas acquisition ever, and continues a patient, strategic Chinese campaign to secure energy assets in North America.
Also last week, the U.S. State Department issued its latest environmental report card on the long-delayed Keystone XL pipeline, which would bring more of that oil sands crude from Canada to Nebraska and on to the U.S. Gulf Coast.
Americans have a love-hate relationship with Canadian oil, as thousands of anti-Keystone demonstrators in Washington recently reaffirmed. The Chinese are clearly not so conflicted.
What last week's events made obvious is that if anyone thinks Canadian oil will stay in the ground if we just don't build Keystone XL, they are wrong.
National oil companies like CNOOC, which is 70 percent owned by the People's Republic of China, already control more than 80 percent of the world's oil reserves. Of the 20 percent that remain open to market-based development, 60 percent are in Canada, almost all in the oil sands region of Alberta.
That fact has not escaped the attention of China, whose rapid growth has been fueled by quantum leaps in oil consumption.
Until 1993, China was self-sufficient in oil. Today it has to import almost 60 percent of the oil it consumes, and is the world's second largest oil user after the United States. By 2035, the U.S. Energy Information Administration expects China to import 75 percent of its oil needs.
This voracious thirst for petroleum has driven the Chinese to sign long-term oil contracts with countries such as Venezuela, another traditional U.S. oil supplier, and aggressively explore opportunities in energy-rich and investment-friendly Canada.
As one Canadian energy executive who has worked closely with Chinese oil companies explained, China has piles of cash locked in U.S. Treasury notes that it regards as declining assets. Investing this cash in energy resources abroad is a no-brainer, both for their intrinsic value and for the technological expertise Chinese companies can gain.
In fact, said this executive, the only question Chinese companies have asked him was how many Canadian assets they could buy before eliciting a negative reaction, as CNOOC did in the United States in 2005 when it tried unsuccessfully to acquire the U.S. energy company Unocal for $18.5 billion.
Since then, Chinese companies have avoided scrutiny by purchasing only minority interests in Canadian energy companies -- PetroChina, for example, bought a partial stake in the Athabasca Oil Sands in 2010 -- or buying only the smallest operators.
The Nexen deal represents a shift in that strategy.
Nexen is the biggest Canadian energy company to fall entirely under Chinese ownership. While it is not the largest player in the oil sands, its takeover means Chinese national oil companies now own about 10 percent of Canadian oil sands operations.
And few expect their buying spree to stop there.
Meanwhile, the 875-mile Keystone XL pipeline that would bring that same Canadian oil to the United States remains under review in the U.S. State Department, which must grant it a presidential permit because it crosses an international border.
Shortly after the Nexen takeover was announced last week, the State Department released its latest environmental report card on a rerouted Keystone XL. The 2,000-page report concluded "there would be no significant impacts to most resources along the proposed Project route."
The report did note that producing oil sands product releases anywhere from 5 to 19 percent more greenhouse gases than production of an average conventional barrel of oil in the United States.
These higher greenhouse gas emissions have led opponents to argue against the pipeline on the grounds that if the U.S. didn't buy so much oil sands oil, less would eventually be produced, releasing fewer gases.
Judging from CNOOC's massive investment, these concerns aren't keeping the Chinese up at night. If anyone here seriously thinks blocking Keystone XL will stop oil sands production, perhaps they should get more sleep.
Stephen R. Kelly is the associate director of Canadian Studies at Duke University, and a former U.S. diplomat in Canada.