The pipeline has begun touching a raw nerve. A strong trade relationship with the United States is “absolutely imperative” to Canada’s economic interests, but the country also needs to seek out new markets for its oil, says John Baird, Canada’s foreign affairs minister. “New emerging economic forces in the Asia-Pacific region offer tremendous opportunities of all kinds for Canadian companies.”

While speaking out his mind to a Calgary business audience — many from the city’s energy sector — Baird’s message was clear: “Alberta’s oil sands are in a unique position to help our American friends and neighbors break their dependence on oil from places where supply is unreliable.”

“Canada’s oil is secure. Our supply is stable. We can meet the needs of our American friends and both countries would benefit,” he said.

Americans have a choice to buy from Canada “or someone like Qaddafi,” Baird added.

But no matter what the US decides, cautioned Baird, Canada is interested in wooing new energy customers. “China is now our second-largest trading partner and one of the fastest growing investors in Canada. That is certainly seen here in Alberta’s energy sector.”

If Washington shuts the door on the pipeline, there are “many other countries and many other markets for our oil,” Baird added.

And while raising stakes, Baird argued that even if the controversial pipeline project is not allowed to go ahead, the development of oil sand would continue. That would not hamper the growth of the energy resources, as the pipeline opponents, the environmentalists and Green proponents have been demanding. Canada will continue the pace of oil sands development, even if the controversial pipeline project is rejected by Washington, added Baird.

He said Alberta’s oil sands will not disappear with the rejection of the pipeline.

“This resource is going to be developed whether it’s Keystone or not, and so it is important that they understand that in the decision,” Baird said.

“The decision before the US administration is on the pipeline, not on the production.”

Baird’s remarks came as Brad Wall, the prime minister of the Saskatchewan province, the Canadian economic powerhouse, severely criticized Keystone XL opponents during a meeting with US lawmakers in Charleston, S.C., noting the ongoing controversy is hurting Canada’s relationship with its biggest trading partner.

He also criticized opponents of the Keystone XL project for “much myth making” related to the pipeline. “Al Gore has said that the oil inside the pipeline is ‘the dirtiest source of fuel on the planet,’” Wall said. “His opposition echoes that of ill-informed celebrities and others.”

Opponents of the Keystone XL pipeline say the project is an environmental disaster waiting to happen. Environmental groups argue the $7-billion project will support increased development of Alberta’s oil sands, and in turn cause a dramatic rise in greenhouse gas emissions. Residents in states where the line would cross also are concerned about potential oil leaks polluting key water resources.

However, Wall argued Canadian oil is often cleaner, from a carbon standpoint, than oil from other countries.

Meanwhile, Alberta Premier Ed Stelmach told a conference here that Alberta will continue to ship oil to the US despite increasing refining capacity at home.

“We’re going to be shipping some bitumen to the United States, we will,” Stelmach said from the McDougal Centre in Calgary. “We are (exporting) about 60 percent; we’re at 1.3 million barrels. We’ll be up to three million and we’ll probably be up to six million much faster than some analysts are indicating.”

And while global jet-setters including Dalai Lama, Archbishop Desmond Tutu and other Nobel Peace Prize laureates joined former US Vice President Al Gore in opposing the project, Alberta Energy Minister Ron Liepert scoffed at them.

“I can’t imagine the Dalai Lama knows very much about the oil sands or the Keystone XL pipeline but it’s another indication of (opponents) dragging out the stars,” he told reporters after delivering a keynote speech at a conference.

If the Keystone pipeline is not approved, “there will be a stronger push for sending the oil offshore,” says Ralph Glass, director of energy valuation and operations at Calgary-based petroleum industry consultancy AJM Deloitte.

And in the meantime, Republican Sen. Tommy Moffat, who chairs a US congressional energy committee, has also expressed concern about recent protests in Washington and the chill it could produce between the two countries. Heated protests against the proposed Keystone oil pipeline expansion have marred relations between Canada and its southern neighbor, the senator told a conference in Calgary, earlier the week.

Sen. Moffat said the debate over the Alberta to Texas pipeline was shaping, if not defining, Canada-US relations, despite being confident the contentious project will go ahead.

“I don’t think I’m going out on a limb here to predict the pipeline will be approved,” Moffat said Thursday, from the sidelines of a conference hosted by the Canada West and Asia-Pacific foundations. “However I hasten to add my apologies to our Canadian friends and colleagues for the bruising that our longtime relationship has taken in order to get there.”

And the entire debate is also being looked at from another interesting angle by some here. The lack of pipeline capacity from Canada is keeping oil prices in North America about US$20 a barrel below world prices, some now believe, arguing that the free pass is the real reason the US was stalling on Keystone XL. An interesting point — worth a debate indeed!

Canada has long been known as a country with abundant resources. oil sands have given a major fillip to that reputation. And the huge country, with abundant natural resources is emerging as a key player in the current global energy order. And as is the case with oil and energy issues all around the globe, politics cannot and does not stay aloof for too long. Politics and economics get entwined rather early. The ongoing debate on the $7 billion pipeline too smells of political undercurrents. Interestingly, stakes in the going battle of nerves are getting higher too. It could end up in new alignments on the regional and the global political stage too.

With Ottawa is attempting to woo consumers other than the US too, the inherent desire to reduce dependence on its next door, dominant and demanding neighbor is apparent. The very debate is no more just economical. It has taken on a new, distinct color too — seemingly with long term political implications.