Located in westernmost China and home to the historic Silk Road that made this region a crossroads of Central Asia, the province of Xinjiang today plays the role of major energy producer, supplying China’s 1.35 billion people and burgeoning economy with fuels, chemicals, fertilizer and other products derived from the province’s abundant coal and oil reserves. If government and industry leaders in Xinjiang and Beijing play their cards right, this region of China can also become a world-class hub for carbon capture and storage, helping China to satisfy its urgent need to expand domestic energy production and to meet it national commitment to reducing greenhouse gas emissions.
Pioneered in west Texas, carbon capture, utilization and storage (CCUS)—capturing CO2 from power plants and industrial facilities, using that CO2 to increase and extend oil production from mature fields, and permanently storing the injected CO2 in oil and gas formations—has been a safe and proven commercial practice since the early 1970s. Recently, SaskPower in Saskatchewan added the commercial-scale capture of CO2 from a coal-fired power plant to the long list of industrial processes that supply CO2 for enhanced oil recovery (CO2-EOR), including gas processing, ethanol, fertilizer, hydrogen and chemicals production, and the gasification of coal and other fossil energy feedstocks.
Around the world, CCUS projects still face considerable cost hurdles despite significant deployment to date. In electric power generation, CO2 capture technologies remain costly; in some other industrial applications, such as iron and steel and cement production, CO2 capture has not yet been commercially demonstrated. And for those industrial sources where CO2 capture technology is commercially feasible, building pipelines to transport the CO2 to distant oil fields can often be cost-prohibitive.
By contrast, Xinjiang has perhaps the greatest comparative advantages of any region in the world for commercial CCUS deployment:
- Xinjiang has roughly 60 million tons of CO2 emissions annually from facilities that gasify coal to produce chemicals, substitute natural gas, liquid fuels and fertilizer. The technology to capture CO2 from these existing high-purity, low-cost sources has been commercially available for decades, making it much easier to finance CO2 capture projects. For context, Xinjiang’s annual supply of high-purity CO2 nearly equals the entire volume of CO2 injected for EOR in the U.S., which is responsible for 4 percent of America’s domestic oil production.
- The province’s large oil fields face declining production, but they have the capacity to produce several billion barrels of additional oil—if CO2 were made available and injected for EOR—while permanently storing several billion tons of CO2 that would otherwise be vented to the atmosphere.
- Many of Xinjiang’s high-purity sources of industrial CO2 are located in close proximity to oil fields suitable for EOR. In fact, in the province’s Junggar Basin, coal gasification facilities operate right next door to existing oil production. Whereas U.S. industry and private capital had to build CO2 trunk pipelines up to 500 miles (800 km) to link major CO2 sources with large EOR projects, Xinjiang can begin large large-scale CO2 capture for EOR with a comparatively modest initial financial investment in pipelines. This should present few economic or logistical challenges in a country recognized for its extraordinary capacity to accomplish infrastructure development.
Even in Xinjiang, some financial incentives will be necessary to jumpstart commercial deployment of CO2 capture, pipeline and EOR projects. However, thanks to these crucial cost and infrastructure advantages, the province does not face the usual economic or technological barriers to CCUS deployment that challenge other regions of the world.
Instead, Xinjiang’s barriers are of a more cultural and institutional nature. Chinese oil and gas companies that would benefit from CO2-EOR do not routinely work with the industries that could supply the CO2 and participate in project development. Similarly, government officials often do not communicate and collaborate across ministries, or between national and provincial levels, in ways necessary to develop the financial incentives and regulation to enable CCUS project development.
Committing to implementing one or more flagship CCUS projects would go a long way to overcoming these barriers and unlocking Xinjiang’s extraordinary potential. Provincial and industry leaders can help pave the way for such flagship projects by building a comprehensive strategic case for CCUS deployment that highlights the oil production, economic development and carbon storage benefits for the province and China as a whole. This analysis should also show how increased revenue to national and provincial governments from additional oil production made possible through CO2-EOR will, over time, more than pay for the cost of the upfront financial incentives needed for the capture and transport of CO2 to oil fields.
Finally, Xinjiang should set an ambitious goal to guide and motivate commercial CCUS project development and deployment. It took over 40 years for the Permian Basin of Texas and New Mexico to become the world’s first and largest hub of CCUS projects and pipeline infrastructure, and another CCUS hub is now evolving centered on Wyoming, Montana and Colorado. Xinjiang should learn from these experiences and leapfrog North America by aiming to establish a world class hub of CCUS deployment within 10 years. Given Xinjiang’s highly favorable conditions, this goal is feasible. Achieving it would support Xinjiang’s long-term social and economic development and, from a climate standpoint, benefit China and the world in the process.
Brad Crabtree is Vice President for Fossil Energy at the Great Plains Institute. He recently spoke at a U.S.-China CCUS Workshop held on November 16-17, 2015 in Urumqi, the capitol of Xinjiang Province. The Workshop was hosted by the Chinese and U.S. governments and organized by Xinjiang University, the Clean Air Task Force and World Resources Institute.
