Supporting early CarbonCapture Utilisation andStorage development innon-power industrial sectors,Shaanxi Province, ChinaAUTHORSProfessor Hongguang JIN, Dr. Lin GAO, Dr. Sheng LIInstitute of Engineering Thermophysics,Chinese Academy of SciencesEmiel van SambeekAzure InternationalRichard PorterUniversity of LeedsTom Mikunda, Jan Wilco Dijkstra,Heleen de Coninck, Daan JansenEnergy research Centre of the NetherlandsPublication dateJune 2012Report no.012PublisherThe Centre for Low Carbon Futures 2012For citation and reprints, please contactthe Centre for Low Carbon Futures.This project is funded by the British Embassy Beijingas part of the China Prosperity SPF Programme.The results of this report are based on the collaborativeefforts of the Institute of Engineering Thermophysics,Chinese Academy of Sciences, Azure International, theUniversity of Leeds, the Energy research Centre of theNetherlands and has been lead by the Centre for LowCarbon Futures (CLCF). The project is also grateful forsupport from the Global CCS Institute.CONTENTSIntroduction .............................................................................................................................................01CHAPTER ONE: GAPS AND BARRIERS TO CARBON CAPTURE UTILISATION AND STORAGEIN NON-POWER INDUSTRIAL SECTORS OF SHAANXI PROVINCE, CHINA1. Background and Introduction................................................................................................................061.1. CCUS and its significance to the Shaanxi Province, China ..........................................................061.2. Matching non-power industrial high purity CO2 sources to EOR and other utilisation ..................071.3. Availability of information ..............................................................................................................082. Technical Gaps and Barriers .................................................................................................................092.1. Capture and Compression ............................................................................................................092.2. Transport .......................................................................................................................................102.3. Storage: EOR and ECBM..............................................................................................................132.4. Impact of CO2 impurities...............................................................................................................173. Economic Gaps and Barriers.................................................................................................................193.1. Existing CCUS infrastructure.........................................................................................................193.2. Age and lifespan of CO2 sources and sinks .................................................................................203.3. Investment needs ..........................................................................................................................213.4. CO2 taxation .................................................................................................................................214. Policy and Regulatory Barriers .............................................................................................................224.1. Current CCUS policy .....................................................................................................................224.2. Integrating policy and legislation ...................................................................................................234.3. Regulation of liabilities...................................................................................................................244.4. Incentive provision to promote CCUS ...........................................................................................254.5. Cooperation between multiple authorities .....................................................................................264.6. Harmonising policies in an international context ...........................................................................285. Public Perception and Acceptance .......................................................................................................285.1. Health and safety issues ...............................................................................................................285.2. Visual impact .................................................................................................................................295.3. Financial issues ............................................................................................................................296. Recommendations ..................................................................................................................................30References ..............................................................................................................................................31CHAPTER TWO: INVENTORY OF NON-POWER INDUSTRIAL CO2 SOURCES OF SHAANXIPROVINCE, CHINA1.2.3.4.5.6.Executive Summary................................................................................................................................36Introduction .............................................................................................................................................361.1. Introduction to CCUS ....................................................................................................................361.2. Objective of this report ..................................................................................................................361.3. Methodology and introduction to the outline..................................................................................37Industrial processes with CO2 emissions............................................................................................372.1. The impact of CO2 purity on energy/economic penalty ................................................................392.2. Definition of high purity CO2 sources in industrial processes .......................................................422.2.1.Separation processes providing high purity CO2 sources.........................................................432.2.2.Specifications and impurities .....................................................................................................442.2.3.Composition and after-treatment ...............................................................................................462.3. Description of high purity CO2 sources in industrial processes ....................................................472.3.1.Natural gas processing..............................................................................................................472.3.2.Coal-to-liquids............................................................................................................................482.3.3.Biomass conversion ..................................................................................................................492.3.4.Ammonia/fertiliser production ....................................................................................................502.3.5.Ethylene production ...................................................................................................................512.3.6.Refineries ..................................................................................................................................522.3.7.Methanol, ethanol and dimethylether production.......................................................................532.3.8.Ethylene epoxide production .....................................................................................................542.3.9.Hydrogen production process....................................................................................................542.3.10.Calcium carbide production process........................................................................................562.3.11.Cement production process .....................................................................................................572.3.12.Steel production .......................................................................................................................572.4. Summary .......................................................................................................................................58High-purity CO2 sources in Shaanxi Province ....................................................................................593.1. General description of CO2 emissions in Shaanxi Province .........................................................593.2. Classification of industrial sources according to CO2 emissions ..................................................603.3. Identification of the main sources of high purity CO2 emissions in Shaanxi Province ..................643.4. Detailed description of main sources of high purity CO2 emissions in Shaanxi Province.............653.4.1.Ammonia synthesis plants.........................................................................................................663.4.2.Methanol plants .........................................................................................................................663.4.3.Hydrogen plant ..........................................................................................................................683.4.4.Ethanol plant..............................................................................................................................693.4.5.Dimethyl ether plants .................................................................................................................693.5. Identification of the sources suitable for a demonstration project .................................................693.5.1.Definition of criteria for selecting sources for a demonstration project ......................................703.5.2.List of sources suitable for a demonstration project ..................................................................733.5.3.Map of the applicable sources in Shaanxi Province ..................................................................74Conclusion...............................................................................................................................................75References ..............................................................................................................................................77Appendices..............................................................................................................................................80CHAPTER THREE: OPPORTUNITIES FOR CO2 ENHANCED OIL RECOVERY (EOR) IN SHAANXIPROVINCE AND THE NORTHWEST OF CHINA1. Introduction .............................................................................................................................................871.1. Fundamentals of CO2-EOR .........................................................................................................881.2. Features of this report ..................................................................................................................892. Status of CO2 utilisation .......................................................................................................................902.1. Overview of CO2 utilisation opportunities in China and Shaanxi Province ..................................902.2. CO2 Enhanced Coal Bed Methane Recovery ..............................................................................902.3. CO2 Enhanced Gas Recovery .....................................................................................................912.4. Others ..........................................................................................................................................912.5. Global status and developments in CO2-EOR .............................................................................922.6. Required purity levels for CO2-EOR ............................................................................................942.7. Opportunities for increasing CO2 storage with CO2-EOR ...........................................................952.8. Environmental impact of CO2-EOR .............................................................................................963. Findings from the government and industry surveys ........................................................................974. Screening criteria for CO2 utilisation options .....................................................................................984.1. CO2-EOR ...................................................................................................................................1014.2. CO2-ECBM ................................................................................................................................1025. Outlook for EOR and other utilisation options in China and Shaanxi Province .............................1025.1. Oil reserves ................................................................................................................................1035.2. EOR potential .............................................................................................................................1035.3. CO2 storage capacity .................................................................................................................1036. Conclusions ..........................................................................................................................................104References ............................................................................................................................................105Appendices............................................................................................................................................108CHAPTER FOUR: INDENTIFICATION, ANALYSIS AND MAPPING OF CCUS TARGET PROJECTS1. Introduction ...........................................................................................................................................1111.1. Objective of the report .................................................................................................................1111.2. Methodology and project selecting criteria ..................................................................................1122. High-purity CO2 sources in Shaanxi ...................................................................................................1152.1. Overview of potential CO2 sources.............................................................................................1153. EOR potential in Shaanxi ....................................................................................................................1203.1. Characterisation of potential EOR sites ......................................................................................1204. CO2 transport options in Shaanxi........................................................................................................1244.1. Overview of transportation options and their relative economics ................................................1244.2. Existing transportation infrastructure and potential physical barriers in Shaanxi ........................1264.3. Recommendations on selection of transport options ..................................................................1275. Source-sink matching options ..........................................................................................................1275.1. Description of source-sink matching options according to selection criteria ...............................1275.2. Further description of selected source-sink matches ..................................................................1296. Conclusions...........................................................................................................................................1316.1. Total identified potential for cost-effective source-sink matching ................................................1316.2. Recommendations ......................................................................................................................132References ............................................................................................................................................134CHAPTER FIVE: SUMMARY REPORT: TECHNICAL, FINANCIAL AND REGULATORYASSESSMENTS OF CCUS IN SHAANXI PROVINCE1. Background and Introduction..............................................................................................................1371.1. Status and rationale for CCUS in Shaanxi Province ...................................................................1371.2. Objectives and approach ............................................................................................................1382. Policy and Regulation for CCUS..........................................................................................................1382.1. Implementing an emission trading scheme .................................................................................1382.2. Regulation of CO2 transport and storage....................................................................................1402.2.1.CO2 transport and associated infrastructure ...........................................................................1402.2.2.Storage regulation ...................................................................................................................1413. Investment for CCUS infrastructure....................................................................................................1414. EOR storage and other utilisation options in Shaanxi Province......................................................1454.1. Assessment of EOR storage capacity.........................................................................................1454.2. EOR Potential..............................................................................................................................1464.3. Changqing oilfield company ........................................................................................................1464.4. Shaanxi Yanchang Petroleum Group ..........................................................................................1474.5. Other utilisation options...............................................................................................................1475. Analysis of logistical challenges to CCUS .........................................................................................1485.1. Location of EOR sites in comparison to high purity CO2 sources...............................................1495.2. Current CO2 emission levels and potential EOR usage rates ....................................................1496. Technical Opportunities and Challenges ...........................................................................................1506.1. CCUS infrastructure sharing .......................................................................................................1516.2. CO2 impurity impacts ..................................................................................................................1536.3. EOR CO2 injection ......................................................................................................................1556.4. Flowrate measurement................................................................................................................1556.5. Monitoring CO2 storage sites......................................................................................................1567. Options for an EOR demonstration project integrated with an industrial high purity CO2 source1577.1. EOR in Yanchang oilfield, Yanan, using CO2 captured from Yanchang oilfield methanol plant.1587.2. EOR in Yanchang oilfield, Yanan, using CO2 captured from Yanan Fuxian methanol...............1587.3. EOR in Chanqing oilfield, Yulin, using CO2 captured from Changqing oilfield methanol plant ...1587.4. EOR in Changqing oilfield, Yulin, using CO2 captured from Jingbian methanol plant ................1588. Commercial Arrangements ..................................................................................................................1588.1. Drivers for CCUS.........................................................................................................................1588.2. Roles of CO2 sources and sinks .................................................................................................1598.3. EOR Licensing, Business models and risk transfer ....................................................................1598.4. CCUS financial mechanisms.......................................................................................................1608.5. Management of fluctuations and interruptions ............................................................................1619. Recommendations ................................................................................................................................162References ............................................................................................................................................163Carbon capture and storage in non-power industrial sectorsShaanxi Province, ChinaCarbon capture and storage (CCS) is a technology that can prevent the release of large quantities ofCO2 into the atmosphere from the use of fossil fuels in power generation and other industries bycapturing CO2, transporting and then pumping it into underground geologic formations to securelystore it away from the atmosphere. Crucially, and why it is worthy of research, is the fact that CCS isa potential means of mitigating the contribution of fossil fuel emissions to global warming.In the context of these reports, Carbon Capture Utilisation and Storage (CCUS) refers to thematching of industrial high-purity CO2 sources, such as those of fertiliser plants or coal-to-liquid fuelsfacilities, with a sink industry which would make beneficial use of the captured and transported CO2,such as Enhanced Oil Recovery (EOR). The capture of CO2 from industrial high-purity sourcesrequires much less additional process development than conventional carbon capture from thepower generation industries because the production of pure CO2 is already an inherent part of theprocess, often arising from gasification technology. Similarly, the sink industries may require lessdevelopment than conventional CO2 storage in geological formations like saline aquifers; hence,CCUS does not refer here to conventional carbon capture and storage.CCS and China: the rationale for Shaanxi ProvinceCCS is an important technology for China to reduce its carbon emissions, while at the same timesatisfying its increasing demand for electricity and chemical products and its continued reliance oncoal. Shaanxi province in Central Mainland China is a region that has abundant fossil fuel resourcesof coal, natural gas and crude oil and has been ranked third in China for the production of these. It isalso listed as one of Chinaʼs low carbon demonstration provinces. However, as a western andunderdeveloped province, its energy structure is dominated by coal and heavy chemical productionis still an important pillar industry in promoting economic growth.CO2 emissions of Shaanxi Province mainly derive from the consumption of fossil fuels. In 2005, theywere 138 million tons and accounted for 2.4% of Chinaʼs total emissions. Thermal power plants arethe main source of CO2 emissions in Shaanxi Province, accounting for about 70% of the total; this isfollowed by the cement industry, accounting for about 10%. In addition, ethylene and synthesisammonia industries account for about 10% and hydrogen production industry accounts for around0.7%. According to preliminary measurements and estimates, CO2 emissions from fossil fuels inShaanxi Province had risen from 138 million tons in 2005 to 209 million tons in 2009, and before2015 they may reach 450 million tons. In the coal chemical industry, CO2 emissions are expected toreach 180 million tons by 2015. This is due to high energy-consumption in this industry, theassociated large CO2 emissions and the constant development of large-scale coal chemical projectsfor the future.1The implementation of early CCUS demonstrations in Shaanxi Province is of great significance.Firstly, Shaanxi Province urgently needs low carbon technology and CCUS is good for encouragingand developing this. Secondly, the chemical industry in Shaanxi Province is developed and hashigh-purity CO2 sources. This can reduce the implementation cost of CCUS in Shaanxi Province andis good for promoting wide scale CCS deployment. Moreover, the Shaanxi provincial governmentholds a positive attitude to a CCUS project. Implementing early CCUS demonstrations in ShaanxiProvince can help to build the image of Shaanxi as a clean energy province.The current state of technologyTo date a number of separate preliminary pilots for the capture and storage of CO2 have been andare being undertaken in China. However, none of these pilots have succeeded in cost-effectivelyestablishing a fully integrated CCS chain, due to insufficient coordination between capture andstorage sectors.Early demonstration of cost-effective CCUS potential in selected sectors can significantly advanceCCS development in China in selected industries, in time crossing over into other sectors, includingpower, as the technology and policy conditions mature.By directly engaging stakeholders from relevant industries and the EOR sector, this project explorescarbon capture potential and the cost in these industries, and helps the National Development andReform Commission (NDRC) and the Ministry of Science and Technology (MOST) in identifying andbetter coordinating potential CCUS early stage demonstration projects, while building awareness inthese industries about potential opportunities for collaboration in CCUS.There have not yet been any fully linked CCUS demonstration projects in Shaanxi. However, theYulin natural gas chemical company employed CO2 capture equipment in their facilities from 20042010. Research and Development on low carbon technology has been conducted in Shaanxiprovince since 2004 and the academic community and government agencies have held numerousseminars and published many papers and reports on the topic.2Objectives of these reportsThe major objective of this work is to promote early opportunities for CCUS using high purity nonpower industrial sources of Shaanxi, which may act as a catalyst for the larger scale deployment ofthe technology. A number of actions have been taken in support of this.A review of the technical, policy, legislative and economic gaps and barriers relating to CCUSimplementation in Shaanxi was conducted and reported, including; the identification of the funds tosupport the CCUS demonstration; difficulty in coordination of the whole CCUS chain coveringdifferent industries; and lack of government coordination through industrial policy, regulations andincentive policies will result in prohibitively high cost of initial CCUS demonstration projects and islikely to delay further development of potentially cost-effective CCS projects in China.The identification of a suitable CCUS demonstration project in Shaanxi Province would help topromote the wider deployment of low carbon technologies. To do this, inventories of suitable highpurity industrial CO2 sources and CO2 sink industries of EOR and Enhanced Coal Bed Methane(ECBM) have been compiled. The information has been gathered from a combination of industrysurveys and publicly available information in academic papers, reports and on the Internet.Based on a set of selection criteria and points system a number of potential CO2 source-sinkmatches for a CCUS demonstration project were then identified. During the course of the project anumber of workshops were organised with attendance of relevant stakeholders from CO2 source andsink industries and local government. The workshops brought together the involved parties thusfacilitating dialogue on promoting CCUS and were used to disseminate the project findings.An examination of the potential of the oilfields and high purity CO2 source industries located inShaanxi Province in hosting an early opportunity CO2 capture and utilisation demonstration projecthas also been considered and as a whole, the combination of these five reports provides acomprehensive overview of the carbon capture and storage potential in non-power industrial sectorsin Shaanxi Province.3RecommendationsBased on the findings of this project we submit the following recommendations for the developmentof cost-effective early CCUS opportunities in China:1. Officially adopt a China CCUS roadmap provide the policy framework for developing detailedpolicies and regulations to enable larger and more CCUS demonstration projects. Prioritiseconcentrated high-purity CO2 sources and EOR as target sectors for CCUS development in themedium term.2. Support R&D activities on high-purity CO2 capture, transportation and EOR as part of theNational Future Science Development Plan. Such R&D activities will contribute to minimisingproject risks and improving effectiveness throughout the CCUS chain. It is recommended thatstrong emphasis is put on EOR, as the further development of EOR technology and capabilitiesin China will help define the value of CO2 for EOR as a primary driver for developing the CCUSchain. Existing R&D funding mechanisms under the 863 and 973 programmes of MOST may beused to support these activities.3. Conduct detailed technical and economic feasibility assessments for the four identified full-chainCCUS projects in Shaanxi. Attracting investment in these projects will require the developmentof strong business cases with clearly identified technological, environmental, safety andeconomic risks to be allocated among the various stakeholders and the government. Detailedtechnical and economic feasibility studies are needed to ascertain these costs, benefits andrisks.4. Designate one high-purity CO2/EOR project in Shaanxi as a national demonstration project to beimplemented under the direct guidance and leadership of the NDRC, so that NDRC cancoordinate the work of MOST, MEP and MLR from the national level down to the local level toensure effective implementation of the project.5. Develop CCUS demonstration funding mechanisms using government funds. Such fundingmechanisms are required to address specific risks associated with large first-of-a-kindinfrastructure projects such as full-chain CCUS projects and leverage finance from the parties inthe CCUS chain. Possible financing mechanisms include low-interest loans, guarantees anddirect government financing for public CCUS infrastructure such as pipelines.6. Foster international collaboration on R&D, financing and development of demonstration projects.China already has extensive international collaboration in the field of CCUS. Such internationalcollaboration can be leveraged to address specific knowledge barriers for developing CCUSdemonstration projects and may also provide funding for CCUS project feasibility assessmentsin China.4Gaps and Barriers to Carbon Capture Utilisation and Storage inNon-power Industrial Sectors of Shaanxi Province, ChinaSupporting early Carbon Capture Utilisation and Storage development in non-powerindustrial sectors51. Background and Introduction1.1. CCUS and its significance to the Shaanxi Province, ChinaCarbon capture and storage (CCS) refers to the technology attempting to prevent the release oflarge quantities of CO2 into the atmosphere from fossil fuel use in power generation and otherindustries by capturing CO2, transporting it and ultimately pumping it into underground geologicformations to securely store it away from the atmosphere. It is a potential means of mitigating thecontribution of fossil fuel emissions to global warming.According to the state condition of China, the CCUS concept (carbon capture, utilisation and storage)is proposed. Based on CCS, the CO2 utilisation process is added, including Enhanced Oil Recovery(EOR), ECBM, utilisation in the food industry etc.Some definitions of CCS from different authoritative organisations are listed in Table 1.1Table 1.1: Definitions of CCSOrganisationDescriptionIPCCIn the approach of CCS, CO2 arising from the combustion of fossil and/orrenewable fuels and from processing industries would be captured andstored away from the atmosphere for a very long period of time.1GCCSICCS is a technology to prevent large quantities of carbon dioxide or CO2(a greenhouse gas) from being released into the atmosphere from the useof fossil fuel in power generation and other industries. The technologyinvolves:collecting or capturing the CO2 produced at large industrial plantsusing fossil fuel (coal, oil and gas);• transportation to a suitable storage site;• Pumping it deep underground to be securely and permanently storedaway from the atmosphere in rock.2CO2 emissions can be reduced significantly if CO2 Capture and Storage(CCS) is implemented globally. CCS is the process where CO2 is cleanedfrom large point sources, followed by transport of the CO2 to a safeunderground storage location where CO2 is injected for long-term safestorage.3•BellonaFoundationDepartmentof Energyand ClimateChange, UKCCS technology captures carbon dioxide from fossil fuel power stations.The CO₂ is then transported via pipelines and stored safely offshore indeep underground structures such as depleted oil and gas reservoirs, anddeep saline aquifers. Up to 90% of carbon dioxide (CO₂) from a fossil fuelpower station can be captured using CCS technology.4U.S. DOECCS encompasses the entire life-cycle process for controlling CO2emissions from large-scale point sources such as coal-based power1http://www.ipcc.ch/pdf/special-reports/srccs/srccs_chapter1.pdfhttp://www.globalccsinstitute.com/ccs/what-is-ccs3http://www.bellona.org/articles/articles_2007/CCS_facs4http://www.decc.gov.uk/en/content/cms/emissions/ccs/what_is/what_is.aspx26plants. By cost-effectively capturing CO2 before it is emitted to theatmosphere and then permanently storing it, coal can continue to be usedwithout restricting economic growth while still reducing carbon emissionsto the atmosphere.5CCS is also important to reduce Chinaʼs carbon emissions, while at the same time satisfying itsincreasing demand for electricity and chemical products and its continual reliance on coal. AsChinaʼs major province of energy and natural resources, Shaanxi Province has abundant coalresources and is listed as one of Chinaʼs low carbon demonstration provinces. However, as awestern and underdeveloped province, its energy structure is dominated by coal and the heavychemical industry is still an important pillar industry in promoting economic growth. During theʻEleventh Five-Yearʼ (during 2011-2015) period, Shaanxi Province exceeded the task of energysaving, but high energy-consuming industries such as power, chemical, petrochemical, nonferrousmetal, metallurgy and building materials contributed to more than half of Shaanxiʼs output value. Theconflict of resource usage and environmental protection has become increasingly prominent, andthis economic pattern is difficult to fundamentally change in the short term.CO2 emissions of Shaanxi Province mainly derive from the consumption of fossil fuels. In 2005, theywere 138 million tons and accounted for 2.4% of Chinaʼs total emissions. Thermal power plants arethe main source of CO2 emissions in Shaanxi Province, accounting for about 70% of the total; this isfollowed by the cement industry, accounting for about 10%. In addition, ethylene and synthesisammonia industries account for about 10% and hydrogen production industry accounts for around0.7%. According to preliminary measurements and estimates, CO2 emissions from fossil fuels inShaanxi Province had risen from 138 million tons in 2005 to 209 million tons in 2009, and before2015 it may reach 450 million tons. In the coal chemical industry, CO2 emissions are expected toreach 180 million tons by 2015. This is due to the high energy-consumption in this industry, theassociated large CO2 emissions and the constant development of large-scale coal chemical projectsfor the future.The implementation of early CCUS demonstrations in Shaanxi Province is of great significance.Firstly, Shaanxi Province urgently needs low carbon technology and CCUS is good for encouragingand developing this. Secondly, the chemical industry in Shaanxi Province is developed and hashigh-purity CO2 sources. This can reduce the implementation cost of CCUS in Shaanxi Province andis good for promoting the entire CCUS demonstration. Moreover, the Shaanxi provincial governmentholds a positive attitude to a CCUS project. Implementing early CCUS demonstrations in ShaanxiProvince can help to build the image of Shaanxi as a clean energy province.1.2. Matching non-power industrial high purity CO2 sources to EOR and other utilisationPreliminary work on CCS in China has focused on the power sector. However, capture in the powersector is technically challenging, energy-intensive and expensive. Capture can be achieved at lowercost at large point sources of concentrated CO2, such as in fertiliser plants, coal-to-liquids facilities5http://www.netl.doe.gov/technologies/carbon_seq/refshelf/CCSRoadmap.pdf7and refineries. China has a large industrial base in these sectors, resulting in a significant CO2emission reduction potential through CCS.In recent years China has seen the development of Enhanced Oil Recovery (EOR) activities. EORinjects CO2 in oil reservoirs to enhance production and prolong the life of the reservoir. EOR iswidely applied in the United States and Canada and is in development in the Middle East. China hasa large EOR potential and an EOR industry is emerging. CO2 from nearby high-concentration pointsources has a value for EOR operations. This value can be used to develop early cost-effective CCSprojects involving industries where capture cost are relatively low.To date, a number of separate preliminary pilots for the capture and storage of CO2 have been, andare being, undertaken in China. However, none of these pilots succeed in cost-effectivelyestablishing a fully integrated CCS chain, due to insufficient coordination between capture andstorage sectors.Early demonstration of cost-effective CCS potential in selected sectors can significantly advanceCCS development in selected industries in China, in time crossing over into other sectors includingpower, as the technology and policy conditions mature.Carbon capture potential and the cost in these industries have been explored by directly engagingstakeholders from the relevant industries and the EOR sector. This helps to inform the NationalDevelopment Reform Commission (NDRC) and the Ministry of Science and Technology (MOST) inidentifying and better coordinating potential CCS early stage demonstration projects, while buildingawareness in these industries about potential opportunities for collaboration in CCS.1.3. Availability of informationThe main task of this project is to support early CCS opportunities in the non-power sector. First ofall, the CO2 emission sources in non-power sectors should be identified; then the potential CO2 sinksand their geological conditions should be confirmed; lastly, potential CCS projects should besuggested and evaluations made. However, as for the emissions sources, the information of theplant type, scale, enterprisesʼ names and so on are always available online. As for the sinks, someinformation can be obtained from the oil companiesʼ homepages and existing publications. We havetaken part in a lot of CCS activities in China and have good cooperation with some oil fields,therefore we can learn something from the outputs of the past projects or we can inquire directlyfrom the oil fields. Also, according to our preliminary investigation, some oil fields such as theYanchang oil field in Shaanxi Province, have showed great interest in CO2-EOR projects, so theinformation about this project can become available.Altogether, we can gather information in different ways. Firstly, by searching online – for example,through the homepages of some giant enterprises, such as Yanchang Oilfield, we learned the basicsituation of the industry; through online yellow pages, we gained more detailed information about thecompany yield, location, etc. of Shaanxiʼs chemical, power, construction industries related to CCSprojects. Secondly, we held some workshops with experts in the relevant fields. This provedinstrumental in fulfilling this report. In addition, we conducted a questionnaire surveys for CO2sources, sink industries and other relevant stakeholders.82. Technical gaps and barriersThere are a number of specific technical gaps and barriers that exist to CCUS development thatwould need to be addressed in order to make deployment a reality. This section summarises thegaps and barriers that have been identified for each element of the CCUS chain: CO2 capture andcompression; CO2 transport; and CO2 utilisation in EOR or ECBM. Improving the understanding andperformance of each element in the CCUS chain is critical to its effective demonstration and largescale deployment. Technical gaps and barriers that are specific to China and Shaanxi province arealso addressed.2.1. Capture and compressionUnlike capture from the electrical power generation industries, CO2 captured from high purityindustrial sources may require little, if any, further treatment. The main requirement would be tocompress the CO2 to high pressures, usually over 100 bar, making it ready for transport andutilisation [1]. However, actual purity requirements of the CO2 will depend on the application,transportation method and distance. Low oxygen concentrations are a strict requirement for use ofCO2 in EOR because it would react with hydrocarbons within the oil fields [2]. For long transportationdistances, dehydration of the CO2 stream is required in order to prevent corrosion and leakage ofpipelines. However, moisture does not cause problems for EOR injection so appropriate metallurgycould be installed for pipelines such as stainless steel and this may be more economical for shorttransportation distances. CO2 impurities may impact on compression or result in risk of phasechange during transport; this may be a difficult problem to overcome for transportation networks withmultiple CO2 sources. Awareness amongst CO2 source industries about the implications ofimpurities on transport and application in EOR is required and could be achieved by draftingrecommended guidelines and standards. This would indicate to the source industries what steps arerequired to meet the necessary standards [3].Capital and operating cost penalties of CO2 compression are considerable for any CCS system. TheCO2 compressor power required for a coal to hydrogen plant is approximately 8% of the total plantenergy requirement. For such plants the cost of CO2 compression can lead to a 15% increase in theH2 cost [4]. Techno-economic studies can help to estimate costs of required CO2 capture, additionalgas purification and compression of CO2 derived from high-purity CO2 sources and to assess theeconomic viability of projects in comparison of these expenses to emission taxes and revenuegenerated from sale of CO2.In comparison to other sections of the CCS chain, CO2 compression uses relatively maturedtechnologies with a high readiness level. Nevertheless, R&D efforts are being undertaken in a bid toreduce capital costs, increase efficiency, improve heat recovery and optimise the integration ofcompressors in the carbon capture process [5]. Addressing these areas will alleviate economic riskof CCS projects. To achieve these objectives, key gaps in understanding of the impacts of impuritiesin the CO2 stream as well as the effects of different operating pressures, temperatures and flowrates must be addressed. Improved knowledge of the thermodynamic characteristics of CO2mixtures with impurities under conditions at or near to supercritical could be obtained by activitycoefficient measurement and will benefit these aims. The impact of impurities in the CO2 stream oncorrosion of solid materials used for compression is another key area of research. Research is9needed in order to compare and evaluate options and configurations for compression andliquefaction. Heat exchange data should be quantified for plant applications, including supercriticalCO2, and waste heat could be utilised to improve cycle efficiency. Compressors at the large scalerequired for CCUS applications are available but are a non-standard product and may need to besourced internationally for Shaanxi Province. The speed at which CO2 compression systems canadapt to changes in throughput are currently highly uncertain but demonstration projects will help tofill this gap in knowledge [6].2.2. TransportCO2 is mainly transported in pipelines from source to storage site in the gaseous or liquid phase, asthis is the most cost effective method for CCS [7][8]. Pipeline transport also has an advantage overother transport methods in that temporary storage requirements during transmission are bypassedbecause a steady stream of CO2 can be delivered. Like CO2 compression, transportation of CO2 is arelatively mature technology in comparison to other parts of the CCS chain, with several projectshaving been employed in North America with application to EOR for a number of decades [1].Nevertheless, research is being conducted to develop optimal CO2 pipeline networks and toinvestigate the scale-up required for large-scale CCS deployment. Significant gaps in knowledgeexist on the economics of CO2 pipeline transport since most CCS techno-economic studies neglectCO2 transportation costs or assume a given cost per ton of CO2 transported. CO2 transport requiresan improved understanding of the thermodynamic characteristics of CO2 at supercritical conditions,especially when anticipated impurities are present, which would also address research needs forCO2 compression [6].Figure 2.1. Phase diagram for pure CO2.Figure 2.1 shows the phase diagram for pure CO2, which identifies its phase (solid, liquid or gas) forany given operating pressure and temperature. Two distinct features are shown on the phasediagram, namely: the triple point (5.1 atm, -56°C) and the critical point (73 atm, 31°C). In the vicinityof the triple point, CO2 can exist as any one of the three phases. At temperatures and pressures10above the critical point, CO2 does not exist as a distinct liquid or gas phase but as a supercriticalfluid, with the density of liquid but the viscosity of a gas. The most efficient state of CO2 for pipelineis in the supercritical or dense phases in the vicinity of the triple point, which corresponds to a lowerpressure drop along the pipeline per unit mass of CO2 when compared to the transportation of theCO2 as a gas or as a two-phase combination of both liquid and gas [9].Today, over 2500 km of onshore CO2 pipeline infrastructure is in operation in North America with acapacity of over 60 million tons of CO2 per year. Elsewhere, a 90km onshore CO2 pipeline isoperated in Turkey for EOR and offshore pipelines in the North Sea are operated by Norway for CO2storage. In China, long distance CO2 pipelines are not in operation but research is being carried outat Liaohe Oil field, where EOR is undertaken in order to investigate the impact of CO2 release from arupture in a 500m pipeline [10]. The requirements for construction of CO2 pipelines are the same asthose for hydrocarbon transportation so there is a strong understanding of the engineeringprinciples. These pipelines can cover a wide range of environments, both onshore and offshore.However, there is still a significant lack of experience with regards to CO2 transmission, especiallywith multisource transport and safety characteristics required for pipelines close to denselypopulated areas.Variations along CO2 pipelines such as flows, surges and the actual CO2 composition must beaccommodated by the system. Compared to extremely pure transported CO2, streams from highpurity CO2 sources are likely to have impurities which will impart changes to the physicochemicalproperties of the CO2 stream and can increase the level of engineering complexity of the problem –very few engineers have the skills and experience necessary to make informed decisions on thesafe design and operation of CO2 pipelines. Therefore, key technical issues for CO2 transport are thechemical, physical and transport properties with impurities in the stream. Consideration of pressuresrequired to maintain CO2 in the appropriate phase is needed whilst not exceeding safety limits atother parts of the system. Intermittency of CO2 supply is a strong possibility with high-purity industrialsources, requiring careful consideration of the flow management in order to mitigate the occurrenceof CO2 phase change within the pipeline [11].Guidance on procedures for the management of flow intermittency in CO2 pipelines is extremelylimited. Water in the system is undesirable, since it can react with CO2 to form carbonic acid, whichcan corrode the carbon steel internal surfaces [12]. Sudden temperature drops with water present inthe CO2 stream could enable the formation of hydrates and clathrates, which are solid compoundswith similar properties to ice; consequently they can lead to pipeline scaling and blockages inequipment, such as heat exchangers. The freezing of water is also an unwanted possibility [13]. Forthese reasons, the CO2 stream should be dehydrated to levels below 50ppm of water prior totransport. Hydrate formation requires investigation to avoid operational downtime. Furtherinvestigations on the effects of other impurities on water solubility in supercritical CO2 are merited.Hydrogen sulphide H2S impurities should also be minimised due to the risk of internal pipelinecarbon steel corrosion. Furthermore, impurities could potentially have an impact on non-metalmaterials used in pipelines, such as elastomers and polymers of seals and gaskets, so research isneeded to investigate these effects. Efforts should be made to identify, quantify and document theimpurities from high-purity CO2 sources that will potentially remain within the stream through tostorage or utilisation. An improved knowledge of internal corrosion rates of carbon steel and othersin the presence of various impurities is very important for pipeline design and cost analysis; this11could be obtained by investigating the level of corrosion in some of the oldest CO2 and byperforming experimental analysis on corrosion rates on new materials and pipelines at differinglevels of moisture in order to evaluate the risk of accidental intake of humidity [6].Some CO2 purification may be necessary for the requirements of pipeline transport. High levels ofCO2 will enhance capture rates. There are currently no industry standard composition requirementsimposed for CO2 transportation. CO2 composition requirements are set in contracts between thesupplier and transporter and between the transporter and storage operator [14], and are oftendependent on the end use (storage or EOR). For the purpose of CO2-EOR, purity of over 95vol% isrequired. At this level, and under reservoir pressure [15], miscible conditions can be achievedwhereby the CO2 can mix in all proportions with the components in the oil, leading to the annulmentof interfacial tension. For miscible EOR, high purity CO2 should be compressed and cooled so that itis in the supercritical phase. The presence of non-condensable impurities such N2 or Ar can impactthe phase behaviour of the mixture and may make achieving a supercritical fluid impractical.Therefore, the design and operation of CO2 pipelines requires careful consideration of impurity levelsdue to their effect on the supercritical phase behaviour. Networks of CO2 pipelines could raisechallenges not yet experienced as two-phase flow may occur in CO2 pipelines where a supercriticalregime is desired when impurity levels vary from source to source and this may also lead tosignificantly higher pressure drops. A standard set of entry specifications for CO2 pressures,temperatures and impurities concentration would be required where multiple CO2 sources connect tothe same pipeline network, which may be prescribed by the EOR or storage operator and have alarge bearing on upstream dehydration, compression technologies [11].Further research, development and demonstration is needed to obtain improved thermodynamicmodels of CO2 or mixtures of CO2 with impurities such as argon (Ar), nitrogen (N2), oxygen (O2)carbon monoxide (CO), ammonia (NH3) and hydrogen sulphide (H2S) under supercritical conditionsand near to the critical conditions as current equation of state models inadequately predict the phasebehaviour. Improvements to these models could allow investigations into less energy intensive ormore economical methods of producing supercritical CO2 and could also address optimal solutionsto the integration of compression and transportation systems [6].Mapping of potential CO2 source and sink matches in China [16] and Shaanxi [17] show thatimplementing CCUS may require long-range transportation by pipelines. As CO2 transport is arelatively mature technology, this should not represent a major technical hurdle as the operating CO2pipelines in North America have demonstrated. No injuries or fatalities have occurred with CO2pipelines but 10 failure incidents were reported between 1990-2001 and it is reasonable to concludethat the level of safety is comparable to natural gas pipelines [18]. Despite the pipeline engineeringexperience and maturity of technology in North America, existing engineering and regulatoryguidelines and experience worldwide are limited and a number of additional engineering gaps andchallenges have been identified. Fracture propagation in CO2 pipelines is a credible problem and thelevel of resistance required needs to be defined for various levels of impurities. Improved models forpipeline fracture propagation are required and these should be validated against full-scale crackarrest testing. CO2 pipeline blowdown and depressurisation may occur as a result of an intentionalcontrolled evacuation of pressurised gas or as a result of some incident such as valve malfunction,operational error or external damage. There are currently no validated models available forunplanned blowdown involving rapid decompression and temperature drop [19]. Supercritical/dense12phase CO2 release data is also required to verify any developed models. This information will help todefine adequate safety zones around CO2 pipelines.Significant costs can be incurred in both further gas-clean up and by the problems associated withCO2 pipeline impurities. Further studies are required to evaluate the economic trade-offs betweengas-clean up, keeping impurities in the CO2 pipeline and upgrading pipeline materials. Improvedthermodynamic models for supercritical CO2 mixed with impurities needed for simulation of hydraulicflow would also help to achieve this goal. As the number of CCS projects increases in a region itmay be more economical to operate pipeline network. This raises a question if early opportunities forCCUS should invest in high capacity pipelines which other future projects could connect to orwhether building individual pipelines would be cheaper as they may circumvent costs associated toCO2 entry condition requirements (i.e. temperature, pressure and contaminant levels). Studies,which include hydrodynamic modelling for CO2 pipeline design in China, have begun to emerge [20].2.3. Storage: EOR and ECBMEOR techniques are employed to increase the amount of crude oil that can be extracted from an oilfield. The techniques can increase reservoir pressure and improve oil displacement or fluid flow inthe reservoir. There are three main types of EOR, namely: chemical flooding, thermal recovery andgas injection. Gas injection uses N2, hydrocarbons or CO2 (CO2-EOR), which after injection into thereservoir either expand to push the oil towards the production wells (immiscible displacement) ordissolve within the oil, which decreases its viscosity and increases its flow (miscible displacement).Miscible CO2-EOR is one of the most promising of the developed technologies because when CO2mixes with the oil it forms a low viscosity, low surface tension fluid which is more easily displaced. Inaddition, CO2 can release and reduce trapped oil as well as occupying reservoir zones that watercannot [21].CO2-EOR has been operating successfully in the US for over 30 years, with most miscibledisplacement projects being located in the Permian Basin fields of western Texas and eastern NewMexico. Every day, approximately 30 million m3 of CO2 is delivered by pipeline to the Permian Basinand around 30 million tons of CO2 has already been sequestered there. The increasing number ofCO2-EOR projects worldwide has generated significant experience and has provided valuableinsights into the underlying physical and chemical mechanisms for oil recovery [22].In China, the first large scale CO2-EOR and storage project is being conducted by PetroChina at JilinOilfield, located in Jilin Province of Northeast China. The CO2 source comes from nearby natural gasproduction where it is stripped and condensed before being injected via six CO2 injectors at theoilfield complex. So far, nearly 150,000 tons of CO2 has been injected for miscible flooding with anexpected 10% enhancement to recovery [23]. Given that many low permeability oilfields have beenfound in China in recent years and these are quite suitable for CO2-EOR, the storage potential couldbe vast [24].CO2-EOR was not intrinsically developed for climate change mitigation and its goals are somewhatdifferent to the geological sequestration of CO2; in CO2-EOR the aim is to maximise oil-productionand to reduce costs by minimising the amount of CO2, whereas for geological sequestration the aimis to maximise the amount of CO2 stored [25]. However, CO2-EOR does amount to geologicalstorage in practice because very little CO2 gets returned to the atmosphere. Significant volumes of13CO2 can be recovered from production wells and then be re-injected; EOR operators seek to recycleas much CO2 as possible in this way due to its cost of production. The amount of non-recycled CO2has been estimated by EOR operators to be anywhere between almost negligible to around 5% [26].More than half of the current CO2-EOR projects use CO2, which is supplied from natural sources anddoes not contribute to any climate change mitigation. Nevertheless, there are a number of projects inNorth America, which use approximately 10 million metric tons per year of CO2 from anthropogenicsources in total [27]. Anthropogenic CO2 comes from a variety of sources such as natural gasprocessing and coal gasification for production of ammonia involving water gas shift reaction toconvert carbon monoxide CO to CO2. These industrial CO2 sources are usually easy to utilise forEOR, requiring little or no additional purification. The costs of CO2 from naturally occurring sourcesare roughly 25 to 50% of the cost of the capture costs from coal-fired power stations. However, thecost of CO2 from high purity industrial sources is about the same as that of naturally occurringsources because the separation of CO2 is already an inherent part of the process [6].Despite the large amount of experience of sequestration of CO2 via EOR, there are still a number ofgaps and barriers that could hinder its widespread deployment for CCS. For example, the distancebetween CO2 sources and oil fields could be large and nearest oil fields might be unsuitable for CO2EOR or the storage capacity could be insufficient. In all cases, full seismic analysis is required andthe storage media should be well characterised in terms of petrology, mineralogy and rock/rock-fluidproperties [28]. Some key issues for CO2-EOR are listed here:•Reasonably simple expressions can be used for estimating the CO2 storage potential in a CO2EOR project. The methods are based on the assumption that the theoretical CO2 storagecapacity in oil reservoirs is equal to the volume previously occupied by the produced oil andwater [29]. However, the main drawback to these methods is the lack of data and theiruncertainty due to the lack of consideration of important engineering or economic factors; hencethey are not reliable. More accurate predictions of CO2 storage capacity can be obtained byusing numerical reservoir simulations, which may take into account the effect of water invasion,gravity segregation, reservoir heterogeneity and CO2 dissolution in formation water [30]. Basin orcountry specific estimates may be more accurate but are limited by the availability of data andthe methodology used; such estimates may not be available for certain regions.•CO2 trapping mechanisms (i.e. volumetric, solubility, adsorption and mineral trapping) thatdetermine the long-term fate of CO2 require a better understanding [6].•Risks associated with leakage of CO2 injected as part of an EOR project should be quantifiedand regulated for public safety and assurance. The possibility of CO2 leakage might follow twopathways. The first and most probable is that CO2 migrates out of a well, either the project wellor a nearby well that is improperly sealed; the second unintended way of leakage is viaunidentified faults or fractures [31]. Unintended leakage of CO2 from underground to the surfacecould result in the asphyxiation of humans and animals, have an impact on plants or ecosystemsand may also contaminate drinking water sources [32]. Field data should be collected onpermanence of storage and high-level computer simulation could also aid the analysis of leakagerisks. Furthermore, information from the natural gas storage and the natural CO2 productionindustry could be used to provide analogies and lessons for CO2 [6].14•The possibility of CO2 injection causing induced earthquakes is believed to be remote but sitespecific assessments should be carried out [26].•Understanding the impact of impurities is an area that requires further research. High-purity CO2sources arising from coal gasification often contain levels of H2S. In the presence of SO2,deposition of elemental sulphur could occur, which could lead to severe pore blocking [33].Although H2S is an efficient solvent that miscibly displaces oil, the acids it forms by contact withbrine could make production handling expensive [34]. The effect of impurities on the minimummiscibility pressure also requires further understanding.•Rather than considering the maximum CO2 storage capacity, traditional approaches for CO2EOR tend to optimise oil production efficiency by limiting the amount of CO2 used for injection.Even this activity is considered as a ʻblack boxʼ with several unknowns including proper materialbalance of the injected CO2; how much will be dissolved in the water; how much will actually mixwith the crude etc. [28]. Well simulation techniques for CO2-EOR can help to fill this gap. Furtherinformation and experience is also required on maximising storage capacity in conjunction withCO2-EOR – this will involve redesigning CO2-EOR projects and approaches [35].•A final challenge relates to reservoir monitoring and management. A comprehensive reservoirmonitoring and surveillance system is required to verify the storage integrity in reservoirs. Thiscan be established by measuring pressure and changes to fluid chemistry in the reservoir,imaging seismic properties or recording microseismic activity in the reservoir and by samplingsurface soil to test for traces of leaked CO2. Management of the CO2 flood pattern can becompounded by the lack of real time performance information.Despite these gaps in knowledge that require filling in order to improve CO2-EOR, it is believed thatthere are no major technical obstacles to this technology, since large-scale operations involvingindustrial CO2 sources have already been proven in North America.Enhanced Coal Bed Methane (ECBM) is a way of recovering methane from un-mineable coal seamsand is considered to be a less mature technology than EOR. During the coalification process in coalseams, gases including CO2 and methane CH4 are produced. The gases are stored in the coal cleatsand adsorbed onto the internal surface of the coal; this is distinct from conventional natural gasfields where it exists as a free gas in porous rock formations. Coal bed methane has often beenrecovered by reducing the overall pressure in the reservoir, either by pumping out or mining outwater and then degassing the reservoir. Injection of inert gas – either N2, CO2 or a combination ofthe two – is another method of recovery, which has the advantage of higher yields. Injection of N2into the reservoir promotes methane desorption by lowering the partial pressure of methane in thereservoir without lowering the total reservoir pressure. CO2 has a higher adsorptivity on coal thanmethane and will therefore displace it – this also leads to an effective mechanism for CO2sequestration.There are currently no large-scale field operations of ECBM with gas injection. However, there are anumber of pilot-scale demonstration projects across the world. The earliest of these have beenconducted at the San Juan Basin in the south western United States by Amoco using N2 or CO2 asthe injected gas. In Alberta, Canada, field tests have been carried out using CO2 or CO2/N2 mixtures[36]. The RECOPOL CO2 sequestration and ECBM demonstration project in Poland is the first of its15kind in Europe and outside of North America and injects CO2 into the Silesian Coal Basin. TheIshikari Coal Field in Japan has hosted another pilot CO2-ECBM project [37].In China, a pilot scale ECBM project is taking place at the Qinshui Basin in Shanxi Province. TheQinshui Basin is one of Chinaʼs foremost primary coal bed methane (CBM) producing regions. It isoperated China United Coal Bed Methane Corp. Ltd. (CUCBM) who have the exclusive rights forexploration development and production of CBM in cooperation with foreign companies. The QinshuiBasin was selected due to its large area, thick continuous coal seam, high gas contents and shallowdepths of coal seams. It also has reasonable access to pipelines and has been explored relativelymore than other basins [38]. Preliminary results of the project have been promising and it has beenshown that the amount of methane that can be produced compared to primary CBM wassubstantially enhanced and that CO2 storage in the high rank anthracite coal is feasible [39]. TheChinese ECBM recovery potential has been estimated to be over 3.7 trillion m3 and thesequestration potential is about 142.67 Gt [40].As with CO2-EOR, CO2-ECBM requires a relatively pure stream of CO2 for injection, although highlevels of N2 can be accommodated. There are no natural sources of CO2 in or near the Ordos coalbasin in China [41], meaning that appropriate matching with a high purity industrial source or asource from the power generation industry would be crucial for the success of these projects.As CO2-ECBM is a relatively new concept, the technical gaps and barriers are considered to bemore of an obstacle in comparison to CO2-EOR and they need to be overcome by vigorousprogrammes of fundamental and applied R&D. Before widespread deployment can occur, a keytechnical issue of the reduction in coal permeability after CO2 injection due to coal swelling must beresolved. In order to enable reservoir modelling and simulation, the effects of CO2 injection rate, totalgas pressure, formation temperature and gas composition on coal swelling/shrinkage andadsoption/desorption of gases on coal surfaces must be adequately quantified. Some of the mainchallenges for CO2-ECBM are listed here:•The interplay between the physical mechanisms of multicomponent diffusion and adsorptionrequires a better understanding for effective simulation [42].•Models for response of the coal pore structure to gas injection and the impact this has on thecoal swelling or shrinkage require further development.•The impact of coal matrix-fracture interactions on the time-dependent coal permeability is stillunclear [43].•The integrity of CBM CO2 geological storage systems and reliable monitoring of these are criticalissues, which require further work in order to gain public acceptance.•A problem arises in regards to what exactly constitutes an unmineable coal seam because whatis considered umineable with current levels of technology, expertise and coal price might changeto economically viable in the future. A future risk is posed for currently legitimate coal seamsequestration sites of future CO2 release or obstructing the utilisation of the coal as an energyresource. Criteria for establishing location specific definition of unmineable coal are required.•Final challenges for CO2-ECBM are the lack of information on the available storage capacity inunmineable coal seams and the lack of geological and reservoir data required for defining goodsettings for CO2 injection and storage [44].16Despite these challenges, there is continued interest in CO2-ECBM because of the large coaldeposits across the world, economic value of ECBM potential and the existing CBM infrastructure,which could be used for enabling CO2 storage projects [44].2.4. Impact of CO2 impuritiesThis section summarises the impacts of impurities in the CO2 stream across the CCUS chain fromcompression through to transport and storage and outlines research gaps. Guidelines for impuritylevels as provided by other authors are given. Little data is available on recommended impuritylevels for CO2-ECBM due to the immaturity of the technology but some discussion is given below.A large majority of previous studies have focussed on the impacts of impurities on pipelinetransportation. The DYNAMIS European project [45] made recommendations on allowable impuritylevels for transport via pipelines for pre-combustion and post-combustion processes. The impacts ofthe impurities on application of the CO2 for EOR were also discussed. There are parallels that canbe drawn from CO2 sources derived from pre-combustion carbon capture power generation and highpurity industrial sources of CO2 derived from gasification, such as, coal-to-liquids (Fischer-Tropcsh)or ammonia/fertiliser plants. The concentration limits and an explanation of the technical or safetylimitations are given in Table 2.1.Table 2.1. DYNAMIS recommendations for CO2 quality [45,33]ComponentConcentrationLimitationH 2O500 ppmH 2S200 ppmCO2000 ppmO2Aquifer < 4 vol%, EOR < 100– 1000 ppmCH4Aquifer < 4 vol%, EOR < 2vol%N2< 4 vol % (all noncondensable gases)Technical: below solubilitylimit of H2O in CO2. Nosignificant cross effect ofH2O and H2S. Cross effect ofH2O and CH4 is significantbut within limits for watersolubilityHealth and safetyconsiderationsHealth and safetyconsiderationsTechnical: range for EORbecause of lack of practicalexperiments on effects of O2undergroundEnergy consumption forcompression and miscibilitypressure for EOREnergy consumption forcompressionAr< 4 vol % (all noncondensable gases)Energy consumption forcompressionH2< 4 vol % (all noncondensable gases)SOX100 ppmFurther reduction of H2 isrecommended because of itsenergy contentHealth and safety17considerationsNOX100 ppmHealth and safetyconsiderationsCO2>95.5%Balanced with othercompounds in CO2Impurities in the CO2 stream may cause changes to the physical properties of CO2 in comparison topure CO2 that may have implications for geo-sequestration. Geological storage capacity couldpotentially be reduced by impurities by the replacement of CO2 and also by reducing the CO2 streamdensity since they are not as easily compressed as CO2. The decrease in density experienced bythe presence of less compressible impurities can also affect injectivity because it will decrease themass flow for the same pressure drop; however, the addition of impurities will also lead to adecrease in viscosity, which would increase the mass flow. Both the density and the viscosity will becontrolled by the temperature and pressure; however, there is a lack of experimental data requiredto validate viscosity calculations. The effect of impurities on injectivity is less than that of storage butcould still be significant under certain circumstances. In addition, the decrease in density can alsolead to an increase in buoyancy of the plume. The buoyancy of a CO2 plume can be increased by50% for a case of 15% impurities, which in turn could lead to a three-fold rising velocity increase;subject to reservoir conditions, this could potentially reduce residual trapping and increase the lateralspreading of the plume [33].Impurities within the CO2 stream can have chemical effects which impact on the reservoir, caprockand well cement. The species with the most significant effects are NOX, SOX and H2S because thesespecies can oxidise to form nitric acid or sulphuric acid, thus lowering pH [46]. These acids mayaffect long term caprock porosity and permeability due to the occurrence of dissolution of carbonatesor sandstone [47]. The impurities can accelerate the corrosion of steel and cement well materials.High levels of O2 in CO2 streams used for EOR are known to cause overheating at the injectionpoint, oxidation in the reservoir leading to higher oil viscosity with increased extraction cost andincreased microbial growth with unknown effects on oil production [48]. High levels of O2 are a mainconcern with streams derived from oxyfuel combustion carbon capture but may not be expected inCO2 streams derived from gasification. The impacts of the impurities of SOX and NOX relating toexperience to date with EOR have been discussed by Bryant and Lake [49] with the conclusion thatthe impurities are unlikely to adversely affect the recovery and have an insignificant effect oninjectivity.CO2 impurities have a different effect on the storage capacity of CO2-ECBM applications. H2S andSO2 have a higher affinity to coal compared to CO2 and so will preferentially adsorb on to the coalsurface thus reducing the CO2 storage capacity [50]. O2 impurities will react irreversibly with the coalsurface and therefore reduce the surface for sorption and storage capacity.Some gaps and recommendations relating to CO2 impurities are summarised here:•Accurate equations of state are required for CO2 mixtures containing impurities in order toimprove modelling predictions for compression, transport and storage. Experimental data isneeded in order to calibrate parameter values and to vialidate model predictions.18•The viscosity of the CO2 stream affects pipeline transport, injectivity and migration of the CO2stream in storage. There is a lack of experimental data on the effect of impurities on the CO2viscosity, which is required to construct and verify numerical models.!•Long-term testing is needed for materials exposed to CO2 containing impurities at all stages ofthe CCUS chain and predictive models for corrosion rates prediction should be improved.!•The impact of CO2 impurities on sub-surface chemistry and prospects for long-term safe storagerequires an improved understanding.!!3. Economic Gaps and Barriers3.1. Existing CCUS infrastructureWith the increasing focus on CCUS in China, some infrastructures have been built. Theexisting/planed infrastructures are listed in Table 3.1.Table 3.1: Existing and planned CCUS infrastructures in China.ProjectCaptureMethodStorage/UsageScaleCurrentSituationBeijing Thermal PowerPlant Capture Project,Huaneng GroupPostcombustionCaptureFood industry,industry3,000tons/yearUnderoperationShanghai ShidongkouPower Plant CaptureProject, Huaneng GroupPostcombustionCaptureFood industry,industry120,000tons/yearUnderoperationChongqing ShuanghuaiPower Plant CaptureDemonstration, ChinaPower InvestmentCorporationPostcombustionCaptureN/A10,000tons/yearUnderoperationJilin Oil Field CO2-EORR&D project, ChinaNational PetroleumCorporationNatural GasCO2SeparationEOR0.8-1 milliontons/yearPhase Ifinished;Biodegradable PlasticProduction using CO2,China National OffshoreOil CorporationNatural GasCO2SeparationBiodegradablePlasticProduction2,100tons/yearUnderoperationCO2-ECBM Project,China CBMPurchaseECBM40 tons/daySuspendedNew Chemical MaterialCO2Chemical8,000UnderPhase IIongoing19tons/yearoperationProduction using CO2,ZHONGKEJINLONGChemical Co., LtdCapturedFrom AlcoholPlantsMaterialProductionGreenGen Tianjin IGCCDemonstration, HuanengGroupPrecombustionCaptureEORLianyungang CleanEnergy DemonstrationPrecombustionCaptureSaline AquiferSequestration1 milliontons/yearPreparatoryHubei Yingcheng 35MWtOxy-fuel CombustionDemonstrationOxy-fuelSalt MineSequestration100,000tons/yearPreparatoryCCUS Demonstration,China GuodianCorporationPostcombustionFood industry20,000tons/yearPreparatoryMicroalgae CarbonSequestration Bioenergy Demonstration,ENN GroupCO2Capturedfrom CoalChemicalIndustriesBiosequestration320,000tons/yearOngoingCCS Project, ShenhuaGroupCO2Capturedfrom CoalLiquefactionIndustriesSaline AquiferSequestration100,000tons/yearUnderOperationShengli Oil Field CO2EOR Demonstration,Sinopec GroupPostcombustionCaptureEOR30,000tons/yearUnderOperation1 milliontons/yearPreparatoryPhase IongoingCaptureCCS-EOR DemonstrationFrom Table 3.1, we can see that China has done a lot of works and has a leading place in CCUSfield.3.2. Age and lifespan of CO2 sources and sinksThe lifespan of CO2 sources are different for different types. Typically, for ordinary chemical orpower plants, their lifespan is about 20–30 years.20For CO2 sinks, their lifespan depends on the CO2 storage capacity and the CO2 injection rate.However, for a big oil field, the injection of CO2 can last for several tens to more than one hundredyears.Thus, for a CCS demo, the math of the age and lifespan between the CO2 sources and sinks is not abig problem.3.3. Investment needsAccording to the IEA research, in the background of controlling temperature rises by 2oC till 2050, asthe technology of improving energy efficiency contributes less in CO2 emission reduction anddeveloping alternative energy is more and more difficult, the contribution proportion to CO2 emissionreduction by CCS will increase from 3% in 2020 to 10% in 2030, and reach 19% in 2050. IEA reportsthat 100 CCS projects and 130 billion dollars will be needed till 2020 around the world (21 projectsand 19 billion dollars for China and India); 3,400 CCS projects and 5.07 trillion dollars will be need till2050 around the world (190 projects and 1.17 trillion dollars for China and India).When applying CCS technology in a power plant, cost input will increase by at least 50% and thefinal user cost will increase by 20% as well. For the three stages of CCS, capture costs the most(about 80% of the total cost) while transport and storage take about 10% respectively.If CO2 is captured in a chemical plant, for example the methanol plant, investment around 1400–1500$/kW is needed. Thus, for a plant with a scale of one million tons methanol, the total investmentwould be 85–90×108 US$.As for the CO2 pipeline with a diameter 1m, around 60,0000US$/km is needed to transport CO2high-pressure conditions.Weyburn CO2-EOR in Canada is an exsiting and successful project. The EOR is expected to enablean additional 130 million barrels of oil to be produced and extend the life of Weyburn Field by 25years. Ultimately 20 million tons of CO2 are expected to be stored. The current cost is $20/ton ofCO2. A 330km (205 miles) long pipeline transfers the CO2 from Beulah, North Dakota, to theWeyburn field in Saskatchewan, Canada. There are two projects in tandem at the Weyburn Field:the commercial EOR project run by EnCana; and the research project looking at the potential tostore CO2, run by the PTRC. The research project was formally known as the International EnergyAgency Greenhouse Gas Weyburn-Midale CO2 Monitoring and Storage project. The eight-yearproject, which will increase oil production and CO2-EOR research, is estimated to cost $80 million. InJuly 2010, the U.S. and Canadian governments jointly pledged an additional $5.2 million in newfunding. The DOE has provided $3 million and the Canadian Government $2.2 million. The CO2injection is on two sites, Cenovus Energy owned Weyburn Field and Apache owned Midale Field.The EOR has increased production from Cenovus's Weyburn field by 16,000-28,000 barrels a dayand by 2,300 to 5,800 barrels a day for Apache's Midale Field.3.4. CO2 taxationCO2 taxation is a price instrument that can be used to internalise the envisaged negative effects ofCO2 on society. The instrument works by requiring emitters to pay a fee per ton of CO2 released to21the atmosphere. Regardless of which sector of the economy is exposed to the instrument, the CO2tax increases the cost of operation, whether driving a car or running a coal-fired power plant. Froman industrial or power generation perspective, emitters can either choose to the pay the tax or investin CO2 abatement technologies or energy efficiency measures. The choice will be made on a simpleeconomic decision dependent on the price of the CO2 tax and the cost of the abatementtechnologies available.In order for CO2 taxation to act as an incentive for CCUS, the tax must exceed the marginalabatement cost of a CCUS project. In Norway, a CO2 tax of approximately US$50/tCO2 hasencouraged the oil and gas industry to invest in two large CCS projects, Snohvit and Sleipner, with acombined storage of almost 2MtCO2 per year. These CCS projects involves collecting (rather thanventing) the CO2 that is stripped from natural gas processing plants, a relatively low cost form of CO2capture.In Chinaʼs Twelfth Five-Year plan, it was stated that government researchers have proposed acarbon price of RMB 9.5 ton CO2 (US$1.5) in 2013 rising incrementally to between RMB 48 andRMB390 yuan/ton CO2 (US$7.30 and US$59) in 2020. At the upper limits of this range, the CO2 taxmay certainly encourage the deployment of a CCUS project. The CO2 tax will be applicable to anyprocess that emits CO2, and no differentiation between sectors is foreseen. It is proposed that theCO2 tax will be introduced as a pilot scheme in 13 provinces starting in 2013, however ShaanxiProvince is not named as one of the pilot provinces. The primary reason for the introduction of a CO2tax is to avoid frictions of trade with the US who, under the American Clean Energy Security Actestablished in 2009, has considered placing carbon tariffs on the import of goods from China.4. Policy and Regulatory Barriers4.1. Current CCUS policyPolicies related to CCUS in China are primarily concerned with supporting R&D of the technologyand the development of demonstration projects, such as the 400MW GreenGen demonstrationproject in Tianjin, which is due to be completed over the next five years. R&D in CCUS has beeninitiated within a number of multi-annual programme plans including (51):National Medium- and Long-Term Programme for Science and Technology Development (20062020), State Council, 2006 - “To develop efficient, clean and near-zero emission fossil energyutilisation technologies” – highlighted as an important frontier technologyChinaʼs National Climate Change programme (2007-2010), State Council, 2007 – CCUS technologywas included as one of the key GHG mitigation technologies that shall be developed.Chinaʼs Scientific and Technological Actions on Climate Change (2007-2020), 14 Ministriesincluding MOST, 2007 – CCUS technology was identified as one of the key tasks in the developmentof GHG control technologies in China.The Ministry of Science and Technology, 2008 - launched the National High Tech Program (863Program) of Technology Research for CO2 Capture and Storage.In addition, the Twelfth Five-Year guideline (2011-2015) released in March 2011, placed emphasisthat CCUS will remain a priority R&D goal for the period. Also in the Twelfth Five-Year guideline, a22number of structural market mechanisms are proposed to reduce energy intensity in industrial andenergy sectors. According to The Climate Group (52), these market mechanisms include a resourcetax reform, focused on an ad valorem tax on the energy resources used to make a product.Furthermore in October 2010, the 17th Central Committee of the Communist Party of China (CPC)approved proposals to establish an emission trading scheme on over the next five years, withtargets being set in the five-year guideline as a 17% reduction in CO2 emissions and 16% reductionin energy intensity compared to 2010 levels. However, it is unlikely, that the market-basedmechanisms outlined above will be sufficient to incentivise CCUS deployment without publicfinancial support in the near-term.4.2. Integrating policy and legislationIn parallel to the development and commercialisation of CCUS technologies, a legislative orregulatory framework is a key enabling factor for the deployment of CCUS in any country. However,akin to the majority of countries across the globe, no legal framework exists in China that canregulate this multifaceted and innovative abatement technology. Basically, effective regulation isessential to ensure that CCS operations are conducted in a manner that causes no harm to peopleand the environment. In addition, regulation is also necessary to clarify issues of long-term liability,monitoring requirements and to guarantee remedial action in the case of CO2 leakage or any form ofdamage caused through operations.The link between policy and legislation is often unclear although very important. Commonly, policy isdeveloped, and then the objectives of the policy are enforced, or encouraged, by the development ofan enabling regulatory framework. To highlight the link between policy and legislation particularly inthe field of CCUS, it is useful to look towards an example. Between 2005 and 2007, the first phase ofthe European Unionʼs Emission Trading Scheme (EU ETS) was launched as one of the mechanismsto achieve the EUʼs climate policy goals. From 2013 (the start of third phase) CCS is fully recognisedas an abatement option, meaning that CO2 successfully stored is classed as ʻnot emittedʼ, and theassociated emission allowances under the EU ETS do not have to be surrendered.However, CCUS projects attached to installations can only store CO2 under the EU ETS if theycomply with specific CCS regulation issued by the European Commission, the EU Directive on thegeological storage of carbon dioxide6. The Directive, which should have been transposed into theEUʼs 27 Member Statesʼ national legislation by June 2011, sets out the legal requirements for CCSprojects in terms of inter alia monitoring requirements, environmental impact assessments, sitecharacterisation, liability and post-closure management. CCS projects may only take place in theEuropean Union if they comply with the minimum requirements of the Directive as transposed innational legislation.In addition to the EU CCS Directive mentioned above, an EU Decision was released in 2010, whichoutlines the guidelines for the monitoring and reporting of CO2 emissions stored under the EU ETS7.These guidelines ensure that CO2 captured, transported and stored under the EU ETS inaccordance with the EU CCS Directive is monitored and reported in an appropriate and consistent67Directive 2009/31/ECCommission Decision 2010/345/EU23manner by all project developers. Therefore, the example above highlights the interaction betweenpolicy to encourage CCS, and the requirement for specific legislation to ensure that CCS projectsare deployed in a safe and equitable manner.4.3. Regulation of liabilitiesWithin a CCUS project, the actor liable for any damages caused from the capture, transport orstorage components of the project may depend upon the ownership and operational organisation.The division of liability may also differ between the operational phase and the post-closure phase ofthe project. For issues of liability during the operational phase of the project, it is generally acceptedby industry and authorities involved in CCUS that the operator, or the entity overlooking the activity,must assume liability for any damages occurred (53). If, for example, there are separate operatorsfor the transport and storage components of the CCUS chain, it is assumed that these operatorswould assume liability and factor risk into any transport/storage tariffs charged to the emitter. Anexception would be gross negligence by the capture operator, i.e. an impure CO2 stream causingequipment malfunction. Whether liabilities could be attributed to third parties, i.e. equipmentsuppliers, given the cause of a leakage being faulty hardware depends on pre-existing contractualagreements.For localised effects, for example surface leakage, impact of CO2 on the subsurface, physical effects(e.g. induced seismic events) and occupational hazards, may fall under existing regulations such asadministrative law (i.e. breach of authorisation conditions), criminal law (i.e. negligence) or civil law(damages to third parties) (53). Although CCUS as a technology is relatively new, from a legalperspective this is independent from the potential damages caused by the operations. Existingcriminal law and civil law may be sufficient in China to allow for timely redress of any affectedentities during the operational phase, and this is not understood to be a barrier given that existingmining and oil/gas extraction activities entail very similar liability risks as CO2 storage. Nevertheless,regulations that stipulate the legal requirements for operating CCS projects must be developed if acourt of law is to decide whether or not an operator was in breach of the authorised conditions forthe project.Long-term liability of CO2 storage projects, once the operational phase has finished, is a challengingand complex issue. Private investors are unlikely to invest in a CCUS project whereby the period ofliability for leakage is indefinite, particularly when the project is combined with a mechanism such asthe EU ETS where the CO2 stored could be worth millions of Euros in EU Allowances (carboncredits). Furthermore, if an accident were to occur 30 years after the operational phase had beencompleted, there is no guarantee that the firm responsible would be in a position to accept liability.In Europe, the EU Directive8 states that after a minimum period of 20 years, the responsibility of thestorage site may be passed onto the state government of the country where the project is takingplace. In this case, if the operator can show that there is negligible risk of leakage at the site, thelong-term liability (+20 years) will be accepted by the Member State. Dependent on the ownershipstructure, there may be CCUS projects that are owned or partially owned by the state government,and in this case there may be no transfer of liability issues (53).8Directive 2009/31/EC244.4. Incentive provision to promote CCUSUnder certain circumstances the injection of CO2 into oil fields for the purposes of enhanced oilrecovery (EOR) can result in a business case for CCUS. In China EOR test injections with CO2 havetaken place in the Jilin Oil Field conducted by PetroChina, and results suggest that an additional 3.2tons of oil can be recovered for every ton of CO2 injected (51). The feasibility of EOR depends on thepredicted responsiveness of the field, the cost of acquiring and transporting the CO2, and theprevailing price of oil on global markets. In some cases, EOR is subsidised not for the purposes ofCO2 abatement, but for its contribution to national energy security. For example, in the US, to offsetthe costs of EOR the government provided tax incentives to companies engaged in the practise. Thecombination of EOR with crediting of the stored CO2 emissions under a climate mechanism, such asthe CDM, is a possibility, however there is an ongoing debate regarding how to account for theemission from the combustion of the incremental oil recovered through the process. Furthermore,the additional monitoring and reporting requirements for CCUS under the CDM will also increase thecosts of the project.Incentives for CCUS may also be created through the application of policy mechanisms, such asemissions cap-and-trade systems like the European Union Emissions Trading Scheme, a carbontax, a baseline and credit scheme (such as the CDM) or an emissions standard. Unfortunately, giventhe high cost of CCUS, no market-based mechanisms have resulted in sufficient incentives to enableCCUS to this date.Figure 4.1: Progression of incentive policy for CCS (54)In a recent policy paper, the IEA [55] stated that in the early stages of CCUS deployment, incentiveswill be required in the form of CCUS specific financial support, with the technology subsidised by thepublic sector. Early CCUS projects can prove the viability of the technology and the informationgenerated is of public interest. However, these pioneering activities entail excessive risk for theprivate sector to absorb individually. As the technology matures, and with the prospect of reducedcosts through technological learning combined with increased private sector investment confidence,public support can be reduced. With potentially lower costs associated with CCUS, emissionreduction policies can maintain incentives to invest in CCUS (or other abatement technologies)without the use of public funding.254.5. Cooperation between multiple authoritiesGiven the multifaceted nature of CCUS the deployment of the technology will require involvementfrom multiple government institutions, national and local authorities, both from a policy andregulatory perspective. According to Liang et al (54), a large number of institutions in China at thenational, provincial and municipal level share the responsibility for developing and implementingenergy policies, and the authorization process for such projects has evolved rapidly over the last halfcentury.The World Resources Institute (56) has conducted a regulatory analysis for CCUS in China, andidentified the relevant Ministries which would most likely be responsible for the development ormodifications of regulatory acts. According to the World Resources Institute, the relevantenvironmental regulations for CCUS would be overseen by the Ministry of Environmental Protection(MEP), and the regulatory requirements for monitoring surface, water and sub-surface impactswould be the Ministry of Water Resources (MWR) and the Ministry of Land Resources (MLR).Although the national ministries outlined above would be responsible for the development of thenational regulation, the provisional branches of the Ministries would be responsible for enforcing theregulation of individual demonstration projects (56). A non-exhaustive list of the legal acts relevantfor CCUS and the responsible ministries in China is given in Table 4.1.Table 4.1: Legal acts potentially relevant for CCUS and responsible ministries in China (56)National Development and Reform Commission (NRDC)- Approving Domestic and Foreign Investment ProjectsMinistry of Environmental Protection (MEP)- Water Pollution Control- Environmental Protection Law- Environmental Impact Assessment- Law and Standards on the Prevention and Control of AirPollution- Solid Waste Pollution Law- Standard for Underground Storage of Hazardous Waste- Marine Environmental ProtectionMinistry and Land and Resources (MLR)- Property Rights Law- Land Administration & Mineral Resources LawState Administration of Work Safety (SAWS)- Protection of Oil and Natural Gas Pipelines- Provisions for Safe Supervision and Management ofPetroleum and Natural Gas PipelinesMinistry of Water Resources (MWR)- Water LawRegarding the development of policy to support the deployment of CCUS in China, Liang et al haveundertaken a study [54] to identify the perceived importance of various governmental departments inChina in the authorisation and financing of large-scale CCUS demonstration plants. Through surveysand interviews with key stakeholders who have current or potential influence on the deployment ofCCUS demonstration projects, including ministers from relevant departments, managers fromenergy companies and senior researchers from academic institutions, the importance and role of arange of government departments were identified (see Table 4.2).26Table 4.2: Chinese government departments and their potential roles in CCUS demonstrationprojects (table modified from 54)InstitutionNational Developmentand ReformCommission (NDRC)Percentage of stakeholdersnaming institution as mostimportant in authorising a CCSproject64%Local governments9%Ministry ofEnvironmentProtection (MOEP)The State Council7%Ministry of Finance(MOF)4%Ministry of ScienceandTechnology (MOST)State ElectricityRegulatoryCommission(SERC)3%6%2%Perceptions of potential role(s) inauthorising and financing a large-scaleCCS demonstration power plant inChinaAuthorise the project at the nationallevel. Providefinancial and policy incentives. Issueguidance ontechnology options.Provide fiscal and other forms ofsupport. Authorisethe project at the provincial andmunicipal level.Monitor and verify operations. Assesstheenvironmental impact.Influence the decision of NDRC andother ministries.Approve and audit the financial incentiveneeded fordemonstrating CCS.Provide scientific research grants topartially supportCCS demonstration project.Review and regulate the electricity tarifffor CCSproject approved by NDRC.As can be seen in Table 4.1, from the stakeholder interviews, the National Development and ReformCommission (NDRC) is clearly perceived as the most important institution for enabling thedevelopment of CCUS demonstration projects. Although not included in the table, 33% of theinterviewees mentioned local governments as the second most influential institutions. The alignmentof national and local political support for CUCS is essential for the success of a demonstrationproject. A misalignment of national and local policies for CCUS is stated as one of the key reasonsfor the cancellation of a flagship CCS demonstration project in the Netherlands [56].In order to improve the coordination between multiple authorities in the development of CCUS,certain countries have chosen to establish a so-called ʻinteragency CCS Task Forceʼ. One suchTask Force was established by the Obama administration in the United States in 2010, is chaired bythe US Department of Energy (US DOE) and the Environmental Protection Agency (EPA), and alsoinvolves nine different department and offices. Its is to develop a comprehensive and coordinatedstrategy to accelerate the development and deployment of clean coal technologies, with a keymilestone of realising five to ten demonstration projects by 2016. A similar CCS Task Force wasestablished in the Netherlands in 2008. This task force involved not only members of relevantgovernment organisations, but also industry representatives and members of relevant nongovernment organisations, such as the Netherlands Foundation for Nature and Environment.274.6. Harmonising policies in an international contextIt may be possible for China to implement CO2 abatement policies that could link within the UnitedNations Framework Convention on Climate Change, potentially under a climate agreement such asthe Kyoto Protocol. For example, a national emissions trading scheme could be linked to theinternational carbon market, meaning that any credited emissions reductions achieved in Chinacould be sold on the carbon market. China has been very active in the Kyoto Protocolʼs CleanDevelopment Mechanism (CDM), boosting 3,500 registered projects, accounting for approximately70% of the total carbon credits generated in Asia (with Asia accounting for 80% of all carbon creditsgenerated under the mechanism to date) [57].However, the future of the Kyoto Protocol, and thus the motivation to harmonise climate policies forthe purposes of linking mechanisms internationally, is currently unclear. Nationally AppropriateMitigation Actions (NAMAs) and New Market Based Mechanisms (NMBMs), such as sectoralcrediting/trading schemes, are being discussed within the UNFCCC as potential follow-ups to theClean Development Mechanism, and these mechanisms could incentivise technologies such asCCUS. One potential barrier foreseen within Chinese climate policy is the focus on emissionsintensity and taxes on resource use, rather than on absolute emissions, which have been theprimary metric used within policy making in other countries.5. Public Perception and Acceptance5.1. Health and safety issuesThe general public are relatively unaware of CCS, the risks involved and the nature of CO2. Initialreactions to the technology are usually sceptical but have a tendency to improve when information isprovided. A distinction may be drawn between the general views of CCS of the public and those oflocal opposition to particular projects, which in the past has been strong enough to lead to significantdisruption and postponement of CCS projects [58]. Negative opinions to CCS can be influenced byperceived risks of O2 leakages from pipelines or storages, either gradual or catastrophic, whichmight impact on the environment, ecosystems and human health, the possibility of induced groundmotion which could damage buildings and the possibility that sequestered CO2 could contaminatewater supplies [59]. Uncertainties concerning the potential risks of CCS, especially the risks ofaccidents and leakage, should be addressed in order to reassure the public. There have been veryfew studies on public perception on CCS in China, whereas there have been a few coveringstakeholder perceptions. Surveys conducted by Duan [60] found slight support for CCS amongst theChinese public but local opposition to CCS projects should still be expected in China just as in anyother country. Stakeholder perceptions of Health and Safety concerns surrounding CCS also extendto coal mining accidents [61].Barriers of low public acceptance for CCS can be overcome through information and education onhuman caused climate change and the recognition of the need for major CO2 reductions.Acceptance of CCS can also be aided when it is seen as part of a wider strategy in the energyportfolio for cuts in CO2 emissions. [62]285.2. Visual impactThe burial of CO2 pipelines is a possibility if the diameter is not too large – this could lead to asignificant reduction in visual impact of CCUS projects. However, significant visual impact alongpipeline routes could still occur during the commissioning and decommissioning stages. Localconcerns about visual impact of equipment should be taken on board and designs adjustedaccordingly where possible.5.3. Financial issuesFurther barriers to public acceptance can relate to the costs of CCUS deployment and plans for itsuse for a relatively short period of time. International funding of CCUS projects could help to alleviatepublic financial concerns. In the survey by Duan [60], over half the Chinese respondents wereconcerned that the governmentʼs support for CCS could divert funds and investment from otherclean energy technologies and renewable energies. However, early opportunity projects that utiliseCO2 for a purpose like EOR and ECBM would appear more financially attractive in comparison tocapture from the power energy sector, which has associated energy penalties and incrementalenergy price increases. The increased fuel productions from CO2-EOR and –ECBM projects couldhelp to sway public opinion on financial issues.6. RecommendationsBased on the gaps and barriers of CCS technologies, we recommended that:1. Listing CCS into Chinaʼs future science development plan. The main barrier of developingCCS is the uncertainty of the strategy. We suggest making a CCS development strategy planand listing CCS as our frontier technology in energy, environment and other related areas in thefuture.2. Supporting CCS theoretic and technological research. Starting from the basic theoreticresearch and technological revolution, initiate the councilʼs major research plan, extract keyscientific problems and implement basic theoretic research on greenhouse gas control and CCS.Supported by the Ministry of Science and Technology (MOST) supporting plan and ʻ863ʼ project,clarify the technology puzzles, implement CCS R&D with low energy penalty and low cost, andmake CCS standards and regulations for the project implementation.3. Implementing CCS demonstration project. Form a government supported and enterprisemainstay regime to coordinate interests among industries, implement demonstration projects,accelerate the transfer of scientific achievements and realise the combination of scientific andindustrial plans. Use foreign funds to support CCS demonstration projects and make sure thatthe nationʼs fund takes a substantial proportion of the total investment to mitigate the enterpriseʼsrisk and responsibility.4. Building CCS technological platform and strengthening international cooperation. Form anational low carbon technology research center and an alliance between industry, academia andthe research community to make CCS key technology breakthroughs. Strengthen internationalcooperation in low carbon revolution areas, and build an international regime with low carbontechnology R&D, competition and optimization.295. The project strongly recommends that (at least) the first demonstration project should bea national programme, conducted by a consortium of complementary partners and led by apioneering company, such as Greengen, with government support. The learning andexperiences gained during demonstration can be accessed by all interested enterprises. Chineseenterprises have started taking actions in CCS research and development. However, there is anabsolute necessity for strong government leadership to form a national CCS consortium. Ademonstration project should be a horizontally integrated project along the CCS value chain inorder to combine strengths and reduce weaknesses substantially. Such integration could beachieved through either signing long-term contracts among participating companies in capture,transportation and storage along the CCS value chain or establishing a joint venture amongshareholder companies to share risk among different companies.6. China has an opportunity to observe and draw lessons from the experiences of other countries indeciding how it wants to proceed in developing regulations. At the same time, it is important torecognise that these regulatory frameworks are being prepared by nations that expect toestablish a legal basis for the commercial deployment of CCS. A new set of policy options areneeded at the national level to address technical, institutional, legal, regulatory and financialgaps, promote demonstration projects with a standardised approach that provides replicablecases for future projects. Policy options at the national level have important implications not onlyfor CCS at the national level but also for demonstration projects at project level.!30REFERENCES[1] J. Serpa, J. Morbee and E. Tzimas. Technical and Economic Characteristics of a CO2Transmission Pipeline Infrastructure. European Union Report (2011) EUR 24731 EN –2011.[2] R. Steeneveld and B. Berger. 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World Resources Institute, Washington DC.[57] Ashworth, P., Bradbury, J., Feenstra, C.F.J., Greenberg, S., Hunt, G., Mikunda, T., Wade, S.Communication, project planning and management for carbon capture and storage projects:An international comparison. Available at (11/04/2012): http://www.ecn.nl/publications/ECNO--10-034[58] UNEP Risoe, 2012. CDM projects by host region. Available at (11/04/2012):!""#$%%&'(#)#*+),*-./0%&'(1#/.2*&"31/*0).,-!"([59] E. Dütschke. What drives public acceptance – comparing two cases from Germany. EnergyProcedia 4 (2011) 6234-6240.[60] M. Ha-Duong, A. Nadaï and A.S. Campos. A survey on the public perception of CCS inFrance. International Journal of Greenhouse Gas Control 3 (2009) 633-640.[61] H. Duan. The public perspective of carbon capture and storage for CO2 emission reductionsin China. Energy Policy 38 (2010) 5281–5289.[62] S. Shackley, C. McLachlan and C. Gough. The public perception of carbon dioxide captureand storage in the UK: results from focus groups and a survey. Climate Policy 4 (2005) 377398.34Inventory of non-power industrial CO2 sources of ShaanxiProvince, China Draft report35Executive SummaryCapturing CO2 from processes that have low concentrations of CO2 in the flue gases is associatedwith high investment and energy costs. CO2 emissions from coal and gas-fired power plants normallyhave a CO2 concentration in the flue gas of 8–15%, whereas certain industrial processes such ashydrogen, ammonia and methanol production can have CO2 concentrations of between 50% toalmost 100%. This study has identified a number of high purity sources in the Shaanxi province, withhigh-purity streams of CO2 estimated to be approximately 45 mega tons per year.!" Introduction1.1 Introduction to CCUSCarbon capture and storage (CCS) refers to technology that can prevent the release of largequantities of CO2 into the atmosphere from fossil fuel use in power generation and other industries bycapturing CO2, transporting it and ultimately, pumping it into underground geologic formations tosecurely store it away from the atmosphere [1]. It is a potential means of mitigating the contribution offossil fuel emissions to global warming.According to the state condition of China, the CCUS concept (carbon capture, utilisation and storage)is proposed. Based on CCS, the CO2 utilisation process is added, including enhanced oil recovery(EOR), Enhanced Coal Bed Methane recovery (ECBM), in food industry etc.1.2 Objective of this reportSince coal plays an important role in Chinaʼs energy structure, as an important option to mitigate CO2emissions, CCS is promising in China. However, some barriers to CCS demonstration include: (1) theidentification of the potential cost-effective CCS chain; (2) the identification of the funds to support theCCS demonstration; (3) difficulty in coordination of the whole CCS chain covering different industries;and (4) lack of government coordination through industrial policy, regulations and incentive policieswill result in prohibitively high cost of initial CCS demonstration projects and is likely to delay furtherdevelopment of potentially cost-effective CCS projects in China.Preliminary work on CCS in China has focused on CCS in the power sector. However, CO2 capturefrom power sector is energy-intensive and expensive due to the low CO2 concentration in the flue. It iseasier to realise CO2 capture at a lower cost at large point sources with high-purity CO2 in non-powersector, such as in fertiliser plants, coal-to-liquids facilities and refineries. China has a large industrialbase in these sectors, resulting in a significant CO2 emission reduction potential through CCS.This project also aids to identify and build CCS demonstration in non-power sector and helps toovercome the barriers of project deployment.361.3 Methodology and introduction to the outlineIn the project, the high-purity CO2 sources in non-power sector and the potential CO2 sinks in ShaanxiProvince will be identified, the mating of CO2 sources and sinks will be done and the CCUSdemonstration in Shaanxi province will be recommended. Also, the gaps and barriers, fundingsources of the CCUS will be identified and recommended.2Industrial processes with CO2 emissionsIn 2006, the overall emissions of CO2 in China were 5000 million tons per year and it is expected thatthe total emissions in 2012 will be over 7000 million tons per year. The main industries that produceCO2 emissions are fossil fuel power plants, oil refineries, and gas processing plants, ammonia plants,steel plants, ethylene production, ethylene oxide production, hydrogen production, cement productionplants and others.Figure 2.1 shows the CO2 emissions in the different industries of China in 2004. It can be seen fromthe figure that the CO2 emissions from power plants were around 1863 million tons, accounting fornearly 63% of the total emissions in 2004. The power plants were the primary sources of CO2emissions followed by the emissions from cement and steel industries, whose emissions were 570and 282 million tons individually. In recent years, with the growth of the installed capacity of China'spower plants, steel and cement production, the total CO2 emissions have shown a continuous upwardtrend. The installed capacity of fossil fuel power plants in China was more than 70% of the totalinstalled power generating capacity, which was 390 million kilowatts in 2005, and the CO2 emissionsfrom these power plants were around 2200 million tons per year. With the economy booming and thedemand for energy growing in 2010, the installed capacity of fossil fuel power plants rose rapidly to700 million kilowatts, which caused CO2 emissions to increase by around 4000 million tons per year,compared to 2005 the number of which was almost doubled. The CO2 emissions from China's powerindustry in recent years are shown in Table 2.1.It is estimated that the installed capacity of fossil fuel power plants will still maintain growth until 2030,and the related CO2 emissions will continue to increase as well. Because of the continuousacceleration of urbanisation and infrastructure construction, China's cement demand, and thereforeproduction, continues to grow. China's cement output was about one billion tons in 2005, while in2010 it had climbed to nearly two billion tons. At the same time the CO2 emissions in the cementindustry increased from about one billion tons/year to about two billion tons/year. The cementindustry's CO2 emissions are shown in Figure 2.2 (2).Meanwhile, China's steel production in recent years has also steadily increased, with acorresponding increase in related CO2 emissions. China's steel production in 2005 was 355 milliontons, and it jumped up to 489 million tons in 2007 and 650 million tons in 2010. China's steelproduction is expected to grow further along with the further deepening and development of China's37construction industry. It was estimated that the steel industry's CO2 emissions in 2010 was around820 million tons per year, and it is expected to continue to expand over the next decade.Figure 2.1 CO2 emissions of different industries in 2004 in China [2]Table 2.1 CO2 emissions from fossil power plants in recent years in ChinaInstalled capacity (0.1 billionCO2 emission (0.1 billionkilowatts)tons /year)20022.6614.8920032.9016.2520043.2918.4720053.9121.9420064.8427.1420075.5030.8420086.0133.7120096.5236.5620107.0039.24YearSource: China's state Statistics Yearbook, State Electricity Regulatory Commission.Figure 2.2. CO2 emissions from cement industry in China38Table 2.2 lists the CO2 concentration in the typical industrial processes. Among these processes,some chemical processes, such as ammonia, ethylene oxide, hydrogen production processes needCO2 removal as an integral part of the process, so the CO2 concentration of such emissions fromthese processes is much higher. The CO2 concentration in the cement industry and steel industry isabout 20%, while in the thermal power plants it is relatively lower, at about 10–15%.Table 2.2. The CO2 concentration of different CO2 sourcesEmission sourcesTypical CO2 concentration,%Coal fired power plant10-15Cement plant20Hydrogen plant50Ethylene plant12Steel plant20Oil refinery8Epoxy ethane99.9Ammonia plant99.92.1. The impact of CO2 purity on energy/economic penaltyEnergy costs are key factors to impact the success and future development of CCS demonstrationprojects. The concentration of CO2 in the gas to be separated is the key factor to affect the energyconsumption of CO2 separation and the CO2 capture costs. Energy consumption of CO2 separation isdetermined by two factors: (1) ideal work or alternatively called the minimum separation work for CO2separation in an ideal process; and (2) the energy efficiency of CO2 separation in the actualseparation process, which is defined as the ratio of actual separation work to the ideal separationwork. The ideal separation work only relates with the thermodynamic state before and after theseparation, and the separation efficiency depends on the level of energy utilisation in the specificseparation process.The formula of the ideal separation work for CO2 separation is shown in Eq. (1).Eq. (1)Where, Eidea is the ideal work for CO2 separation, X is CO2 concentration, and K is the recoveryrate. As it can be seen from the formula, the independent variables to determine the ideal39separation work of CO2 separation process is the CO2 concentration X in the gas and the CO2recovery rate K.On the basis of the expression of ideal separation work for CO2 separation, the formula of actualenergy consumption is shown as follows:H = E idea /"sepWhere,!Eq. (2)is the efficiency of CO2 separation for the actual separation process.Figure 2.3 shows the relationship between the separation work and CO2 concentration. It can beseen that the higher the CO2 concentration, the smaller the separation work. When theconcentration is less than 20%, with the reduction of CO2 concentration, CO2 separation work willrapidly increase.From this analysis we can draw the following conclusions:•To reduce the energy consumption of CO2 separation, one of the key factors is to enhancethe CO2 concentration before separation.•As CO2 concentration differs in different points of each industry process, choosing thereasonable separation point is the first step to achieve low energy for CO2 separation.•We can improve energy utilisation levels (increasing the separation efficiency, e.g. to selectadvanced CO2 separation technology or to adopt new absorbents) in the separation processto reduce the CO2 separation energy consumption eventually.40Figure 2.3. The relationship between energy consumption for CO2 separation and theCO2 concentrationThe CO2 concentration not only affects the energy consumption for CO2 separation, but also directlyaffects the CO2 capture cost. The cost of CO2 capture is mainly composed of two parts: the extra costof equipment investment, and the cost of fuel for CO2 separation. Among them, the extra cost ofequipment investment directly relates to the gas volume (the volume of the gas determines the scaleof the equipment), which means that in the conditions of a fixed CO2 separation amount (the CO2capture rate is fixed), the extra cost is directly related to the CO2 concentration in the gas mixture. Thecost of fuel needed for CO2 separation is proportional to the energy consumption for separation.Therefore, the concentration of CO2 is an important factor affecting the cost of CO2 capture.The main three technologies for CO2 capture are:Pre-combustion separationIf we choose to capture CO2 before combustion, the CO2 concentration can reach 20-30% and tocapture 90% of the CO2 will make the energy system's efficiency drop by 7–10 percentage points andthe CO2 capture costs will be around $25-45/t.Oxygen combustionIn the oxygen-combustion capture technology, although the concentration of CO2 is high (often higherthan 80%). The high concentration of CO2 is acquired at the price of additional energy consumptionfor producing oxygen from air separation unit, and thus to capture 90% of the CO2 will make theenergy system's efficiency drop by 8–10 percentage points, and the CO2 capture costs are about30-50 $/t. The concentration of CO2 in the exhaust of coal-fired power plants is 10–15% in general,and is even lower (around 3–5%) in the exhaust from the natural gas power plant.Post-combustion separation.To separate 90% CO2 by post-combustion, the efficiency of the power system will be reduced by10–15 percentage points, and the CO2 capture cost will be around 40-60 $/t. The relationshipbetween CO2 concentration and the capture cost is shown in Figure 2.4.Figure 2.4. The relationship between CO2concentration and the capture cost412.2 Definition of high purity CO2 sources in industrial processesThe use of high-purity CO2 sources removes one of the most important barriers to CO2 capture andstorage: the high-energy use and costs of CO2 removal from diluted process streams. High-purityCO2 sources can be defined as those streams from which CO2 does not need to be separated, butthat can directly be applied for CO2 utilisation and/or storage, only requiring compression andremoval of water and minor impurities.These streams are encountered in many cases in industry because some industrial processesrequire a CO2 removal step from which high-purity CO2 is produced. The CO2 in the process stream ispart of the feed gas or it is formed as a (by)-product in conversion of fossil fuels such as oil, coal ornatural gas. The removal of CO2 from the industrial process is required to purify the product, orbecause the CO2 has an adverse effect on downstream steps in the industrial process. Since thisCO2 removal step is necessary in the industrial process, its costs are not attributed to CCUS. Thislargely reduces the investments and operating costs for CCUS, since the largest contribution to thecosts of CCUS are those of CO2 separation.The criteria for the classification of the CO2 concentration differ a lot between industries and plants,and there are no unified or authoritative criteria for the classification until now. It is known that energyconsumption and cost of CO2 separation are the most important factors affecting the CCSdevelopment, while the concentration directly affects the energy consumption and cost.In this report, the CO2 concentration levels are classified based on the influence of the CO2concentration on the energy consumption. As shown in Figure 2.3, when the concentration of CO2 isless than 20%, with the concentration changing, the energy consumption of separation CO2 changesvery sharply. Once the concentration drops by five percentage points, energy consumption for CO2separation will increase by 5–17 kJ/mol (separation efficiency is assumed to be 0.1 here andafterwards), so this report defines the emission sources with CO2 concentration less than 20% asemissions sources of low CO2 concentration.When the CO2 concentration changes in the range of 20%–50%, along with the concentration change,the change of energy consumption for CO2 separation changes is slowing down. In this interval, foreach drop of five percentage points in CO2 concentration, the energy consumption increases by 3.5-5kJ/mol, and thus this report defines CO2 emission sources in this concentration range as themoderate concentration emission sources.When the CO2 concentration changes in the range of 50%–90%, the energy consumption for CO2separation showed a linear decline with the increase of its concentration, which is not that obvious.For each drop of five percentage points in concentration, the energy consumption for CO2 separationincreases by 3-3.5 kJ/mol, and therefore we define this concentration interval as the secondary42highest CO2 concentration range. When the CO2 concentration is higher than 90%, the energyrequirement for CO2 separation becomes very small and, in these cases, CO2 can be captured bysimple processes. The CO2 emissions sources, whose concentration is higher than 90%, are definedas the high concentration CO2 emissions sources. The classification for CO2 emissions sources ofdifferent concentration is shown in Table 2.3.Table 2.3: The classification criteria for CO2 emissions sources of different concentrationCO2 concentration inemissions source2.2.1Concentration level(%)>90High50-90Secondary highest20-50Moderate<20LowSeparation processes providing high-purity CO2 sourcesThe four main categories of obtaining high-purity industrial CO2 removal streams are chemicalsolvents; physical solvents; pressure swing adsorption (PSA); and membranes and othertechnologies, which are discussed briefly below.Chemical solvents are water soluble components that remove the CO2 from a gaseous processstream by forming a chemical bond with it. This is carried out in an absorption tower, after which theCO2 loaded solvent is transported to a stripping tower where the CO2 is released by adding heat.Chemical solvents are capable of removing CO2 from low concentration or low pressure gases, buthave the disadvantage of a relatively high energy demand for regeneration. Because of the highlyselective chemical reaction, the resulting CO2 stream is very pure. Commonly used physical chemicalsolvents are MEA (mono-ethanolamine), MDEA (Methyldiethylamine), Sulfinol and potassiumcarbonate solution [3].Physical solvents are liquids that remove CO2 by physical absorption of the CO2 into the liquid. Thisis carried out in an absorption tower. The CO2 loaded solvent flows to a stripping tower where theCO2 is released at elevated temperature. The resulting CO2 stream is pure but some co-absorption ofgaseous components may occur. Physical solvents require a high CO2 pressure, a combination of ahigh feed pressure with a sufficient CO2 concentration. Their advantage is a relatively lowregeneration heat compared to chemical solvents, though some solvents require refrigeration.Commonly used physical solvents are Rectisol (methanol), Purisol and Selexol [3]. A noveltechnology currently under investigation is the use of chilled ammonia.43Both chemical (e.g. Selexol) and physical solvents (e.g. Sulfinol) are used for simultaneous removalof H2S, and in some cases other sulphurous components (COS, mercaptanes) with the removal ofCO2. In some cases (e.g. for Selexol) it is possible to design the removal process in such a way that arelatively pure CO2 stream is obtained, next to a stream that contains the H2S diluted with CO2.PSA or pressure swing adsorption is a gas/solid process in which the CO2 (often together withother components) is physically adsorbed at high pressure from a synthesis gas on a solid phasesorbent. After fully loading the sorbent in a batch-wise process, the CO2 is then released by reducingthe pressure. PSA is a very effective way of removing CO2 and other components, thus having theadvantage of producing a very high-purity H2 stream combined with having low energy demand.However, PSA is not suitable for obtaining a high-purity CO2 stream. Typically the CO2 will contain20–30 % by volume of components like H2, CO and CH4, which are sent to a furnace to make use ofthe heating value of these components. Other uses of this stream require significant changes to itshandling, which is an additional barrier to CCUS [4].Lastly, membranes are used for CO2 (and H2S) removal in natural gas production, especially incases where compact equipment is required, such as on gas platforms. The polymeric membranesused have a limited selectivity so the CO2 produced will contain significant amounts of CH4 and H2S ifpresent in the gas. The use of membranes will be discussed later in the natural gas processingsection.Emerging and alternative technologies for CO2 separation include the use of high-temperaturehydrogen separation selective, high-temperature CO2 sorbents, CO2 freezing out or cryogenicseparation and several types of novel solvents [3] [5]. Most of these technologies are less relevant forshort-term application in existing facilities.2.2.2Specifications and impuritiesThe specifications for CO2 purity may be set by considerations on compression, transport andunderground storage. How pure the CO2 needs to be depends on the impurity considered and CO2application. Table 2.4 lists some of the effects limiting the impurity level of CO2 streams.44Table 2.4: Considerations limiting the impurity level in CO2 streams, adapted from [6]ComponentLimited byNitrogenMMP*, Compression costsHydrocarbonsMMPWaterCorrosionOxygenCorrosion, storage reservoir issues (EOR)H 2SHealth and SafetyCOHealth and safetyGlycolOperationsTemperatureMaterial integrity*MMP=Minimum Miscibility Pressure.Currently there are no national or internationally agreed standards for CO2 purity. Specifications havebeen developed by research projects [7] [8] [9]. A possible set of specifications is listed in Table 2.5.Depending on project-specific aspects, CO2 specifications may be adapted.Table 2.5: CO2 specifications [9]Recommended by EBTFAquiferEORCO2> 90 vol% > 90 vol% > 90 vol %H 2O< 500 ppm (v)< 500 ppm (v)< 50 ppm (v)H 2S< 200 ppm (v)<1.5 vol %< 50 ppm (v)NOx< 100 ppm (v)NANASOx< 100 ppm (v)NA<50 ppm (v)HCN< 5 ppm (v)NANACOS< 50 ppm (v)NA< 50 ppm (v)RSH< 50 ppm (v)NA> 90 vol %N2, Ar, H2*< 4 vol % *< 4 vol % *< 4 vol % *CH4< 2 vol %< 4 vol % *< 2 vol %CO *< 0.2 vol %< 4 vol % *< 4 vol % *O2<100 ppm vol< 4 vol % *<100 ppm volNA = Not availableNote: * - x + Σxi < 4 vol % = total content of all non-condensable gases45Next to the quality of the CO2 there needs to be an alignment between the need for amount of CO2 forEOR in terms of flow rate and supply/demand time related characteristics.The maximum CO2 demand for a typical EOR operation will vary with the size and characteristics ofan oil field. Typical CCS-EOR projects store between 0.5 and 9 mega tons (Mt) of CO2/year, with atypical value of around 1.0 Mt/year. EOR projects involving natural CO2 sources may even much belarger, up to 32 Mt/year CO2 [6]. The demand for a CO2 EOR operation is however not constant andwill change over the course of a project. Typically, the need for CO2 increases during the first yearsgoes through a maximum and decreases due to recycling of CO2 that is produced with the oil, seeFigure 2.5.Figure 2.5: Oil production and CO2 demand injected over the course of an EOR project [10]2.2.3Compression and after-treatmentCO2 for EOR is compressed in a multi-stage compressor/CO2 pump combination equipped withinter-cooling and water removal. The resulting CO2 stream is in the super-critical state. A commonlyused suitable pressure for transport is 110 bar.The product cooler cools the CO2 down to a temperature less than 30°C. During compression most ofthe water is already removed. Further water removal can be achieved using glycol drying or with molesieves if a very low water content needs to be met.Typical for EOR operations is a very low limit for oxygen. Small amounts of oxygen can be mitigatedusing a catalytic oxidation unit (CATOX). Large amounts of oxygen may be removed by cryogenicseparation in the compression section. During compression also SOx and NOx may be reduced bywater-phase reaction and by cryogenic distillation.462.3.Description of high purity CO2 sources in industrial processes: chemicalproduction/cement productionIndustry sectors that are interesting for CCUS, because of the magnitude of their CO2 emissions, arelisted in Table 2.6. Though many of these industries have high emissions, those interesting for earlyapplications are much less because of the high dilution of the CO2 stream. Industries that havehigh-purity streams for early opportunities can be found only in the gas and oil industry, in ammoniaindustry, and in biomass conversion.Table 2.6 Current technologies producing high-purity CO2 for early CCUS opportunitiesIndustryTechnology producing high-purity CO2Power production-Gas and oil industryNatural gas processingLNG productionCoal-to-liquidsGas-to-liquidsChemical industryAmmonia/Urea production(Poly)Ethylene productionBiomass conversionBiomass to LiquidsBioethanol production2.3.1.Cement industry-Iron and steel industry-Refineries-Natural gas processingNatural gas typically undergoes processing before it can be fed to the natural gas grid. Depending onfield conditions it may contain 2%–70% of CO2 that needs to be removed to a large degree to meetpipeline specifications. Removal is done by conventional technologies such as amine (MDEA)scrubbing. This gives a high-purity CO2 stream available for CCUS. Processing plants usingmembrane gas separation do not produce a sufficiently pure CO2 stream.In the past decades Chinese natural gas production has grown rapidly. In the Shaanxi Province,natural gas production has a large proven reserve of natural gas (70 billion m3 in west area of47Shanbei and 3.3 billion m3 in Hengshan and Yulin areas [11]. However, there is little information onthe natural gas specifications and treatment required. Detailed case studies involving the gas fieldoperators are needed to assess whether CO2 removal is necessary for the gas produced in thesereserves and whether the CO2 is of sufficient quality and flow rate to be amenable for utilisation orstorage.2.3.2.Coal-to-liquidsCoal-to-liquids (CTL) is a group of technologies in which liquid fuels/base chemicals are producedfrom coal. The main technology currently pursued replaces current common liquids such as gasoline,diesel and naphtha, though also alternative fuels such as gaseous hydrogen and dimethylether arepossible products [12]. Though it is not a very significant industry today, CTL could grow fast in thenear future. The main drivers include prices of oil and security of liquid fuel supply, as for CTL, Chinacan use domestic coal as a source [13]. In spite of now becoming a net importer of coal, China coalreserves are still much larger than oil.Another rationale for coal-to-liquid technology is that liquid fuels contain less CO2 per unit of energy,so emission reductions could be achieved if the CO2 produced from the conversion is storedunderground or used [14]. Indeed CCUS can largely reduce the CO2 emissions from the process itself– however, the liquids produced still contain fossil carbon which is emitted eventually in the form ofCO2. Therefore taking into account the whole fuel chain, not all emissions are reduced by far, evenwhen CCUS is applied at the conversion plant. When applying CCUS with coal-to-liquid technology,the emissions of the fuel chain are comparable to that of conventional liquid fuels [15]. ThereforeCCUS can be considered a technology of increasing the security of supply of liquid fuels whileavoiding a drastic increase in emissions. Financially, high oil prices will stimulate the developmentand implementation of CTL technology. Local governments may stimulate development of CTLprojects using local coal reserves. The National Development and Reform Commission (NDRC),which has to approve all CTL projects, however has so far been reluctant in granting permits [16].The many existing CTL technologies can be classified into two main categories: direct and indirectconversion [17]. Both technologies offer early opportunities for CCUS. Indirect conversion usesgasification with subsequent partial CO2 removal and liquids production from the gas. The othertechnology is indirect coal conversion where the coal is cracked into crude oil products using hightemperature, pressure and a catalyst. The cracking process as well as the required upgrading step ofthe liquid products uses hydrogen that is produced from coal gasification with CO2 removal. Productsare heavy oil, naphtha, diesel and LPG. Around 80% of the CO2 produced in this step can be storedwithout additional capture costs.In China, the Shenhua group is very active in CTL technology development and has constructed aʻCoal Liquifaction Production Lineʼ in the Ordos region, Inner Mongolia [14] [13] [18] [19]. The facility48is built for development of direct coal liquefaction technology. Start-up was in December 2008 and byJuly 2011 over 10,000 cumulative production hours had been achieved. CO2 is produced withmembrane technology – for CCUS, the CO2 concentration will be increased from 87% to above 95%,while capturing 85% of the CO2 emitted. The facility will be able to capture and store 100 kton CO2/year.When a full scale facility is built, it is expected to produce nearly 1 Mton of oil products per year,equivalent to approximately 25,000 barrels of oil per day. The estimated total cost of the first phase ofthe plant is $1.5 billion US. The plant will also produce nearly 3.4 Mton/year of CO2 of which 3Mton/year can be used for storage without additional capture costs.Shenhua company is investigating the possibility of storing this CO2 in the Ordos Basin. For thedevelopment facility aquifer storage is considered but for the full scale facility, different methods ofstorage can be considered, including EOR and Enhanced Gas Recovery (EGR), but also storage insaline aquifers. Alongside this, unminable coal seams may be available for storage combined withenhanced coal bed methane recovery (ECBM).In the Shaanxi Province several initiatives for the development of CTL installations have been taken.In 2007, Dow and Shenhua announced plans for a direct CTL plant at the Yulin chemical plant [20]and Yankuang Group is planning a 5 Mton/year indirect CTL facility in Yulin, with a first phase of 1Mton/year output. However, this project has been suspended following a notice of the NDRC in 2008[21] [16].2.3.3.Biomass conversionThe CO2 emitted from biomass or biomass-based product can be considered climate neutral sincethis is based on short-cyclic carbon, originating from CO2 captured from air relatively shortly beforecombustion during growth of the biomass. Therefore, by using biomass the amount of CO2 in theearth atmosphere is kept constant.An interesting option is combining biomass use with CCS to BE-CCS (bio-energy with CO2 captureand storage). Here, ʻnegative emissionsʼ can be achieved; effectively CO2 is captured from theearthʼs atmosphere by the biomass, captured by the biomass processing, and then storedunderground. Such technologies are interesting if very aggressive emission reductions are required,but these technologies could also be used as early opportunities for CCUS demonstrations [22].Biomass can be used to produce electricity, hydrogen, liquid and gaseous fuels and chemicalproducts. Thermal conversion technologies involve combustion and gasification. Of these, the latter ismost interesting since this results in a synthesis gas stream from which CO2 can be captured at lowcost. These are very similar to coal-to-liquid technologies, only the coal fuel is replaced by biomass49from pre-treated woody sources [23] [22]. Coal and biomass can also be converted together (CBTL),reducing the environmental impact of CTL [24].Fermentation technologies of interest are currently first-generation bio-ethanol production processesusing mainly maize, wheat and cassava. Of the carbon feed that leaves the plant, 67% is as ethanoland the remaining 33% of the carbon becomes available as highly pure CO2 stream, suitable forCCUS. Multiple bio-ethanol plants in the USA currently supply CO2 for underground storage projects.At present, China is the worldʼs third largest producer of bio-ethanol – in 2007 there were fivebio-ethanol plants with a total yield of 1.5 Mton/year. None were in the Shaanxi Province, but one is inthe neighbouring province of Henan. Further growth may at some point be limited by competition withland for food production, and there are serious concerns on that. Development of second generationbiofuel technologies based on non-grain sources may overcome this direct competition with food, butthe issue of land use remains [25] [26].2.3.4.Ammonia/fertiliser productionAmmonia is manufactured from natural gas, oil or coal. In contrast to the rest of the world, wherenatural gas is the main feedstock, in China the main feedstock is coal/cokes (71%) followed bynatural gas (21%) and oil (8%) [27]. Total Chinese emissions amounted to 181 MtCO2 in 2005. Chinaalso has a relatively large amount of small and medium scale ammonia plants; around 82% have aproduction capacity of less than 300,000 tons/year, while CCUS is mainly suitable for large-scaleplants. In these large-scale plants, the feedstock is converted by reforming or gasification into asynthesis gas stream from which all CO2 needs to be removed. If this is done by liquid-phasechemical adsorption, a highly pure CO2 stream is provided which may be used for CCUS. However,some processes make use of PSA, which does not produce a sufficiently pure CO2 stream. Ammoniaproduction is carried as a continuous process out at large scale (typically 10 Mt NH3/year) making itan attractive option for large-scale demonstration of CCUS.In about half of the plants in China the CO2, or part of the CO2, produced is further converted intoingredients for fertilisers such as urea and ammonium bicarbonate. In 2008 this amounted to a totaluse of 18 Mton. Strictly speaking, this is in itself already a form of CCUS, but is often not consideredat such because it is not a climate related activity that is additional to common industrial practice. Inthe case of natural gas as a feedstock, most or all of the CO2 separated from the syngas stream canbe used in urea production. Using coal or oil as a feedstock gives more CO2 production than can beprocessed in the urea plant. For these feedstocks, typically about half of the CO2 separated is used inurea production. Some plants make use of separation using PSA – in these cases the CO2 stream willcontain inert compounds that mean that the stream is not pure enough for CCUS. Also, it couldcontain H2S, which for some storage options such as EOR or other specific storage/usage, may notbe acceptable. Therefore, the viability of CCUS needs to be assessed also on a case-by-case basis50looking at the process feedstock, separation processes and stream purities, and also judging therelative size of ammonia plant relative to the associated urea plant.Taking these factors into account, one study [28] concluded that in 2007 China had six coal-fed andeight oil-fed modern gasifiers that were suitable for downstream CO2 removal for CCUS. In 2004another 10 units were planned.One potential site located in the Shaanxi Province is at the Weihe Chemical Fertiliser Company inWeinan. It concerns a coal-fed ammonia plant with two Texaco coal-fed gasifiers (and one spare)with a fuel input of 273 MWth. The plant produces 948 ktCO2/year, of which 381 ktCO2 is used for ureaproduction, resulting in 567 ktCO2/year being available for CCUS. A process scheme published by[29] shows that the process uses methanol physical adsorption producing separate H2S and CO2streams, making it likely that the CO2 is of sufficient quality for CCUS.In a study by IEA GHG [30] a worldwide survey for early opportunities for CCUS was conducted inwhich here again the Weihe Chemical Fertiliser Plant was listed as a potential candidate for CO2supply, using the CO2 in Hedong-Weibei coal-bearing region for coal-bed-methane. Another CO2source listed in Shaanxi was the Shaanxi Chemical Industry group fertiliser plant. This plant produces677kt CO2/year and operates 8000 hrs/year. CO2 could potentially be used for two applications. Thefirst, selected by the authors, was for coal-bed-methane in the Eastern Piedmont of Tanghai Mts. coalbasin at a distance of 50km. This area is one of the nine coal bed methane blocks approved forexploitation through foreign co-operation by the Chinese government. An economic evaluationindicated net sequestration costs of 13 €/tonCO2 based on 32 €/tCO2 for CO2 and coal-bed-methanecosts, and 19 €/tCO2 of methane revenues. The same study concluded that EOR gives a net profit asa result for typically lower cost and higher revenues. Another option for storage of Shaanxi ChemicalIndustry group fertiliser plant was studied, but in far less detail. This option was EOR in the tertiaryLacustrine of the Bohaiwan Basin. However, no detailed study was made here.2.3.5.Ethylene productionEthylene is one of the most important building blocks in the chemical industry, with a yearlyproduction capacity in 2012 of 13 Mtons/year. The main way of producing polyethylene is by crackingof oil fractions to yield a product with ethylene, CO2, methane and other hydrocarbons. From thisproduct stream CO2 is removed using a liquid phase chemical absorption using a Benson tower.From the resulting stream ethylene is recovered and the other products are either recovered orrecycled. The resulting CO2 stream is of high purity and suitable for CCUS [31]. Though relativeamounts of CO2 produced are rather high (1-1.6 tonCO2/tonethylene), CO2 emissions from most existingplants are rather small, typically 150-250 kt/year. This means that ethylene plants are restricted tosmall projects with relative higher costs unless these can be combined with other CO2 sources [5].51An alternative way of producing ethylene of interest in China is the new MTO process (methanol toolefins), which uses coal rather than oil fractions as a feedstock. Here, first methanol is producedwhich is then converted into ethylene. In the methanol production step CO2 can be removed.Chinaʼs ethylene production capacity is growing extremely fast. Production is expected to grow by44% (5.85 Mt/year) to 19.08 Mt/year as of 2013. After that, growth is expected to slow down undermacro control of the government [32].In Shaanxi Province, construction of a large MTO plant is planned in Yulin to produce 500,000tons/year of ethylene. The project by Shenhua Group/Dow Chemical is expected to commenceoperations in 2016 [32]. China Coal Shaanxi Yulin Energy & Chemical Co. Ltd has also announcedthat it is to build a MTO plant with a capacity of 300,000 tons/year of ethylene with start-up expectedin 2013. PetroChina and the government of Shaanxi have announced a 1 Mton/year ethylene plant inYaʼan [33]. Next to the announced projects, Shaanxi has ethylene plants but records on the amountand size could not been obtained.2.3.6.RefineriesRefineries have considerable CO2 emissions; the majority are in low-concentration flue gas orprocess steams, which are not suitable for early-opportunity CCUS. The only emissions that possiblyare suitable for CCUS originate from hydrogen manufacturing, amounting to 5–20% of the refineryemissions. Hydrogen is manufactured by reforming of natural gas or by coal gasification. Traditionallythe CO2 was removed from the resulting flue gas stream by chemical absorption, providing ahigh-purity CO2 stream suitable for CCUS. However, in the past decades there has been a tendencyto use PSA instead, which has lower operational cost and produces a very high-purity hydrogenstream, but produces a far less pure CO2 stream. This stream contains a considerable amount ofcombustibles, with a considerable heating value, which makes incompatible with using this for CCUS.The feasibility of CCUS at refineries has to be assessed on a case-by-case basis.Figure 2.6: Geographical distribution of Chinese refineries [2]52Chinese refineries are dominated by a small number of companies, with CNPC and Sinopec being byfar the largest. The past years have seen increasing foreign involvement. Refinery capacity hasgrown quickly, 270 Mtons/day in 2005 to 342 Mtons/day in 2008 and a projected 440 Mtons/day in2011 [35].Shaanxi Province is home to five refineries, as shown in Figure 2.6. The Yulin refinery, operated byYanchang petroleum, will increase its capacity to three billion tons/year under the Eleventh Five-Yearplan. There are no data on what type of technology is used for hydrogen manufacturing in theShaanxi refineries, making it difficult to assess the suitability for CCUS.According to the classification criteria for CO2 emissions sources of different concentration and theactual concentration of CO2 emission sources in various industries, it can be seen that: emissionssources of high CO2 concentration are from chemical plants producing methanol, ethanol,dimethylether, ethylene oxide, ammonia, hydrogen; emissions sources of moderate CO2concentration are from cement plant, steel mills, etc.; while emissions sources of low CO2concentration are for the thermal power, ethylene plant, refining plant and other enterprises.2.3.7.Methanol, ethanol and dimethylether productionFigure 2.7. Process for methanol, ethanol and dimethylether productionMethanol, ethanol, dimethylether are all important intermediates of chemical raw materials, whilemethanol and dimethylether can also be main alternatives to liquid fuels. A schematic of thetraditional system of methanol/ethanol/dimethylether production is shown in Figure 2.7. Generallyspeaking, the CO/ H2 (molar ratio of CO to H2) in the feed gas cannot meet the CO/H2 (molar ratio)requirements for chemical productsʼ synthesis before entering the Chemical Synthesis Unit. Thewater gas shift reaction are needed to make the H2/CO (molar ratio of CO to H2) in the feed gas meetchemical equivalent ratio requirements. In order to prevent the catalyst for chemical synthesisreaction from poisoning, the raw gas needs treatment by an acid gas purification unit for removal ofsulphide, as well as to prevent the large amount of CO2 as inert gas adversely affecting the chemicalsynthesis process, and usually CO2 will be removed in this acid gas purification unit. Aftertransformation and the acid gas removal, the fresh gas flow into the methanol synthesis and53distillation unit, thus producing chemical products. CO2 concentration in the traditional chemicalproduction processes is often as high as 99% and above, while the impurities are relatively low, it istherefore very suitable for the EOR and geological storage.2.3.8.Ethylene epoxide productionEthylene oxide is a chemical intermediate of organic ethylene derivatives, which can undergoring-opening reactions easily with water, alcohols, ammonia, amines, phenols, hydrogen halide, acidand merchantman. A large number of chemical products from these reactions can be applied in theproduction of intermediates and fine chemical products, which become indispensable chemical rawmaterials in a range of industrial products all over the world.At present, the most widely used method to produce ethylene oxide is by oxidising ethylene in pureoxygen – ethylene (C2H4) and oxygen react to generate ethylene oxide (C2H4O). During the ethyleneoxide production process, a fraction of the ethylene will be oxidised to CO2 and H2O. Since there is noother gas for dilution, CO2 concentration is very high in the gas emitted from the ethylene oxideproduction process, that is, close to 100%. 0.46 tons of CO2 will be produced for each ton of ethyleneoxide.Figure 2.8: Process of producing ethylene oxide by oxidizing ethylene in pure oxygen2.3.9.Hydrogen production processHydrogen for use as a raw material for clean and efficient energy and oil production has been paidincreasing attention. The traditional methods of hydrogen production are mainly methane reforming,water electrolysis, coal gasification, partial oxidation of heavy oil and using methanol to producehydrogen.The reaction for hydrogen production by methane reforming is:!CH4 +H2O = CO + 3H2(1)54CO, formed from the process above reacts with water vapour (shift reaction between water andgas),to produce more hydrogen. The reaction is as follows:CO + H2O = H2 + CO2(2)The gas produced by the shift reaction needs the removal of CO2, and then we can get the pure H2.The main reactions for producing H2 by partial oxidation of methane are:CH4 + 0.5O2 = 2H2 + COCO+H2O= CO2+H2(3)(4)In this process, CO and H2 will be formed after a partial oxidation reaction between methane andoxygen, and CO will go further into the shift reaction with water gas to produce CO2 and H2. After CO2removal, pure H2 is obtained.Hydrogen production by gasification consists of three main processes: gasification (reaction 5), thewater gas shift reaction (reaction 6), and hydrogenʼs purification and compression. The reaction is asfollows:C+ H2O= CO+ H2CO+ H2O= CO2+ H2(5)(6)In this process, coal is gasified into CO and H2. Then, CO reacts with H2O to produce CO2 and H2.Finally, pure H2 is obtained after removal of CO2.The hydrogen production process requires CO2 to be isolated individually, so CO2 emissionsconcentration is high, almost free of any impurities and close to 100%. It is estimated that for everyton of hydrogen produced, CO2 emissions are about 6.5 tons.Figure 2.9: Hydrogen production process.552.3.10. Calcium carbide production processCaC2 is commonly known as calcium carbide. The industrial product is grey, brown or black, andpurple with high proportion of calcium carbide. The newly created section is shiny, grey, and absorbswater in the air. It can conduct electricity and the higher the purity, the better conductivity. Theaddition of water to CaC2 will cause reaction to produce acetylene and calcium hydroxide. Reactionwith nitrogen will yield calcium cyanamide.Calcium carbide is one of the basic raw materials for the synthetic organic chemical industry, and isthe key chemical raw materials for acetylene. Using calcium carbide to produce acetylene is widelyused in metal welding and cutting.Production methods are the aerobic thermal method and electric thermal method. The electricthermal method is used to produce calcium carbide and uses quicklime and carbon-containing rawmaterials (coke, anthracite or petroleum coke) in the calcium carbide furnace, to generate under theelectronic arc of high temperature a melting reaction. The production process is shown in Figure 2.10.The main production process is: the mixture of feed materials at the top of the electric furnace topentrance or a pipe is fed into the furnace, then in the open or closed electric furnace it is heated toabout 2,000ºC calcium carbide is generated according to the following formula reaction:CaO + 3 C → CaC2 + CO(7).Molten calcium carbide is removed from the bottom and, after cooling and then crushing, a finishedproduct is packaged. Carbon monoxide generated in the reaction is discharged in different waysaccording to the type of calcium carbide furnace: in an open furnace, carbon monoxide burns on thematerial surface and combustion continues as the dust scatters outside the furnace; in thesemi-closed furnace, part of the carbon monoxide is drawn out from a suction hood on the furnaceand the remaining part is still on the material surface; in a sealed furnace, all the carbon monoxide isdrawn out.Figure 2.10: Calciumcarbide engineeringprocess flow diagram56Using the sealed furnace, the exhaust gas composition is: CO 75–90%; H2 10%; CH4 2–4%; CO22–5%; and O2 0.2–0.6%; N2 1–2%. Therefore, in terms of exhaust emissions from the calciumcarbide production process, the subsequent processing is needed (such as water coal gasconversion) to get a higher concentration of CO2; the subsequent processing is not complicated, butrelatively simple.2.3.11. Cement production processCement is a building material with good performance. Cement is made of cement clinker viacalcination. The cement clinker is mainly composed of the powdery raw materials, such as limestone,clay and iron by certain percentages. Raw materials are under continuous heating within the furnaceto make it through a series of physical and chemical changes to become clinker. The cementmanufacturing process can be divided into the following phases: exploitation of raw materials, rawmaterial preparation, clinker calcination, milling, and shipping.CO2 is produced from the clinker calcinations phase. The clinker is heated in cement kilns. There aretwo main categories of cement kiln. One is positioned horizontally but with a slight slope and it can beoperated with rotary movement, also known as the rotary kiln; the other is in the vertical position withrotation, known as the shaft kiln. At present, most production of cement is done with the rotary kiln,but the proportion of shaft kiln usage is also very big in China.CO2 produced during cement production comes mainly from two processes: the decomposition of theraw materials such as limestone and the fuel combustion. Limestone and other raw materials andfuels (such as coal, etc.) go into the rotary kiln, air is provided, then fuel combustion releasesconsiderable heat. The limestone and other raw materials absorbing heat will be calcined into CaOand CO2. The offgas gathered from the rotary kiln contains about 25% CO2 after heat recovery, dustremoval and other measures. CO2 emissions from cement production are somewhat different,depending on the way of the raw materials are fed. Generally speaking, the CO2 emissions are0.87–1.11 t CO2 / t cement.2.3.12. Steel productionIn general, the steel plant CO2 emissions are from the coking process, the blast furnace iron makingprocess, the furnace and Basic Oxygen Furnace (BOF) iron making process. The coking process isthe process of making coal into coke. CO2 emission in the process is from the coke oven gas (coalvolatile releasing) combustion. Part of the coke oven gas produced by the coking process iscombusted to produce a high-temperature flue gas in order to meet the energy needs of the coking57process itself. The rest of the gas is either burned and is emitted or is recycled. Coke oven gas ismainly a hydrogen-rich gas; the CO2 concentration is low – usually less than 10%. CO concentrationis also low and usually less than 15%.The blast furnace iron making process is another source of CO2 emissions. In the blast furnace ironmaking process, the coke will generate CO2 gas when it reacts with oxygen in the air and iron ore.Blast furnace gas contains about 20–25% CO2. Large-scale steel mills generally recycle blast furnacegas, and in the small steel plant, blast furnace gas will be emitted after combustion.CO2 emissions in the billet heating process are from the combustion of the fuel. The heat used forbillet heating is recovered from coke oven gas, blast furnace gas and other supplementary fuelburning. Therefore, the CO2 concentration in billet heating process emissions is not high, generallyless than 15%.A converter is one of the main pieces of steelmaking equipment. To get the right carbon proportion inthe steel that meets the product requirements, a small amount of carbon in the molten iron andoxygen (provided by the oxygen lance) is reacted in the converter to generate CO2. But this portion ofthe gas is difficult to recycle. Overall, to make a ton of iron and steel, the CO2 emissions are about 1.3tons.2.4. SummaryAccording to the classification criteria for CO2 emissions sources of different concentration and theactual concentration of CO2 emission sources from various industries, it can be seen that: emissionssources of high CO2 concentration are from chemical plants producing methanol, ethanol,dimethylether, ethylene oxide, ammonia, hydrogen; emissions sources of moderate CO2concentration are from cement plant, steel mills, etc.; while emissions sources of low CO2concentration are for the thermal power, ethylene plant, refining plant and other enterprises.From this analysis, the factors and scales of CO2 emissions for different industrial processes aredifferent. CO2 emission factors of typical industrial processes is shown in Table 2.7 [36].58Table 2.7: CO2 emission factors in different industries.CementEmissionfactorEmissionfactorEmissionfactorPower sectorDry-clinkerDry-cementWet-clinkerCoal-firedOil-firedGas-firedbasedbasedbased0.8820.8671.1111.00.50.4Mg/tMg/tMg/tkg/kWhkg/kWhkg/kWhOil refineryEpoxy ethaneAmmonia0.2192.5413.800Mg/tMg/tMg/tEthyleneHydrogen productionSteel0.4586.151.27Mg/tMg/tMg/t3. High-purity CO2 sources in Shaanxi Province3.1 General description of CO2 emissions in Shaanxi ProvinceShaanxi Province has abundant coal resources. This western province is less developed but rich inenergy resources and its energy structure is dominated by coal. The chemical industry is still one ofthe most important industries to promote economic growth.Although the energy saving and emission reduction task is accomplished during ʻEleventh Five-Yearʼperiod (2006-2010), the output values of six energy-intensive industries, which are power, chemical,petrochemical, nonferrous metals, metallurgy and building materials, industriesʼ account for morethan half of whole industrial outputs in Shaanxi. Pollution and GHG reduction in these industries hasbecome increasingly important, but the conflict is that the fundamental change to this kind of industrystructure is difficult in the short term.Shaanxi Province's carbon dioxide emissions are mainly derived from fossil fuel consumption. In2005, total emissions of CO2 of Shaanxi Provinceʼs were about 138 million tons, accounting for 2.4%of the national emissions. The mainCO2 emissions of Shaanxi Province are from its power plants,accounting for about 70% of the total emissions, followed by the cement, ethylene and syntheticammonia industries, each accounting for about 10%. Hydrogen production CO2 emissions accountfor about 0.7%.According to preliminary estimates, Shaanxi carbon dioxide emissions from the use of fossil fuelsincreased from 138 million tons in 2005 to 209 million tons in 2009 and it will soar to 450 million tons59in 2015. Because the energy consumption of coal in the chemical industry will still be high, CO2emissions in Shaanxi will become more prominent with the development of large coal chemicalprojects in the next few years. In 2015, carbon dioxide emissions are expected to reach 180 milliontons only from coal use in the chemical industry.Since 2011, carbon emission reduction has been listed as the binding target for energy saving.Shaanxiʼs national economic and social development outline for the Twelfth Five-Year guidelines,proposes that the amount of energy consumption will decrease substantially and carbon dioxideemissions will be decreased by 15%. Shaanxi will be a national low-carbon demonstration province.Low carbon development, low carbon economy and low carbon life is expected to be the main themeof Shaanxi's economic development and social life during the Twelfth Five-Years guideline period.3.3.Classification of industrial sources according to CO2 emissionsThe capture of CO2 is an important part in the whole CCS project. It is estimated that the capture costaccounts for 70% to 80% of the whole CCS chain cost. The classification of the CO2 industrialsources according to some certain principles is beneficial to the search for CO2 sources suitable forearly CCS demonstration that have a low capture costs.It is well known that the cost, energy consumption/penalty and the scale of a CO2 demonstrationproject influence its effectiveness. Industrial enterprises will be confident in CCS if the capture costand energy penalty of the demonstration project are low and acceptable. The application of this typeof low cost project can play the important role and improve the development of CCS technologies.Meanwhile, good economic performance and low energy penalties will bring more policy support forCCS. On the contrary, if the demonstration project has bad economic performance and a high energypenalty, it will have a negative impression, which will make it more difficult to develop and get supportfrom policy makers.The scale and purity of the CO2 sources, impurity levels and the difficulty of the pre-treatmentmethods determine the cost and energy penalty of CO2 capture in the demonstration project. Asanalysed in this report, low purity CO2 sources will lead to high-energy penalty and capture costs. It iseasy to understand that high impurity content will result in complex technology, high cost andhigh-energy penalty in the separation process. If the sulphur content of the CO2 source is high, adesulphurisation process is necessary to prevent corrosion. Free water in the flue should also beremoved before transportation. Otherwise, corrosion will be accelerated in the presence of acidiccomponents and free water. Because of the scale effect, large scales will result in small specificinvestments and then low capture costs of CO2. Meanwhile, the scale of CO2 sources will influencethe effectiveness of a CCS demonstration project. If CCS can be demonstrated, the scale of CCSshould not be very small. The power industry in particular will experience the CO2 emission rates of aconventional power plant reach 400t/hr. If the scale of CO2 capture is too small, no obvious60demonstration effects will be achieved. Furthermore, the scale of CO2 source should match with thesink in terms of the amount of CO2.Thus, in this report, we set a series of criteria to classify the industrial CO2 sources aiming at selectingsources suitable for a CCS demonstration.1) The CO2 emission scale2) The CO2 purity3) The impurities4) The ownership of the CO2 sources61Table 3.1 The classification of C CO2 sources.Plant type ofCO2 purityPurity classCO2 sourcePower plantEmissionDesulphurisation orDehydration orscale, Mt/ynotnotDifficulty level of pre-treatmentCoal fired13%~15%Low7.5~60YesYesHardOil fired12%~18%Low3.75~30YesYesHardGas fired3%~8%Low3~24YesHard99%High0.25~2.5NoNoEasy15%-25%Low-medium2 ~10YesYesHardCement plant20%-25%Low0.1~2YesYesHardRefinery plant8%Low0.1~0.6YesYesHardEthanol/Methanol/Dimethyl etherplantIron and SteelPlantCementbuildingmaterialsfactoryRefining62chemical plant8%LowHardEthylene plant12%Low0.25~2.5NoNoHardEthylene100%High0.2~1YesNoEasy99%High0.2~0.6NoNoEasy100%High0.38~3.8NoNoEasyoxide plantHydrogenplantChemicalAmmoniaFertiliser Plantsynthesisplant633.4.Identification of the main sources of high purity CO2 emissions in ShaanxiprovinceHigh purity CO2 sources are mainly in the chemical industries, especially the coal chemicalindustries. Coal is the most important energy resource of China, because it is not only a fuel,but also chemical material. In recent years, the international oil price has been varyingdramatically, leading to the increasing demand for alternative chemical materials andalternative energy sources. Clean coal utilisation has been one of the top emerging energyindustries. The future coal chemical industry will be a major concern with so many listedcompaniesʼ intervention in this field.The outputs of main coal chemical products have been growing continuously and rapidly inrecent years. Methanol production of China was 11.3 million tons in 2009, and 8.1 milliontons in the first half of this year, with a year-on-year growth rate of 53.3%. The syntheticammonia production of China was 51.4 million tons in 2009, and 26.5 million tons in the firsthalf of this year, with a year-on-year growth rate of 4.6%. Furthermore, there are a largenumber of projects under construction or extension and coal chemical industry projects underplan.The new emerging coal chemical industries, which use clean coal gasification technologiesas the leading operation, have influenced the development of coal chemical industries due tothe advantages of high energy efficiency, full utilisation of resources and low greenhouse gasemissions. According to expertsʼ estimates, the energy consumption per unit of the emergingcoal chemical products is more than 20% lower than the conventional coal chemicalproducts.In Shaanxi Province, high purity CO2 sources mainly include methanol plants, dimethyl etherplants, hydrogen plants, ammonia synthesis plants and calcium carbide plants. As aprovince abundant in resources and energy sources, coal chemical industries are importantparts of its industry structure.Northern Shaanxi region is a rare mineral-rich area of the world, abundant in coal, oil, naturalgas and rock salt. The proven coal reserves ranks third in China and the remainingrecoverable coal reserves are estimated at 16.85 million tons, 14.46 million tons of which issuitable for coal chemical industry. Most of the coal is of high quality and a suitable rawmaterial for the power and chemical industries with low dust, low sulphur, low phosphorusand high calorific value. Therefore, Northern Shaanxi region is considered as one of theenergy continuous places and energy chemical industry bases.Shaanxi Province lies in Central China, which has advantages in terms of location. At thesame time, it has many research institutes where a large number of technical personnel64skilled in manufacture and management have been cultivated. Many advanced technologiesare mastered, such as the leading domestic coal liquefaction technology. The world's first tenthousand ton DMTO (dimethyl ether/methanol-to-olefin) system was recently successfullyexperimentally tested in Shaanxi, which was identified as the international leadingtechnology in the national science and technology achievements appraisal. Several Top 500global corporations and domestic famous enterprises including Shenhua and ChangqingOilfield companies have been attracted and settled in Shaanxi. A group of projects havestarted successively or been actively prepared, such as a coal-electricity integrated complex,coal-to-methanol, methanol-to-olefin, acetic acid, coal liquefaction and coal-salt chemicalindustries.From the planning and the current state of development, we can see that the developmentprospect of the coal chemical industries is promising in Shaanxi. However, the developmentof coal chemical industries is limited by local resources and environmental protection, suchas the protection of water resources. The coal reserves are concentrated in the NorthernShaanxi region, especially Yulin, which is an arid area. The water demand in the coalchemical industries is huge. It was estimated that when the planned projects were completedin 2010, the local water resource load capacity would reach saturation. The government hasbeen attaching importance to the protection of water and other environmental resources, andhas taken some appropriate actions. A reasonable integrated plan and a series of measuresfor environmental protection can promote the development of the coal chemical industries inShaanxi.The number of main methanol plants in Shaanxi is listed in Appendix I. Most of these plantsare located in Yulin region. The accumulative total methanol productions are 8.5 mega tons,and accumulative total CO2 emissions are 14.4 mega tons. Relying on abundant coal andnatural gas resources, Shaanxi became one of the heavy chemical industry bases of China.The methanol industry has become one of the prioritised industries in Shaanxi and itsproduction scale has been growing rapidly in recent years, because methanol is an importantchemical product. There are many methanol projects in planning or under construction, suchas Shenmu Chemical Industry Co. Ltd. and Yulin energy and chemical plants. As an idealalternative fuel, there is a highly promising future for the methanol industry with thedevelopment of alternative fuel technology. Dimethyl ether is another important type ofchemical material and promising alternative liquid fuel, and the dimethyl ether industry issupported by Shaanxi Province as one development direction of the coal chemical industry.The number of main dimethyl ether plants in Shaanxi is listed in Appendix III. Most of theseplants are located in Yulin region as well. The accumulative total dimethyl ether productionsare 2.9 mega tons, and accumulative total CO2 emissions are 7.3 mega tons.Hydrogen production technology is a key development direction of clean energy, especiallyfor provinces abundant in coal, such as Shaanxi. The hydrogen industry in Shaanxi is at an65early stage, and there is only one hydrogen plant in the region, but there will be a brightfuture for hydrogen production from coal with an increasing requirement for environmentalprotection. The only hydrogen plant in Shaanxi (Appendix IV) is located in Yulin region. Theaccumulative total hydrogen production is 90000 Nm3/h, and accumulative total CO2emissions are 0.44 mega tons. The ammonia synthesis industry is one of the traditional coalchemical industries in Shaanxi. The annual total production scale is more than 50 million tons,and has been increasing rapidly in recent years. The number of main ammonia synthesisplants in Shaanxi is around 14 (Appendix V), distributing in all regions of Shaanxi. Theaccumulative main synthesis ammonia productions are 5.2 mega tons, and accumulativetotal CO2 emissions are 19.5 mega tons. As an important raw material for acetyleneproduction, calcium carbide production has a significant scale. The number of main calciumcarbide plants in Shaanxi is around 21 (Appendix IV). The accumulative total calcium carbideproduction is around 0.42 mega tons, and the accumulative CO2 emissions are also large.3.4.Detailed description of the main sources of high purity CO2 emissions inShaanxi Province.The above discussion has identified several potential CO2 sources in or near ShaanxiProvince that may be suitable for CCUS against very low costs. These sources are in theCTL, ammonia, biomass conversion and ethylene production sectors.According to the survey of CO2 sources in non-power industries of Shaanxi, this section willgive a detailed introduction of some typical and representative high purity CO2 sources,including emission scale, purity, factory type and so on, to provide some references for theselection of CO2 sources in the CCUS demonstration project.3.4.1.Ammonia synthesis plantsShaanxi Heimao Coaking Stock. Co. Ltd.: located in Hancheng City, is a recyclingeconomy enterprise involving sectors of coke, power generation, chemical industry andconstruction material. The company set up six projects, one of which is a co-production ofammonia with methanol project with an output of 100,000 t/y (this project belongs to itssubsidiary company Heimao Energy Utilization Co. Ltd.). Its synthesis of ammoniaproduction is about 90,000 t/y, and the by-product methanol production is about 10,000 t/y.About 380,000 tons of CO2 with the purity of 99% is generated in this plant every year.Shaanxi Qinling Fertilizer Company: located in Baoji city, has synthesis ammoniaproduction capacity of 160,000 t/y. About 600,000 t/y of CO2 with a purity of 99% isgenerated in this plant.66Shaanxi Weihe Coal Chemical Industry Group Co. Ltd.: located in Weinan city, hasthe synthesis ammonia production of 300,000 t/y and the urea production of 520,000 t/y withbituminous coal as a raw material. About 1,140,000 t/y of CO2 with a purity of 99% isgenerated in this plant.Shaanxi Chenghua Co. Ltd.: located in Chenggu county, Hanzhong city, is the onlyenterprise which has urea production and waste heat driven power generation projects inSouthern Shaanxi Province. It has synthesis ammonia production of 120,000 t/y, ureaproduction of 140,000 t/y and ammonium bicarbonate production of 60,000 t/y. About450,000 t/y of CO2 with a purity of 99% is generated in this plant.Shaanxi Coal and Chemcial Industry Group Co. Ltd.: located in the fine chemicalpark of Hua county, Weinan city, has synthesis ammonia output of 260,000 t/y, the ureaoutput of 320,000 t/y, the ammonium phosphate output of 260,000 t/y and the three elementscompound fertiliser output of 100,000 t/y. In addition, the technical improvement project forenergy conservation and emission reduction contracted by Shaanxi Coal and ChemicalIndustry Group Co. Ltd. has started total construction in October 2008, and was put intooperation in November, 2011. This project has synthesis ammonia output of 300,000 t/y andurea output of 940,000 t/y. About 2,280,000 t/y of CO2 with a purity of 99% is generated inthis plant.Yanchang Petroleum Xinghua Large Chemical Industry Project: owned by ShaanxiYanchang Petroleum (Group) Co. Ltd. and located in Xingping City, was put into operation on28 December 2011. It includes synthesis ammonia output of 300,000 t/y, methanol output of300,000 t/y, soda output of 300,000 t/y and ammonium chloride output of 324,000 t/y. This isan integrated system with ammonia, alcohol and alkali outputs. In the system, the wastegases of CO and CO2 in the ammonia synthesis process can be used for methanolsynthesis, and the purge gas in the methanol synthesis process can be used for ammoniasynthesis. This can reduce the greenhouse gas emissions and there are no sulphurouspollutants discharged in the process. About 1,140,000 t/y of CO2 with a purity of 99% isgenerated in this plant.Shaanxi Fangyuan Chemical Industry (Group) Co., Ltd.: located in Yuyang district,Yulin City, operates a synthetic ammonia production line by adopting the water coal slurrygasification technology, KELLOGG natural gas steam conversion technology and residualvaporisation technology. Synthetic ammonia output is 300,000 t/y, among which 180,000 t/yis used for urea production and the remaining 120,000 t/y together with the by-product areused for soda production. About 1,140,000 t/y of CO2 with a purity of 99% is generated at thisplant.673.4.2.Methanol plantsThe 1,800,000 t/y methanol project in Huangling County, Yanʼan City has beenapproved and will be co-constructed by the People's Government of Yanan city, ShaanxiYanchang Petroleum (Group) Co. Ltd. and the Hong Kong and China Gas Company Ltd.This project is expected to be constructed in 2013. With coal, gas and oil as raw materials,this project has a methanol output of 1,800,000 t/y, MTO (methanol-to-olefin) output of600,000 t/y, light oil reforming capacity of 400,000 t/y, polyethylene output of 450,000 t/y,polypropylene output of 250,000 t/y, butanol-octanol output of 200,000 t/y, and ethylenepropylene rubber output of 60,000 t/y. About 4,500,000 t/y of CO2 with a purity of 99% isgenerated in this plant.The 1,800,000 t/y methanol production and deep processing project in Fu County,Yanʼan City, was constructed and is operated by Yanchang Petroleum Yanʼan EnergyChemical Industry Co. Ltd., which is one of the subsidiary enterprises of Shaanxi YanchangPetroleum (Group) Co. Ltd. About 6,800,000 t/y of CO2 with a purity of 99% is generated inthis plant.The 1,800,000 t/y coal to methanol project in Jingbian County, Yanʼan City is in thecharge of Shaanxi Yanchang China Coal Yulin Energy Chemical Industry Co. Ltd., a largescale chemical enterprise making comprehensive utilisation of coal, gas, oil and salt, whichwas jointly established by Shaanxi Yanchang Petroleum (Group) Co. Ltd. and China NationalCoal Group Co. Ltd. It is responsible for the construction of the start-up projects in theJingbian industrial zone of the comprehensive utilisation of energy engineering and chemicalindustries, which is 10 km away from the northeast of Jingbian County. This industrial zonehas total methanol output of 1,800,000 t/y. This project is planned to start in 2014, and theexpected CO2 emission is 6,800,000 t/y with 99% purity.The 1,700,000 t/y methanol project in Yuheng industrial zone of Yulin City isundertaken by Shaanxi Yanchang Petroleum Yulin Coal Chemical Company, a wholly ownedsubsidiary of Shaanxi Yanchang Petroleum (Group) Co. Ltd. The company owned the aceticacid project with output of 1,000,000 t/y and is the key project of its kind in Shaanxi. The firststage project has methanol output of 200,000 t/y and acetic acid output of 200,000 t/y. Thesecond stage has methanol output of 1,500,000 t/y, acetic acid output of 400,000 t/y, vinylacetate output of 300,000 t/y, acetic anhydride output of 200,000 t/y and acetate fibre outputof 100,000 t/y. The CO2 emissions are expected to be 6,400,000 t/y with purity of 99%.The 600,000 t/y methanol project in Weicheng County, Xianyang City is undertaken byShaanxi Xianyang Chemical Industry Co. Ltd., a wholly owned subsidiary of ShaanxiInvestment Group Co. Ltd. It has a coal to methanol output of 600,000 t/y and a powergeneration capability of 25 MW. The CO2 emissions are about 5,700,000 t/y.68The gas to methanol/dimethyl ether project in Yanchang County, Yanʼan City belongsto Shaanxi Yanchang Petroleum (Group) Co. Ltd. and the Peopleʼs Government of YanʼanCity. The methanol output of the first stage is 600,000 t/y. The second stage is designed toproduce dimethyl ether directly from syngas, with the output of 700,000 t/y and is in thephase of inviting investment. The CO2 emissions are expected to be 3,250,000 t/y after theproject is established.The coal to methanol project of Shaanxi Shenmu Chemical Industry Co. is located inthe industrial development zone of Shenmu County, Yulin City. The designed methanoloutput is 600,000 t/y. The first stage with output of 200,000 t/y has already been put intoproduction. The CO2 emissions are expected to be 1,500,000 t/y.The coal to methanol project of Yanzhou Coal Yulin Energy Chemical Industry islocated in the Caojiatan Town, Yuyang County, Shaanxi Province. The designed methanoloutput is 2,300,000 t/y, and the present output is 600,000 t/y during the first stage. The CO2emissions are 7,250,000 t/y.The coal to methanol project in the economic development zone of Yulin City has amethanol output of 600,000 t/y and the CO2 emissions are 1,500,000 t/y.The methanol plant of Changqing Oilfield, located in Jingbian County, Yulin Citybelongs to Changqing Branch of China National Petroleum Corporation. The methanol outputis about 100,000 t/y. The CO2 emissions are about 250,000 t/y with purity of 99%.3.4.3.Hydrogen plantThe 90,000 Nm3/h hydrogen project of Shaanxi Shenmutianyuan Chemical IndustryCo. Ltd., located in Shenmu County, Yulin City, produces hydrogen from coal. The CO2emissions are about 400,000 t/y with purity of 99% [38].3.4.4.Ethanol plantShaanxi Baoji Alcohol Plant, located in Baoji City, is a large scale light industryenterprise which produces 350,000 tons of beer and 30,000 tons of alcohol every year. Itsmain products include superior alcohol and edible alcohol with the brand ofʻTangqingchencangʼ, and various types of beer with the brand of ʻBaojiʼ. The CO2 emissionamount is about 30,000 t/y.3.4.5.Dimethyl ether plantsThe 1,000,000 t/y dimethyl ether project in Pucheng County was constructed byShaanxi Coal and Chemical Industry Group Co. Ltd. It adopts advanced pressurisedgasification technology for coal-water slurry with coal as the raw material. The outputs ofmethanol and dimethyl ether are about 1,500,000 and 1,000,000 t/y, respectively. Theexpected annual CO2 emissions are about 6,000,000 tons.69The 1,000,000 t/y dimethyl ether project in Xianyang City was in the charge of ShaanxiCarbonification Energy Co. Ltd. The dimethyl ether outputs of the first and second stagesare about 400,000 and 600,000 t/y, respectively. The construction will be completed in 2013.The expected CO2 emissions amount is about 2,500,000 t/y.The 1,000,000 t/y dimethyl ether project in Yulin City was in the charge of Shenfueconomic development zone and is located in the Jinjie industrial park in ShenmuCounty. The expected annual CO2 emissions are about 2,500,000 tons.Jointly, these sources add up to 62.5 Mt CO2 until 2016.3.5. Identification of the sources suitable for a demonstration project3.5.1. Definition of criteria for selecting sources for a demonstration projectThe characteristics of CO2 sources directly affect the cost and energy penalty of CO2 capture,and exert a great influence on the cost and energy penalty of the whole demonstrationproject. It is of key importance to select suitable CO2 sources for the demonstration project.The most important factors that influence the demonstration project are the technicalfeasibility, cost and energy penalty, so the following two key principles must be taken intoconsideration when selecting CO2 sources.1. Technical feasibility and maturity principle. It means that the capture technologyis achievable in engineering, and the mature technology should be given priority to reducethe risk and uncertainty of the project.2. The energy penalty and cost minimisation principle. To get an effectivedemonstration, it is necessary to minimise the cost budget and energy penalty of CCS. Forthe EOR technology, the benefits brought by the increase of oil exploitation should not beless than the cost of capture and transportation. According to the survey from petroleumenterprise including PetroChina, the acceptable price of CO2 for petroleum enterprise is 20$/t,so these enterprises can only make balance or profit when the cost of capture andtransportation is less than 20$/t.The following points are important in the energy penalty and cost minimisation principle:•Whether the scale of source can meet the project requirement should be considered firstwhen selecting CO2 sources for demonstration projects. If the scale is too small, it isdifficult to achieve the required demonstration effect and the unit cost and energy penaltywill be too high for the CO2 capture and transportation because of the scale effect (thelarger the scale, the lower the unit cost). Using the pipeline transportation as an example,the minimum economical transportation amount is 1.8 Mt/y, so it is unlikely to take asmall scale CO2 source as the single source in the demonstration project.70•Secondly, it is better to select sources with CO2 purity higher than 95% for the reductionof the energy penalty and the cost of the demonstration project. The sulphur and watercontents are relatively low in the emission gas with high CO2 purity. Generally, in case ofserious corrosion, the composition requirements for pipeline transportation are listed asfollows: without free water, water vapour content less than 4.8×10-4/m3,H2S content lessthan 1500 ppm (mass fraction), O2 content less than 10 ppm (mass fraction). For EORsequestration, the N2 content should be lower than 4% (mole fraction), and therequirement for water vapour and O2 contents are also high. It is better to use the CO2sources that can meet the requirement for transportation and sequestration withoutpre-treatment, so the procedures can be simplified and total energy penalty and cost canbe reduced.•Thirdly, the geographical location and surrounding transportation of CO2 sources shouldalso be taken into account. If the distance between the source and the storage site islonger than the economical distance (150 km for pipeline transportation), or thetransportation is in a difficult region (e.g. in mountainous terrain which is not suitable forpipe laying), it is unlikely to be selected as the CO2 source for a demonstration project.The ownership of CO2 sources (government, state-owned enterprise or private enterprise)is another consideration. The responsibility of the whole chain of a CCS demonstrationproject is shared by different industries and organisations, so a clear understanding ofthe ownership of the source and storage site helps to understand the difficulty level of theoperation and the coordination of the demonstration project. In addition, a key factor iswhether or not the local government supports the sale of CO2 to a CCS demonstrationproject.The criteria for selecting CO2 sources of demonstration formulated according to theminimisation of energy penalty and cost are listed in Table 3.2..71Table 3.2: Criteria for selecting sources of demonstration.1.The CO2 emission meets the scale requirement of demonstration project,and reaches the economical transportation amount. For the pipelinetransportation, the amount should be no smaller than 1.8 Mt/y.2.Selection of high purity CO2 sources. The purity should be higher than95%.3.The gas composition meets the requirements for transportation andsequestration, and no pre-treatment is required, such as desulphurisationand drying. In case of serious corrosion, the composition requirements forpipeline transportation are listed as follows: without free water, watervapour content less than 4.8×10-4/m3,H2S content less than 1500 ppm(mass fraction),O2 content less than 10ppm (mass fraction). And for EORsequestration, the N2 content should be lower than 4% (mole fraction), andthe requirement for water vapour and O2 contents are also high.4.Good transportation conditions around the CO2 sources. For pipelinetransportation, the recommended minimum economical distance is 150km.The CO2 sources in mountainous area should not be selected.5.The ownership properties of CCS sources. Choose enterprises that cantake charge of both CO2 transportation and sequestration to coordinate thewhole CCS chain.6.Local policies should support the sale of CO2 to CCS demonstrationprojects.723.5.2. List of sources suitable for a demonstration projectBased on the above criteria, the selected proper CO2 sources for CCS demonstration projectare shown in Table 3.3.Table 3.3: CO2 sources suitable for demonstration project.No.1.Plant NameYuhengLocationPlant typeEmissionCO2PolicyscalepuritysupportYulinMethanol6400000t/yHighYESindustry zone2.JingbianYananMethanol6800000t/yHighYES3.HuanglingYananMethanol4500000t/yHighYES4.YanchangYananMethanol/DME3250000t/yHighYES5.ShenmuYulinMethanol1500000t/yHighYES6.ChangqingYunlinMethanol250000t/yHighYES7.ShenfuYulinDME2500000t/yHighYES8.FangyuanYulinAmmonia1140000t/yHighYESXingpingAmmonia1140000t/yHighYESYuyang9.YanchangPetroleum733.5.3.Map of the applicable sources in Shaanxi ProvinceFigure 3.1. The applicable CO2 sources for CCS demonstration.The proper CO2 sources for CCS demonstration project in Shaanxi Province are shown inFigure 3.1. Most of these sources are methanol plants, dimethyl ether plants and ammoniasynthesis plants – these have high purity CO2, which means low cost and energy penalty forCO2 capture and needs no pre-treatment before transportation. These sources are suitablefor the early CCUS demonstration project. These emission sources are located intensively inheavy chemical industry bases, such as Yulin and Weinan. The Yulin area is abundant incoal and natural gas, and it is also one of the ideal CO2 sequestration sites. CO2-ECBM orCO2-EOR can be demonstrated in these areas. There are also many high purity CO2 sourcesin the Yanʼan area, and some of these sources are owned by Yanchang Oilfield orChangqing Oilfield. So the CO2 from sources can be used directly to enhance oil recoveryrates.744.ConclusionAs an integral part of the production process certain non-power industrial activities oftenhave,high-purity off-gases of CO2. The CO2 emissions from coal and gas-fired power plantsnormally have a CO2 concentration in the flue gas of between 8 to 15%, whereas certainindustrial processes such as hydrogen, ammonia and methanol production can have CO2concentrations of between 50% to almost 100%. As the capture step of CCUS projects withlow concentrated flue gases entail the highest cost both in terms of initial investment andoperating costs (energy, capture solvent), industrial processes represent potentiallyinteresting business cases. Furthermore, low cost ʻearly opportunityʼ CCUS projects withinindustry can result in technological learning and the development of best practice, which maycontribute to reducing costs for projects in the power sector and other industries.High-purity CO2 streams are primarily found amongst activities in the oil and gas industry,base chemical production and oil refining industries. The processing of natural gas from thefield to market specification involves the removal of CO2 (which can be between 2% to 70%of the produced gas) in order to raise the combustibility. CO2 is captured using conventionalCO2 scrubbing techniques, which results in a stream of CO2 pure enough to be used directlyin CCUS activities. Ammonia is produced through the gasification of coal or the reforming ofnatural gas, which result in a synthetic gas, of which the CO2 content must removed. Wherechemical adsorption capture technologies are used, this process also leads to a high-puritystream of CO2. The removal of CO2 is also required during the processes of hydrogen andmethanol production, both based on the fundamental process of stream-methane reforming(SMR).Although processes such as coal-to-liquid (CtL) production and biomass conversion (foreither biofuel or synthetic natural gas production) are not currently prolific in China, theseprocesses may become increasingly important given the increasing cost of fossil-basedtransport fuels. The Fischer-Tropsch process, which converts a syngas of carbon monoxideand hydrogen (derived either from coal or biomass gasification) into liquid hydrocarbons,requires that CO2 is removed from the syngas prior to the commencement of the process.Therefore future industrial activities for the production of alternative transport fuels may alsoprovide a source of high-purity CO2 streams for CCUS projects.The large deposits of high-quality coal in Shaanxi mean that a large industry based on theconversion of coal to high value chemical products can be sustained well into the future. Thiscombination of factors also means that the province has significant sources of high-purityCO2 to develop low-cost CCUS demonstration and commercial projects. As part of this study,a detailed site-by-site inventory of potential high-purity sources has been completed for theprovince in Section 3. The CO2 emissions from industries with known high-purity sources inthe Shaanxi Province can be found in Figure 4.1.75!"#$%&'(")*+,-.+/0"11"231+"3+4$5536"+&(27"38/++E0023"5+;F=?+?@+9/)$532:+A"0/)$*:+!*C(2#/3+E0023"5+!"#$%&'(")*+,-.+/0"11"231+"3+4$5536"+&(27"38/++!*C(2#/3+D=<<+;@+!"#$%&'(")*+,-.+/0"11"231+"3+4$5536"+&(27"38/++A"0/)$*:+B=>+;B@+Figure 4.1: CO2 emissions from industries with known high-purity sources in the ShaanxiProvinceAlthough the CO2 emissions are accumulated for each industrial activity, meaning that othernon high-purity sources of CO2 may be included in the data, Figure 4.1 provides an indicativepicture of the technical potential for capturing CO2 (much of which may be high-purity) from arange of industrial activities within the Shaanxi Province.To identify specific opportunities for CCUS demonstration projects in the province, a set ofselection criteria have been developed (see Table 3.2) which includes a minimum projectsize threshold of 1.8MtCO2/yr, a CO2 purity limit of 95% and a maximum transportationdistance to the point of injection of 150km. In addition to these limits, an evaluation of localpolicies, ownership issues and the suitability of the gas composition for enhanced oilrecovery have been assessed. This selection procedure resulted in a list of nine potentialdemonstration projects involving methanol, ammonia and dimethyl production plants (Table3.3). For further research, the authors recommend a site-by-site technical survey to assesspotential technical barriers and to develop cost estimations in order to further refine theselection of identified CCUS demonstration projects from non-power industrial sources inShaanxi Province.76REFERENCES[1] http://en.wikipedia.org/wiki/Carbon_capture_and_storage – cite_note-0[2] Bai, B. et al. (2006). Concentrated CO2 emissions sources survey and their distributioncharacteristics in China. 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(2011) A raft of new projects due for completion over the next three years meanscapacity will soar by 44%, ICES Chemical buisiness 19 feb 2010,http://www.icis.com/Articles/2010/02/22/9336436/china-ethylene-cracker-projects-to-seerapid-capacity.html retrieved 21-12-2011.[33] Reuters (2011) CNPC, Shaanxi Province ink petchem deal -Xinhua,http://uk.reuters.com/article/2007/05/13/petrochina-shaanxi-ethylene-idUKPEK28237220070513 retrieved 21 December 2011.[34] 3E Information management & consultants (2008) Chinese refining and ethylene capacitysurvey (2007-2008), www.3-eee.net/File/8capintro.doc andhttp://www.docstoc.com/docs/31010603/Chinese-Refining-Capacity-Survey retrieved22-12-2011.[35] KPMG (2009) China's energy sector: A clearer view,http://www.kpmg.com/global/en/issuesandinsights/articlespublications/pages/chinas-energy-sector-a-clearer-view.aspx.[36] Shanghai Huaxi Chemical Industry Science and Technology Co., Ltd.www.huaxigas.com/gsyj_js.asp (in Chinese).!79Appendices101112131415Appendix I TypeMethaneIMethaneIMethaneIMethaneIMethaneIMethaneIMethaneIMethaneIMethaneIMethaneIMethaneIMethaneIMethaneIMethaneIMethaneIMethanol plant in Shaanxia Yield (ten/year)Yulin naturalgas chemicalfactery 430.000Designed 0.6 million, 0.2million in phase IcompleteShaanxishenmu chemical industrycompanyDesigned 2.3 million, 0.6Yanzheu coalminingcompany mimoninphaselYulin enterprisezene methanol. 600,000projectChangqingeilfi eldmethanel 100,000companyYanchang oil company 1.800.000Shaanxishanjiao chemica|Co., LTD 200.000Shaanxi Xianyang chemical Co., LTD 600.000ShaanxiHeimao cekingCo., LTD 100.000Weihe coalchemicalgroup 200.000ShaanxiChangqing0.6mi||iontons 600,000methanol projectShaanxi 300,000ammonia to methanol projectYan'anYanchangnaturalgas to500,000methanol, dimethyl ether projectShaanxi Chenghua Co., LTD 20.000ShaanxiHuashan chemica|Co., LTD 40.000CO2 emissionDischarge 1204000168000064400001680000280000504000056000016800002800005600001680000840000168000056000112000Concentrati 99%99%99%99%99%99%99%99%99%99%99%99%99%99%99%AddressSouthernsuburbs efYulinShenmuJingjie industrialdevelopment zoneYuyang District CaojiatanTewnYulin enterprisezeneCityYulinYulinYulinYulinYulinYan'anTongchuanXianyangWei nahWeinanBaojiXianyangYan'anHanzhengWeinanCountyShenmuCaojiatanEnterprisezoneJingbianHuangling, FuxianMeijiapingWeichengI-lahchergLinweiFengiangXingpingYanchangChengguHuaxianWebsite RemarkNaturalgas to methanolCealto methanolCealto methanolCealto methanolYan'an government, Yanchang Oil? eld companyand the Hong Kong and China Gas CompanyLimited cooperate in construct-i on i.seQLchelD Cealto methanol com/ hfl-rr Mini _ha r-nrn r-n/Have not started I (?am am I-rl-rv-I 7F-Inner 9| (?am an i80Appendix H: Ethanol plant in ShaanxiCQ em" ssi onName Yield (ton/year) Addess ty County Websi te Remarkscharge Concentr ati . .. 350 91aanxI Baojl factory 30 thwagz? er 30000 99. 9% Baojl G.1ozhen a I way statl on Baojl A41. . Senql an factory 83:} XI an Wen yang I-lanzhong Laojie dcohol LTD I-lenzhong I-lanta? strict I-lanwu RoadAppendix 111:lb. Type1 methyl2 methyl3 methyl4 methyl5 methyl6 methyl7 methyl8 methylherDimethyl ether plant in ShaanxiNam Yield (ton/year)Yu|in1m'||iontonsmethano| to 200000oimethvl ether proiect Yul i Fugu tons methanol Invesmem Stage1m'||ion tons oimethvl etherYen? an Yencharg natural gas to 700 000rnethand. dmethvl ether nroiect Wei he cod chem" cal group 10,000Xianya'1g1rri||iontonscoal to 1000000oimethvl ether proiect Shaanxi Pucheng 1 m'||ion tons 1,000,000oi met ether or oi ectXi'an I-lenyu cherricd Co., LTD -Sienmu Ta" neng chem" cal Coscharge(t/vi1 Concentrati ty County Website RemarkYulin -Yul i FuguYan'an Yanghan I-lave not startedWei nan Li nweiXianyanc:I . ..EWei nan Pucheng . 223242226Xi an -Yul i Snenmu82Appendix IV: Hydrogen plant in ShaanxiCQ em? ssi onNameYield (ton/year)scharge Shaanxi Shenrm anyuanchem? cal Co.. LTD 4364357443Cbncentr ati on(%ty Gcunty Website99% Yul i Swenmu spkmak83Appendix V: Ammonia plant in ShaanxiType Name Yi el (ton/year)arrm:1niaFugu ferti anmoni a Shaanxi Aowei qi anyuan chem? cal LTD 300-000errmoni alnner ll/bngol i a anrun fertilizer Co., LTD 0-3 m'1110n 10115 arTm0n1a- 0-52m'1110n 10115 Ureaam'n0ni alnner i a Bodashi chem? cal 03., LTD urea? I2errmani alnner Erdos fertilizer project 2ni1110nt0n$amm0n1a- 3?5mi1110nt0n$ ureaanmoni a zhi ni trcgen fertilizer pl ant 30-000a I-lenzhong Yawgxi aw nitrogen fertilizer pl antammni ng errmoni ?300,000a Shaanxi I-bi mao coking Co., LTD 100-000anmoni aWei he coal chem? cal group 0-3 m'1110n tons tons ureaarmmi a Shaanxi nl i ng fertilizer pl ant 100.000arrmoni a Shaanxi Snanhua ferti I i zer 03., LTD 0-26 1111110? tons amnonia 0-32 1111110? tons ureaammni a Snaanxi Chenghua 03., LTD 0- 12 m'1110n tons amm0n1a- 0-14 million tons urea anmoni a91aanxi I-uashan chem" cal Ch, LTDtons ammnia, 0.32 m'||ion tons ureaCQ em? ssi onschage(t/vlAcbf essConcentrati on(%lShibangouFugu Hiangfuzhen150 km to Yul i Iw%km to Yulinabout 120 km to Yul i Nd i nhe chem? cd zone, about EX)GtyYul i Yul i I-bhhotErolosErolosYul i I-lanzhongI-lanchengWei nanBaojiWei nanHanzhongWei nanCount FuguFuguUxi BannerNd i nhezhiYengxi anXi zhuangtownLi nweiJi nt 21'I-liaxi anChengguHiaxi anWebsi te Remar 84Appendix VI: Calcium carbide plant in ShaanxiCO2 ern' ssi onl\b. Type Name Addess ty County Website RemarkDscharge Concentrati 1 Cal ci um carbi de pl ant Shenmu Snenxi cal ci um carbi de pl ant 20.000 Yul i 2 Cal ci um carbi de pl ant Fugu I-lianghe Social Welfare chem" cal factory 20,000 Yul i 3 Cal ci um carbi de pl ant Fugu Fangzheng chen?i cal Co., LTD 20.000 Yul i 4 Cal ci urn carbi de pl ant Fugu l'l.il feng chem" cal Co., LTD 20,000 Yul i 20,000 Yulin6 Cal ci um carbi de pl ant Fugu Xi nl ong chem? cal Co., LTD 20.000 Yul i 7 Cal ci um carbi de pl ant Fugu cal ci urn carbi de Co., LTD 20,000 Yul i m??W8Calcium carbideplant Fugu Yuejin calcium carbideidant 20.000 Yulin9 Cal ci urn carbi de pl ant Fugu (hangcheng ferroal I 0y works 20,000 Yul i 10Calci um carbide plant Fugu second cd ci um carbide plant 20,000 Yulin11 Calcium carbideplant'|1anc1iaoc0rp. Fugu calcium carbide Co., LTD 20.000 Yulin12 Cal ci um carbi de pl ant Snenhua electric chem" cal LTD 20,000 Yul i 13 Calcium carbide plant Fugu calcium carbide idant 20.000 Yulin14 Cal ci urn carbi de pl ant I-liayuan electric power Co., LTD 10,000 Xi'an 15 Calcium carbide plant Weibei calcium carbide |dant 30,000 16 Cal ci urn carbi de pl ant Fugu Fuda welfare cal ci um carbi de |d ant 20.00017Calcium calcium carbideidant 20,00018Calcium carbideplant Baoji calcium carbideplant 20.00019Calcium carbide plant Jingyang Bayi calcium carbide dant 20,00020 Cal ci um carbi de pl ant I-lanji ang chem? cal Co., LTD 20.00021 Cal ci urn carbi ob pl ant Xi'an therrnoel ectri city corp. 20.00085Opportunities for CO2 Enhanced Oil Recovery (EOR) in ShaanxiProvince and the Northwest of ChinaSupporting early Carbon Capture Utilisation and Storage development in non-powerindustrial sectors861. IntroductionEnhanced Oil Recovery (EOR) techniques are a set of processes that have been applied to matureand depleted oil reservoirs since the 1970s in order to increase the production over what is normallyachieved using traditional oil recovery techniques. While conventional oil recovery methods usuallyextract around 20-30% of the Original Oil In Place (OOIP), application of an EOR technique canincrease this amount to up to 60%; however, the process is known to be energy intensive.Commercial methods of EOR can be grouped into three main categories of thermal recovery,chemical injection and gas injection. One of the gas injection methods is based on the use of carbondioxide CO2 and is known as CO2-EOR; this is the most successful and widely used of the EORmethods. CO2 is pumped into the oil reservoir to reduce viscosity and improve the flow of oil. Underthe right physical conditions, CO2 will form a miscible mixture with the crude oil, which leads to thereduction of interfacial surface tension. After the oil-CO2 mixture is brought to the surface the CO2 isseparated from the oil and recycled for further injection into the reservoir. A consequence of theoperation is that a proportion of the injected CO2 remains underground in the reservoir which, whenCO2 from anthropogenic sources is used, contributes to a reduction of greenhouse gas emissions.Enhanced Coal Bed Methane (ECBM) recovery is another method that can use gas injection toenhance hydrocarbon recovery. This process works by injecting CO2, N2, or a mixture of both intounmineable coal seams, the CO2 then replaces methane adsorbed on to the coal surface and the N2reduces the partial pressure of methane in the reservoir resulting in its desorption. The coal surfacedesorption of methane leads to higher recovery and the CO2 adsorption results in its sequestration;however, CO2 injection can lead to a reduction in reservoir permeability that is caused by swelling ofthe coal matrix.Shaanxi Province, China has excellent potential for early opportunity CCUS projects because theregion is rich in oilfields, coal and coal-bed methane resources. The potential for improved recoveryusing CO2-EOR and CO2-ECBM is believed to be significant and the CO2 storage potential isbelieved to be vast. Furthermore, the province has readily available sources of high purity CO2 fromits large coal-to-liquids industry, as well as from the fertiliser industry and others [1]. Successfuldemonstration of CO2-EOR using industrial sources in North America has shown that the maintechnical barriers of this technology can be overcome. CO2-ECBM is a relatively less developedtechnology, therefore its technical barriers are considered to be a greater challenge in comparison toCO2-EOR. Significant barriers to CCUS deployment in Shaanxi Province are believed to relate to theinitial capital costs and the lack of policy measures and regulatory framework; however, once theseare in place, the economic potential is considered to be high.Increasing interest in CCUS opportunities such as CO2-EOR and CO2-ECBM in China and acrossthe world can be expected in the future. Higher fossil fuels prices will make enhanced recoveryoperations more attractive for investment while emissions trading schemes could provide additionalfinancial incentives. Clean development mechanism projects could be initiated in developingcountries to cover capital and running cost. The technologies are likely to play an important role inreducing anthropogenic CO2 emissions underground while simultaneously improving the security ofenergy supply by enhancing and prolonging oil and gas production. Demonstration of early CCUSopportunities can also be expected to encourage the development, demonstration and deploymentof advanced power generation technologies with application of carbon capture and storage.871.1 Fundamentals of CO2-EOR and CO2-ECBMOil recovery techniques have been typically considered in three categories of primary, secondaryand tertiary oil recovery. Primary recovery techniques are usually applied at the beginning of theproduction and can rely on natural mechanisms such as the pressure in the oilfield for extraction.After the natural reservoir pressure reduces, pumps are used to extract additional oil. Secondaryrecovery techniques are applied subsequent to primary recovery and are based on the application ofexternal energy to the reservoir in the form of an injected fluid to increase the reservoir pressure;very often the injected fluid used is water (water flooding). Tertiary oil recovery methods, otherwiseknown as EOR, consist of sophisticated operations that are applied after secondary methods andtowards the end of an oilfieldʼs life; CO2-EOR is one of these methods. Very often more than a thirdof the OOIP remains in the reservoir after primary and secondary recovery techniques have beenapplied. CO2-EOR can be applied to target this remaining oil and produce an additional 5-15% of theOOIP [2]. The residual oil exists as droplets trapped in the pores of reservoir rock or oil films thatsurround rock grains. The aim of CO2-EOR is to mobilise these dispersed oil droplets via the injectedCO2 entering the reservoir and moving through the pore space to form an oil bank that is swepttowards the producing wells. CO2-EOR should also work on the macro scale to effect large volumesof oil in the reservoir [3].To be successful, CO2-EOR requires a careful consideration of the chemical and physicalinteractions between CO2, oil and rock that create favourable reservoir conditions and increase oilrecovery. When the injected CO2 and oil mix to form a miscible fluid the interfacial tension betweenthe two initial phases effectively disappears, enabling the CO2 to displace the oil from the rock poresand push it towards the production wells; this is known as miscible CO2 displacement and is themost common form of CO2-EOR. When CO2 dissolves in the oil it causes oil swelling that reduces itsviscosity and improves its flow. In addition, the mobility characteristics of oil and CO2 should beconsidered because the movement of CO2 in the reservoir has a tendency to be faster than oil. Foreffective CO2-EOR, the mobility of the CO2 should be similar to that of the oil. The mobility of theCO2 and oil phases is dependent on how the presence of other fluids hinders their flow and theirviscosity. When the mobility of CO2 is higher than that of oil, the fluid flow becomes unstable whichcan lead to the early breakthrough of CO2 at the production well and [2]. As a consequence, furtherinjected CO2 follows the same fingered path to early breakthrough and therefore does not sweep themaximum possible volume of the reservoir, which leads to a reduction in the overall efficiency of theprocess. In order to mitigate this negative tendency, CO2 injection is often alternated with waterinjection, known as Water Alternating Gas (WAG) flooding.For miscible CO2 displacement, supercritical CO2 is used at high pressure (exhibiting the density of aliquid and the viscosity of a gas). However, CO2 does not instantly form a miscible mixture with oil;rather the miscible mixing is a gradual process, which develops as the CO2 flows through thereservoir. The miscibility of CO2 and crude oil in the reservoir is strongly affected by pressure. Belowthe Minimum Miscibility Pressure (MMP), oil and CO2 will no longer form a miscible mixture. Asreservoir temperature increases, the density of CO2 decreases and the required MMP will increase.In some cases, it may be necessary to re-pressurise the reservoir via water injection so that theMMP can be reached. The MMP can also be affected by the composition of crude oil and the purityof CO2.88CO2-EOR can be also be effective under conditions when the MMP cannot be reached and the CO2and oil do not fully form a miscible mixture, such with low pressure reservoir or for heavy crude oilwhere the mechanism for oil recovery is usually associated with gravity displacement [4]. Althoughthis is known as immiscible CO2 displacement method, CO2 may partially dissolve in the oil; some oilswelling can occur and the oil viscosity can be significantly reduced. The immiscible CO2displacement method is much less widely used compared to the miscible CO2 displacement method,primarily due to the poor process economics. Large quantities of CO2 are required, which are noteasily recovered for recycle, and up to ten years wait can be required until an improvement in oilrecovery occurs. The method could nevertheless be expected to receive increased attention, in thecontext of atmospheric CO2 emission abatement, due to its ability to geologically store largequantities of CO2 [2].Coal Bed Methane (CBM) is a useful energy resource that can be a significant supplement toconventional natural gas supplies. Usual methods of CBM recovery involve depressurising the coalseam by drilling wells into it and then pumping out water. The depressurisation of the coal seamleads to methane that is adsorbed into the coal matrix being released. The methane can then beextracted, separated from water at the surface and then used in the same way as natural gas. Thedesorption and recovery of CBM can be enhanced by the process of gas injection into the coalseam.CO2, N2 or mixtures of two (such as flue gas) are the main gases considered for injection. CO2exhibits a greater sorption capacity on coal compared to methane and therefore displaces the CBMfrom the sorption sites on the coal matrix surface causing its release to the cleat system. N2, on theother hand, has a lower sorption capacity than methane on coal surfaces. Injection of N2 is used tolower the partial pressure of methane in the free gas phase in the pore space which inducesdesorption. The relative sorption capacity between the gases is strongly dependent on coal rank [5].It is well known that as gas is released from a coal reservoir, the coal matrix shrinks; this causes thecleats to open and therefore significantly increases the level of coal cleat permeability. This processis also believed to work in reverse, whereby gases with large adsorptive capacity, such as CO2, cancause swelling of the coal and considerable reduction permeability. This can lead to a severereduction of well injectivity of CO2, which would restrict the overall effectiveness of the ECBMprocess and can severely hamper economic performance. Further research and pilotdemonstrations are required in order to understand how the benefits of ECBM can be gained whileminimising the negative impacts.1.2 Features of this reportThe aim of this report is to assess the potential of the oilfields and unmineable coal beds located inShaanxi Province in hosting an early opportunity CO2 utilisation demonstration project. The report isstructured as follows:•Initially, the report reviews the status of CO2 utilisation for enhanced hydrocarbon recovery inrelation to China and throughout the world. An inventory of CO2 utilisation opportunities in ShaanxiProvince is presented – this has been compiled from a combination of expert knowledge, literaturereviews and stakeholder surveys. A description of the consultation with stakeholders (e.g. oilfieldoperators, government agencies and academia) via surveys and workshop meetings is presented interms of CO2 utilisation potential and implementation challenges.89••The report then examines the viability of the CO2 utilisation options. One of the main requirements ofthis project is to identify potential matches of CO2 sources and sinks based on a number oftechnical, economic and geographic considerations. Screening criteria of oilfields and coal bedmethane sites for their compatibility with CO2-EOR and CO2-ECBM is discussed.Finally, the report presents an outlook for EOR and other utilisation options in Shaanxi, which is oneof Chinaʼs most important regions for oil and CBM reserves. The prospects for CO2 storage andincreased hydrocarbon recovery in the region are reviewed.2. Status of CO2 utilisationThis section reviews current CO2 utilisation operations globally and with focus on those in China.The main oil basins/coal fields currently supporting CO2 utilisation operations in China are identifiedand characterised, along with those currently under construction or in the planning stage. To providean inventory of CO2 utilisation options of Shaanxi Province, an overview of oilfields and coal basinswith the potential to host a CO2 utilisation demonstration project is presented. The section alsoincludes some of the key findings on the technical, policy, legislative and regulatory challenges ofimplementing a CO2EOR or CO2-ECBM project. CO2-EOR projects have been successfullydemonstrated at commercial scales for over 30 years but have mainly used natural subterraneansources of CO2, which are high in purity and low in cost. Only a small fraction of CO2-EOR projectsutilise CO2 from anthropogenic sources; however, interest and rate of usage from this source isincreasing due to the limited supply of natural CO2 throughout the world. Traditional approaches toCO2-EOR have aimed to minimise the amount of CO2 used per incremental barrel of oil producedand recycle any CO2 recovered at the production well for economic reasons; this is in contrast to theaims of geological storage of CO2 for its emissions abatement. This section reviews techniques andways to encourage the co-optimisation of CO2-EOR/CO2-ECBM with CO2 geological storage.2.1Overview of CO2 utilisation opportunities in China and Shaanxi ProvinceA number of potential geological reservoirs can be considered to store captured CO2 [1]. Thesestorage options include depleted oil and gas fields; CO2 enhanced oil recovery (EOR); CO2enhanced gas recovery (EGR); CO2 enhanced coal-bed methane recovery (ECBM); deep salineaquifers; and some other storage options such as mineral carbonation.2.1.1CO2 Enhanced Coal Bed Methane RecoveryCO2 underground storage is an effective measure to reduce CO2 in atmosphere and alleviategreenhouse effect. CO2-ECBM can reduce CO2 emission as well as promote coal bed methane(CBM) yield and decrease the cost of CO2 underground storage. CO2-ECBM is a safe and reliableway to store CO2 by adsorbing CO2 in coal matrix. China has abundant coal resources; coal seamsare widespread all around China. So CO2-ECBM can be the top choice of CO2 underground storage.According to coal and CBM exploration data in China, reserves distribution of different coal, andreplacement ratio of CO2 and CH4, we conducted a preliminary evaluation of CO2 storage capacityin coal seams which are about 300~5000 meters deep and rich of CBM. The result indicated thatminable CBM in China can reach 1.632×1012m3, meanwhile that would be able to store 120.78×108tons CO2 which is about 3.6 times of Chinaʼs CO2 emission in 2002.902.1.2CO2 Enhanced Gas RecoveryNearly depleted gas fields can be considered for CO2 storage in the void space freed by exploitation.Existing infrastructures such as wells may be partially re-used. Since these reservoirs havecontained gas for thousands of years, they are expected to store safely CO2 for a very long time.The storage capacity can be estimated from the original gas in place or from ultimate recoverablereserve volumes, assuming the void space freed by the production is fully filled with CO2 and has notbeen flooded by water.The pressure inside the reservoir drives usual exploitation of gas fields, but when pressure is nolonger sufficient to drive fluid towards the well bore, exploitation is hampered, while a largeproportion of the hydrocarbons still lies underground. In the case of oil, the ʻassociated gasesʼ, i.e.the dissolved light hydrocarbons, after being separated out from the oil, can be reinjected to maintainthe reservoir pressure. An option is to inject CO2, which displaces the hydrocarbons and in the caseof oil, modifies the viscosity and enhances the recovery. This process is designated by CO2-EGR.Part of the injected CO2 (say about half) breaks through into the produced gas, and is recycled afterseparation, while the other part is ʻfixedʼ in the gas reservoir.2.1.3OthersFOOD INDUSTRY: In the food industry, CO2 is used for food refrigeration, sterilisation, preventingmildew and retaining freshness, etc. In order to adjust the competition in international food marketand meet the domestic high-end food preservation needs, this will be a potential market of liquid andsolid CO2. CO2 can also be used as additive in soda drink, beer, cola and carbonated beverages.CO2 consumption in west Europe is 1.6 million tons/year, 80% of this is liquid CO2. The CO2 ismainly used for carbonated beverage and food, then for weld and refrigerated transport. Germanyproduces the most CO2 by separating them from natural gas – there are more than 30 liquid CO2factories are in Germany. CO2 consumption, which consists of 80% liquid CO2 and 20% solid CO2,will increase by 3–4% in the next few years in west Europe. In China, drink industry is the largestCO2 consumption market, which takes about 30%. Our drink consumption per person is less than 5kilos/year, while in the USA it is 150 kilos/year, and in west Europe it is 110 kilos/year. As peopleʼsliving standards in China improve, CO2 consumption in the drink industry will increase substantially.On the basis of the drink consumption in the USA, CO2 consumption in the drink industry could bemillions of tons per year in China.Plastic material: Using CO2 as chemical feedstock to produce plastic products has taken shapeglobally. In recent years 110 million tons of CO2 has been sequestrated through chemical methodsevery year. Urea is the largest product sequestrating CO2, consuming more than 70 million tons ofCO2 per year. Inorganic carbonate is the second largest, consuming 30 million tons CO2 per year.Hydrogenation of CO2 to synthesise CO also consumes 6 million tons of CO2. Alongside this, 20thousand tons CO2 is used to synthesise salicylic acid and propylene carbonate, which is used fordrug manufacturing.Synthesized urea with CO2 and ammonia is the most successful example of sequestrating and usingCO2. Based on urea, we still can produce dimethyl carbonate with CO2, making urea an effectivecarrier of CO2. Replacing phosgene by CO2 to synthesise high value-added chemical feedstock91(dimethyl carbonate, isocyanate, methyl methacrylate, etc.) can realise cleaner production;meanwhile it can react at mild conditions so as to improve the economy and security of the process.At present, CO2-based plastic represented by CO2 and epoxide copolymers is also a hot issue. Thiskind of plastic is biodegradable which makes it helpful to resolve the ʻwhite pollutionʼ problem. ChinaNational Offshore Oil Corporation (CNOOC) and Inner Mongolia Melic Sea High-Tech GroupCompany, representing the most advanced CO2-based plastic industrial technology in the world,have built two production lines of thousand-tons-level. Henan Tianguan Group has built a CO2copolymer pilot plant with its self-initiated catalysis system. Low molecular weight of CO2 copolymertechnology, researched by Guangzhou Institute of Chemistry, Chinese Academy of Sciences, hasbeen used in Taixing, Jiangsu. This technology use low molecular weight of CO2 and epoxidecopolymer as feedstock of Polyurethane foam materials.2.2 Global status and developments of CO2-EOR and CO2-ECBMCO2-EOR technologies have been used at commercial scale by the oil and gas industry for over 30years. The process was pioneered in the Permian Basin of West Texas and New Mexico usingnatural sources of CO2 for oilfield injection and this remains the worldʼs largest CO2-EOR producingregion. The extensive CO2 pipeline infrastructure that has emerged in the region does deliver theCO2 requirements to the EOR projects. Other regions in the North America have developed CO2EOR projects, especially in the Gulf Coast and the Rocky Mountains. Natural CO2 sources accountfor the majority of supply to North American CO2-EOR projects, with a supply of 45 million tons/year.However, the natural CO2 reserves can only meet a small fraction of potential for EOR and there isconsequently a strong interest in obtaining CO2 from industrial sources. The Shute Creek gasprocessing plant at the La Barge field in Wyoming is the largest single point source of anthropogenicCO2 used for EOR in North America and amounts to a 4 tons/year supply [6].A number of other CO2 flooding projects have been implemented in several other countries outsideof North America including Hungary, Turkey, Trinidad, Brazil and Russia. In Hungary, several fieldscale CO2-EOR applications have been implemented, ranging from immiscible displacement insandstone and karstic reservoirs, to miscible displacement in metamorphic and mixed rockreservoirs [7]. A successful application of immiscible CO2-EOR has taken place in the Bati RamanOilfield in southeastern Turkey; approximately 1 million tons/year of naturally sourced CO2 istransported via a 90km pipeline to this operation [8]. Pilot-scale EOR trials, whixh ran from 1973–1990 at the Forest Reserve and Oropouche fields in Trinidad, produced medium oil using industriallysourced CO2 from ammonia (oil and gas journal survey). In Brazil, small scale CO2-EOR has beentaking place since 1987 at the Recôncavo Basin using CO2 collected from an ammonia plant and anethylene oxide production facility. Large-scale pilot-scale EOR tests were carried out in Russia from1980–1990, which utilised CO2, and combustion gases formed at different petrochemical productionplants [9]. A CO2 pilot injection project has been reported at the Ivanić oilfield in Croatia. The results,obtained from 2001–2006, helped to define the larger application of CO2-EOR in this country byusing anthropogenic CO2 sources [10].In China, several experimental pilot-scale EOR projects are ongoing at Liaohe, Shengli, Dagang,Zhongyuan, Daqing and Jilin oilfields [11]:92•Liaohe Oilfield Complex. The pilot scale project of CO2/flue gas injection for EOR has beenconducted at Liaohe oilfield complex since 1998. The application has involved the injection of boilerflue gas containing 12–13% CO2 and steam without premixing the two fluids. After a preliminary testinjection, the well was closed for a number of days to allow the diffusion and penetration of theinjected gases throughout the reservoir. A significant improvement in oil recovery of 50–60% wasobserved with the steam-flue gas injection [12].•Shengli Oilfield Complex. A pilot scale CO2-EOR project began at the Shengli Oilfield complex in2007. Sinopec China plans to expand post-combustion CO2 capture at the existing Shengli powerplant in Shangdong Province for use in EOR. The retrofitted absorption plant will capture around 1million tons/year of CO2 for pipeline transport over a short distance to the EOR site. The large-scaleproject is expected to come online in 2014 [11] [13].•Dagang Oilfield Complex. A CO2-EOR pilot test at the Kongdian reservoir of the Dagang Oilfieldcomplex began in 2007 and lasted for 1.5 years. The operation used natural gas with 20% CO2obtained from a nearby natural gas field which was injected into a single well. Oil productionreportedly improved from 13.6 to 68 barrels per day [11]. A demonstration project is currently underconstruction by China Huaneng group that aims to capture CO2 from a 400 MW IntegratedGasification Combined Cycle (IGCC) power station, which will be used for EOR in Dagang Oilfield.The construction is to be completed in 2016 [14].•Zhongyuan Oilfield. The China National Petroleum Corporation began capturing CO2 from an oilrefinery and injecting it into its Zhongyuan Oilfield. Few details are available in the literature but thecompany has reported capturing and injecting 20,000 tons/year of CO2 [11].•Daqing Oilfield Complex. Field tests for immiscible CO2 floods have taken place at Daqing Oilfieldssince the early 90s [15]. In 2008, the governments of Japan and China agreed to cooperate in aproject to capture 1–3 million tons/year of CO2 from the Harbin thermal power plant in HeilungkiangProvince for EOR injection in the Daqing Oilfield. The project will involve CO2 transportation in a~100 km pipeline.•Jilin Oilfield Complex. PetroChina established a pilot scale CO2-EOR and storage project in JilinOilfield in 2007. The project uses a natural gas source containing 22.5% CO2 which is now beingstripped during the production process and condensed before being injected into several oilfields ata rate of 200-300,000 tons/year. Oil recovery will be enhanced by 10–20%.CO2-ECBM is currently at an early stage of technical development. Several projects exist at the pilotscale and micro-pilot scale worldwide. Burlington Resources have been operating a commercial pilotapplication of CO2-ECBM located in the Allison production unit in the San Juan Basin in thesouthwestern United States. The Allison unit pilot injects around 85,000 m3/day of naturally occurringCO2 from the McElmo Dome field in southwestern Colarodo. The pilot performance in this projecthas been varied, with some production wells showing improved methane recovery whereas othersshow a decline in performance following CO2 injection. Another CO2-ECBM project has taken placeat the micro-pilot scale in Alberta, Canada with the objective of establishing a commercial pilotproject. The well was monitored during the injection of synthetic flue gas (12.5% CO2 /87.5% N2) andthe performance indicated that the permeability increased steadily during the injection period [16][17].93Additional micro-scale CO2-ECBM projects have taken place in Poland and Japan. The RECOPOLproject involved the first CO2-ECBM demonstration in Europe and began in 2003. During the project,some difficulties were encountered following CO2 injection including a reduction in permeability,likely due to coal swelling, and the observation of a rise in the CO2 content of the production gas[18]. In Japan, another micro-pilot scale project was carried between 2004 and 2007 at the Ishikaricoal basin on the northern Hokkaido Island. The project involved a variety of tests with an injectionwell and multiple production wells. During the tests, CO2 injection clearly enhanced gas production;however, low injectivity was experienced after the CO2 flood which was likely caused by thereduction in permeability induced by coal swelling. Subsequent N2 flooding was found to improvewell injectivity but only temporarily and the permeability did not return to its initial value afterrepeated CO2 and N2 injection [19].China is believed to hold large potential for gas injection technology for ECBM production. A jointCO2-ECBM project between the China United Coal Bed Methane Corporation (CUCBM) and theAlberta Research Council of Canada was initiated in March 2002 and ran until December 2007. Themicro-pilot scale project took place at an existing well in the Qinshui basin of Shanxi Province,China. This is the only CO2-ECBM project to have taken place in China so far [20]. Qinshui Basincontain high ranked semi-anthracite/anthracite coal, covers an area 24,000 km2 and is believed tocontain CBM resources of 5.5 trillion sm3. The project objectives of measuring data while using oneinjection and one production well and then evaluating this data to obtain estimates of reservoirproperties and sorption behaviour were fulfilled. In addition, a calibrated numerical model of thereservoir was developed to predict multi-well pilot performance and level of production enhancementwith CO2 injection [21].2.3 Required purity levels for CO2-EOR and CO2-ECBMFor the purpose of CO2-EOR, CO2 purity should be more than 94-95 vol.% in order to achievemiscible conditions in the oil reservoir. The MMP, reservoir depth and the API gravity of the oildetermine if the reservoir is suitable for CO2-EOR. SO2, H2S and C3+ species impurities in the CO2will decrease the MMP whereas O2, N2, Ar and NO impurities will increase the MMP. For CO2transport via pipeline to an EOR site, consideration must be given to the impact the impurities couldhave on pipeline corrosion or phase change of the transported fluid [22]. The presence of SO 2 as animpurity could accelerate pipeline corrosion since this gas forms an acid when dissolved in water.Water levels should therefore be reduced to a certain level, but to exactly what extent iscontroversial. An upper limit of 500 ppm of H2O in the CO2 stream has been recommended by deVisser et al. [23]. The presence of O2 with H2O can accelerate cathodic reaction leading to internalpipeline corrosion. The presence of impurities could result in the formation of a second liquid phaseduring the transport of supercritical CO2, which could have consequences of flow instability andcavitation in the pipe. It would also lead to undesirable high and low pressure peaks that oscillatewithin the pipeline [24]. Most EOR operators recommend levels of oxygen to be below 10 ppm forreservoir safety reasons. In addition, impurities in the CO2 stream may have an impact onsequestration. The CO2 impurities can have the same corrosion impacts on well injection equipmentas they do on pipeline equipment, which could affect injection well integrity. The impact that CO2impurities have on the subterranean environment is uncertain and is an area that requires furtherresearch. The volume occupied by CO2 impurities in a storage site would also contribute to areduction in storage efficiency.94Information regarding acceptable limits for impurities in CO2-ECBM is much sparser in comparisonto that for CO2-EOR, although recommendations made with regards to compression and pipelinetransport will be the same. ECBM can accommodate high levels of N2 since this gas is also effectivefor the methane recovery process. However, the use of flue gas instead of CO2 has a much higherenergy requirement for compression. H2S and SO2 are undesirable in CO2-ECBM because theyhave higher adsorption affinities than CO2 and so would preferentially adsorb onto the coal surfaceand hence reduce the storage capacity [25]. Oxygen is also an unwanted impurity since it reactsirreversibly with coal to reduce the area for sorption and storage capacity for CO2.2.4.Opportunities for increasing CO2 storage with CO2-EORThe overall objectives of CO2-EOR and CO2 storage are somewhat different. In traditional CO2-EORmethods, the aim has been to maximise oil production and because the purchase of CO2 constitutesa significant operational cost, considerable efforts have been made in reservoir engineering designto minimise the amount of CO2 utilised per barrel of oil recovered. If the objective is instead tomaximise the amount of CO2 stored at the end of oil recovery operations while maximising oilrecovery the engineering design approach would change significantly.In current CO2-EOR projects, a significant fraction of the injected CO2 remains in the reservoir butsome is recovered at the production well. This is usually separated from the oil, recompressed andinjected back into the reservoir. The CO2 that remains in the reservoir can become trapped in poresor channels of the reservoir rock from where it has displaced oil. Some CO2 dissolves into oil andwater that remains there unless the reservoir is depressurised; even so, the reservoir could not becompletely depressurised and the CO2 in solution would therefore remain there permanently. TheCO2 storage capacity in EOR is a function of the recovery factor, the OOIP and oil shrinkage [26]. Afurther factor that can influence the storage capacity is the efficiency with which the injected CO2displaces fluids in the pore space. A simple strategy to increase CO2 storage with CO2-EOR is todisplace as much oil and water as possible and replace it with injected CO2 in the pore space andswept zone. Several approaches for increasing CO2 storage in EOR have been put forward byJessen et al. [27] and in a report prepared by Advanced Resources International Inc. and MelzerConsulting for the Department of Energy & Climate Change (UK) [6]. A combined version of theirrecommendations is given below:••••••Adjust the composition of the injection gas to maximise CO2 concentration while maintaining anappropriate MMP.Design well completions (e.g. partial completions) or consider horizontal wells to create injectionprofiles that help to reduce the adverse effects of preferential flow of injected gas through highpermeability zones.Optimise water injection timing, rates and WAG ratio to minimise gas cycling and maximise gasstorage.Consider CO2 injection into aquifers or residual oil zones that underlie main oil pay zones wherethe gas would otherwise flow rapidly to the producing wellsRepressurise the reservoir when the production life of the field is over.Use ʻnext generationʼ technology to increase the volume of injected CO2, optimise well designand placement, improve mobility ratio between CO2/water and residual oil, and extend the95••miscibility range; these could help achieve higher oil recovery efficiency as well as increase theCO2 storage potential.Deploy CO2 injection earlier in field development. This can result in incremental and faster oilrecovery. Improved utilisation of CO2 storage capacity is also achieved.Use any of these approaches in combination with extra storage in other geological formationsaccessible from the same CO2 injection wells and surface infrastructure used for CO2-EOR.2.5.Environmental impact of CO2-EOR and CO2-ECBMInsight into the environmental impact associated with CO2-EOR and CO2-ECBM is essential toensure that they can be applied as safe and effective technologies. Research is therefore beingconducted to evaluate the likelihood and potential consequences of leaks, slow migration andinduced seismicity [28]. Minimal environmental problems have been experienced so far in up to fourdecades of CO2-EOR operations and it is believed that rock formations are likely to retain over 99%of the injected CO2 for over 1000 years [3]. However, the potential risks should not be disregarded.Large-scale releases of CO2 can occur naturally from volcanoes. As CO2 is less dense than air,large-scale releases can pose an asphyxiation risk to humans and animals. In 1986, a large-scaleCO2 release proved catastrophic at Lake Nyos in Cameroon. However, it is highly unlikely that suchhuge CO2 releases would occur from a geological CO2 storage site because injected CO2 will tend todiffuse as it moves away from the injection point in contrast to the accumulation of highlyconcentrated CO2 near the surface as was the case at Lake Nyos. The likelihood of large scale CO2release from a geological storage site can be reduced with proper site selection, monitoring andoperation [28]. To minimise the risk of large sudden CO2 release from pipeline transport nearpopulated areas, route selection, overpressure protection, leak detection and other design factors allrequire careful consideration [29].The slow release of CO2 from geological storage at an EOR site is possible via rock faults andfractures, or by improperly sealed oil wells. Such slow releases can also occur naturally; however,leaks at CO2 storage sites could have adverse effects on ecosystems not adapted to exposure tosuch levels of CO2; so too could any impurities (e.g., Hg, H2S) contained in CO2 arising fromanthropogenic sources. The risks associated to slow CO2 releases are nevertheless believed to beremote since they would diffuse to the atmosphere in a similar way to the CO2 arising from biologicalrespiration or decomposition of organic matter. The risks associated to CO2 leakage to the surfacecan be effectively contained and mitigated by employing proper site selection, engineering design,operational procedures, gas detection and pressure monitoring systems [28].Migration of fluid within geological formations is difficult to predict despite significant advances intechnology and understanding of subsurface fluid behaviour. Upward movement of stored CO2 ordisplacement of brine due to increased pressure has the potential to impact on drinking waterresources, by increasing its salinity, by leaching trace metals or decreasing pH levels [30] [31]. Sucheffects have not been observed on current CO2-EOR projects but a better understanding of theseeffects on the longer time frame is required.From a perspective of CO2-EOR site selection, it is important to understand the risks associated toinduced seismicity from injection activities. Gas injection alters the mechanical state of the reservoirdue to increases in pore pressure. This might induce fractures or activate faults, so that microseismicity or even damaging earth tremors might occur [31]. Although small seismic events have96occurred, significant steps can be taken to mitigate the risk including controlling the injectionpressure, careful site selection, understanding the storage reservoirʼs geomechanical properties andthe astute positioning of wells and pipelines [28].Other environmental concerns have been raised regarding the effect of injected CO2 on subsurfaceecosystems. There is currently no data available on these effects and their knock-on effects for thesurface ecosphere [32]. More research is required to determine the effects of CO2 injection on thesebiological populations.It can be argued that CO2-EOR and CO2-ECBM operations do not present real opportunities tomitigate climate change mitigation since they lead to the further extraction of fossil fuels whose usewould contribute to further CO2 emissions. Life-cycle analyses can be used to quantify effects [33].Nevertheless, these technologies do present an important intermediate step to the wider deploymentof CCS for the reduction of anthropogenic CO2 emissions.3.Findings from the government and industry surveysAs Chinaʼs major province of energy and natural resources, Shaanxi Province has abundant coalresources and is listed as one of Chinaʼs low carbon demo provinces. Meanwhile, as westernunderdeveloped province of energy, Shaanxi Provinceʼs energy structure is dominated by coal.Heavy chemical industry is still an important pillar industry in promoting economic growth. During theʻEleventh Five-Yearʼ period, Shaanxi Province exceeded the task of energy saving, but high energyconsuming industries like power, chemical, petrochemical, nonferrous metal, metallurgy and buildingmaterial contributed more than half of Shaanxiʼs output value. Contradiction of resources andenvironment has become increasingly prominent, and this economic pattern is difficult to befundamentally changed in short term.CO2 emission of Shaanxi Province mainly derives from the consumption of fossil fuels. In 2005, it isabout 138 million tons and accounts for 2.4% of Chinaʼs total emissions. Thermal power plant is themain CO2 emission source in Shaanxi Province, accounting for about 70% of total emissions,followed by cement industry, accounting for about 10%. In addition, ethylene and synthesisammonia industries account for about 10%, hydrogen production industry accounts for about 0.7%.According to preliminary measurements and estimates, CO2 emissions from fossil fuels in ShaanxiProvince have risen from 138 million tons in 2005 to 209 million tons in 2009, and to 2015 it mayreach 450 million tons. Because of the high energy-consumption of coal chemical industry, its largeamount of CO2 emissions and the constantly development of large scale coal chemical projects inthe future, CO2 emissions in 2015 is expected to reach 180 million tons in coal chemical industry.Energy saving and emission reduction will face greater pressure.Implementing early CCUS demonstrations in Shaanxi Province is of great significance. First of all,Shaanxi Province urgently needs low carbon technology; CCUS is good for developing thattechnology. Secondly, chemical industry in Shaanxi Province is developed and has a high-purity CO2source. It can reduce the cost of implement of CCUS in Shaanxi Province, and it is good forpromoting the entire CCUS demonstration. Moreover, Shaanxi provincial government hold a positiveattitude to CCUS projects. Implementing early CCUS demonstrations in Shaanxi Province can helpto build the image of Shaanxi as a clean energy province.97Surveys from Yanchang Oilfield research institute show that the advantages of Yanchang Oilfield indeveloping CCUS: first, Yanchang Oilfield owned its own high-purity CO2 sources; second, it alsohad oilfields suitable for EOR due to the short distance between the CO2 sources and sinks (150200km); and third, the geological condition for oil reservoirs is suitable for EOR. Yanchang Oilfieldwould like to develop CO2-EOR project and it had applied the national projects to support the fullchain of CO2-EOR – the CO2 from chemical plants (high purity) would be transported by tanks tooilfields to enhance oil recovery. Yanchang oil planned to construct the CCUS facility with a scale100,000 tons per year by the end of 2012, and 400,000 tons per year by the end of 2013. Until nowthe design of the CO2 capture equipment had been finished and the evaluation of CO2-EOR hadalso been completed. The future plan was to develop CO2 capture with low energy penalty andenforcing cooperation in technology share. Yanchang Oilfield hoped to cooperate with EU andhoped that the EU could provide engineering experiences in EOR.4.Screening criteria for CO2 utilisation optionsIn order to determine CCS demonstration projects, we should consider these factors below:1. In choosing CCS demonstration projects, whether the CO2 sources and sinks match each otheron the scale should be considered first. We should choose single CO2 sources to matchhomologous CO2 sinks. This can avoid the increase of cost in capture and transport CO2 fromdifferent sources.2. Secondly, technical feasibility must be considered before every project begins. In deploying CCSdemonstration projects, we need to consider the technology maturity of transport andsequestrate CO2, and if we have any other proven technologies that can be used. For example,in sequestrating CO2, as CO2-EOR is a proven technology and has plenty operating experiences,it can be considered first as an effective method of sequestrating CO2. Of course, CO2 salineaquifer storage and CO2-ECBM projects also need to be positively researched and deployrelated pilot demonstration projects.3. In order to make sure that the demonstration projects have good demonstration effect, we shouldreduce the cost of the project. In detail, we should capture high-concentrated CO2 to reducecapture cost; CO2 transportation should also be kept in a cost-effective range; CO2 sequestrationshould use EOR, ECBM, because they can bring additional oil/CBM benefits and promote CCSdemonstrations.4. Besides the cost factors, energy consumption factors are also very important. High energyconsumption in CCS will lead to more energy consumption; the cost of fuel/feedstock willincrease along with that. This is bad for CCS demonstration effect so we should choose highconcentration of CO2 and low-impurities sources to reduce CO2 capture cost.5. As peopleʼs awareness of environment protection strengthens, we should also consider theimpact of CCS demonstration projects to local environment. For example, whether thesequestrated CO2 will pollute the underground water and whether the water consumption in CCSdemonstration projects will aggravate the local water scarcity.6. In addition, we should consider social factors such as traffic, policy, safety and public support. Intraffic, we need to consider whether the local terrain is fit for pipeline laying, difficulty level oflaying pipeline and the transport distance. In policy, we should consider the local policy makersʼattitude towards CCS projects-whether itʼs positive or negative; whether they allow CO2 storage98in-situ. In safety, we should consider factors like corrosion of CO2 pipeline, CO2 transport andstorage leakages, etc.7. In deploying CCS demonstration projects, we should consider the demonstration effect and localpublic awareness. The demonstration effect is closely linked with demonstration locations,industries, scales and economies, so we should choose those influential locations, industries andappropriate scale to deploy CCS demonstrations. As CCS is a newly sprouted thing that publicdo not know much about it. They will probably worry about the safety problems (like CO2 leakage)caused by the projects. So public awareness should also be considered before we deploy theCCS demonstration projects. We can improve the public acceptability by publicity and promotion.8. At last, as CCS demonstration projects may involve many different enterprise like power plants,chemical plants and oil companies, in choosing potential project for CCS we should consider thedifficulty level in coordinate all aspects. We recommend the enterprise, which can be in charge ofthe whole chain of CCS projects simultaneously, should take responsibility for the CCSdemonstration projects.In conclusion, screening principles of CCS demonstration projects are listed below:99Table 4.1: Basic principle for potential CCS project selectionTechnicalfeasibilityMatch ofsourcesand sinksEconomyfactorsEnergyconsumptionfactorsEnvironmentfactorsTrafficfactorsPolicyfactorsSocialfactorsSafetyfactorsDemoseffectDifficultlevel ofdeployingtheprojectTechnicalfeasibilityCO2emissionamountCapturecostCaptureenergyconsumptionContribution to CO2emissionTrafficfacilitiesLocalCCSpolicyPublicawarenessCO2transportsafetyDemoslocationCharacterof CO2sourceenterprises2.SequestrationmethodandamountTransportcostTransportenergyconsumptionImpact onwaterresourcesTerrainCO2leakageDemosscaleCharacterof CO2transportationenterprises3.Whetherthe CO2sourcesand sinksmatchSequestration costSequestrationenergyconsumptionImpact onPMIOemissionsTransportdistanceSubfactors1.4.Characterof CO2sequestrationenterprisesOtherimpactsonenvironment100Table 4.1 lists various factors in choosing CCUS demonstration projects. These factors can bedivided into those necessary and those unnecessary. Necessary factors include the fact that theCO2 sources and sinks must match each other; the technology must be feasible; these projects mustaccord with the local policies; and CCUS can be supported by the majority of the public.Unnecessary factors mean those factors that are not necessary, such as economy factors.In choosing demonstration projects, necessary factors must be satisfied. As to unnecessary factors,we can use a scoring mechanism to come up with the best plan. For instance, when the score ofother unnecessary factors are the same, those with a lower cost and energy consumption can bechosen as the final plan. Table 4.2 lists the scoring mechanism for unnecessary factors.Table 4.2: Scoring mechanism for unnecessary factors in choosing CCUS demonstration projects012345Capture costTransportation costSequestration costCapture energy consumptionTransportation energyconsumptionSequestration energy consumptionTraffic conditionsContribution to CO2 emissionreductionImpact to local water resourcesDifficulty level in deploying theprojectsNotice: mark an ʻXʼ in the box. 0-very low, 1-low, 2-middle, 3-high, 4=very high, 5-extremely high4.1CO2-EOREOR through CO2 flooding (by injection) offers potential economic gain from incremental oilproduction. EOR is thought to be an important option to mitigate CO2. Currently, CO2-EORtechnology has gained a lot of engineering experiences. Early in 2006, USA applied many CO2-EORprojects, and these projects can enhance oil recovery around 234,000 barrels per day [34]. Forexample, the Oxy company has injected around 1.2×109 ft3/d CO2 into the Permian basin, recoveringoil production around 180,000 barrels per day. The Weyburn is one of the biggest CO2-EOR projects– this project has operated for many years and is expected to store CO2 20 Mt and to enhance oilproduction by around 1.22×108 barrels [35]. In China, many enterprises are developing the CO2EOR technology. The Sinpec carried out CO2-EOR experiment in Zhongyuan oilfield in 2006. In2010, this pioneer project had achieved important results. The 2# plant injected CO2 around 17,000tons and water 82,400 m3, enhancing oil production 3,600 tons [36]. The experiences from these101projects have proved the CO2-EOR to be an applicable technology. In 2009, the CO2-EOR pilot wasapplied in Daqing Oilfield [37].Moreover, when storage is combined with EOR, the benefits of enhanced production can offsetsome of the capture and storage costs. Typically, the cost of CO2 injection into an oilfield is around0.6-8.3US$/t (including the monitoring cost) [29]. But the onshore EOR operations can produce netbenefit in the range of 10–16 US$ per ton of CO2 (the benefit depends very much on oil prices, thesefigures are based on the oil price in 2003) [29]. The economic benefits from enhanced productionmake EOR potential early cost-effective options for geological storage.4.2CO2-ECBMIf CO2 is injected into coal seams, it can displace methane, thereby enhancing CBM recovery.Carbon dioxide has been injected successfully at the Allison Project and in the Alberta Basin,Canada [38]. CO2-ECBM has the potential to increase the amount of produced methane to nearly90% of the gas, compared to conventional recovery of only 50% by reservoir-pressure depletionalone [39].The CO2 injection of Allison Unit CO2-ECBM Recovery Pilot Project operations for ECBM recoverycommenced in April 1995. The pilot consists of 16 methane production wells, four CO2 injectionwells, and one pressure observation well [29]. A total of 181 million m3 (6.4 Bcf) of natural CO2 wasinjected into the reservoir over six years, of which 45 million m3 (1.6 Bcf) is forecast to be ultimatelyproduced back, resulting in a net storage volume of 277,000 tCO2 [29]. In recent years, many CO2ECBM projects for evaluating the CO2 storage capacity, risks and etc. have been supported byNSFC, MOST and NDRC.When storage is combined ECBM, the benefits of enhanced production can offset some of thecapture and storage costs. The economic benefits from enhanced production make ECBM potentialearly cost-effective options for geological storage.5.5.1Outlook for EOR and other utilisation options in China and Shaanxi ProvinceOil reservesEOR sites in Shaanxi Province are mainly Yanchang Oilfield and Changqing Oilfield.Yanchang Oilfield locates at Yanʼan (Yanʼan, Yulin, Inner Mongolia included), Shaanxi Province. Itstarts to produce oil with indigenous method in 1905 (the first onshore oil well in China-Yan No.1Well, was 80 metres deep and produced 1–1.5 tons oil per day. It drilled well from 5 June to 6September 1907 with purchased Japanese Dayton drill rig, hiring Japanese technicians and sevenworkmen). Yanchang Oilfield produced 6,115 tons raw oil until 1948. In 1949 it produced 802 tonsraw oil and 176 tons gasoline, which supported the Peopleʼs Liberation Army marching into theNorthwest. Yanchang Oilfield deployed more exploration and construction project after liberation. Itsraw oil production reached 150,000 tons in 1985. Till 1998 it already had 10 well-drilling companies,producing 1.7522 million tons raw oil per year. After reshuffle in 2005, its raw oil production greweven more rapidly. In 2007 its production exceeded 10 million tons and in 2009 its productionreached 11.2 million tons.102The Changqing Oilfield exploration area is mainly located in the Shaanxi-Gansu-Ningxia basin withan area of about 370,000 km2. In recent years, oil reserves in Changqing Oilfield have maintainedrobust growth laying the basis for the promotion of raw oil production. Changqing Oilfield has provengeological oil reserves of about 335.79 million tons, controlled reserves of about 394.04 million tonsand prognostic reserves of about 532.75 million tons since 1999. The four main oilfields ofChangqing are Shanbei Ansai, Jingʼan, Suijing and Wuqi.5.2EOR potentialCO2-EOR is an important technology in CCUS, it can both reduce the emission of greenhouse gasesand promote the production of oil, thus will make some benefits.From around the globe, the potential of CO2-EOR is about 1600×108-3000×108 barrels, which isabout 15% of the EOR production in the world. Most of the CO2-EOR projects are in the USA.In 2008, EOR production in the world was 186.1×104 barrels/day; CO2-EOR production was27.25×104 barrels/day, takes 15.1% of the total EOR production. That is far less than steam-EORproduction, which is widely used in oilfields. But as the development of CO2-EOR, it will replacesteam-EOR gradually. For instance, the USA has realised the industrial application of CO2-EOR, In2008, 105 CO2-EOR projects were built with a production of 25×104 barrels/day and 80% of themwas from Permian basin. That is 38% of the total EOR production and 91% of the CO2-EORproduction in the world. In addition, the number of CO2-EOR projects in the USA is 85% of the world.In 2006, Chinaʼs national Ministry of Science and Technology approved ʻgreenhouse gas-EORresource utilisation and underground storageʼ supported by ʻNational Key Basic ResearchDevelopment Planʼ. In 2007, China National Petroleum Corporation (CNPC) settled a major scienceand technology project ʻgreenhouse gas CO2 resource utilisation and underground storageʼ. Also in2007, CNPC settled a major pilot test ʻJilin Oilfield CO2-EOR and CO2 underground storage pilot testʼ.Thanks in part to this, CO2-EOR and CO2 underground storage research has come into a new stage.In China, gas fields fit for CO2 storage have reserves of 35×108 tons and increased recoverablereserves reaches 3.5×108 tons, which is about an 11×108 tons oilfield. Domestic research has builtCO2 storage evaluation system and basic theories fit for Chinaʼs geological features. They have alsodeployed CO2-EOR, cost-effective CO2 capture, CO2 transport, corrosion and scaling researches.Meanwhile, PetroChina carried out a CO2-EOR and storage pilot test. From these importantachievements in CO2-EOR and storage, we can see the giant potential in CO2-EOR.5.3CO2 storage capacitySequestrating CO2 in depleted oil and gas field due to the exploiting of oil and gas makes room forstoring CO2. Assume that all the room which was filled by minable oil and gas underground can bereplaced by CO2, then the CO2 capacity in oil or gas field can be calculated by the equation below:103In the equation, VCO2 is the CO2 capacity, Mt; Voil(stp) is the volume of minable oil in standardcondition; Vgas(std) is the volume of minable gas in standard condition; Bo is the reservoir volumecoefficient, non-dimensional; Bg is the gas volume coefficient, non-dimensional; ρCO2 is the densityof CO2 in reservoir conditions.Hendriks and Bachu [40, 41] estimated the potential CO2 sequestration volume around the world,depleted oil and gas field in China has a CO2 capacity of 10 billion tons at most.6.ConclusionsCO2 sources fit for CCS demos in Shaanxi Province are mainly methanol, dimethyl ether, synthesisammonia plants which have high-concentration CO2 emissions. As these CO2 emissions costrelatively less to capture and they donʼt need too much pre-treatment before transport, itʼs an idealchoice to deploy early CCS demos in these industries. CO2 sources mainly locate at heavy chemicalindustry bases in Yulin, north Shaanxi and Weinan, south Shaanxi. Yulin District has abundant coaland natural gas resources; itʼs an ideal site for CO2 geological storage where CO2-ECBM can bedeployed. Yanʼan District also has many high-concentrated CO2 sources. Some of these sources areowned by Yanchang and/or Changqing Oilfield; we can use them for CO2-EOR directly. In a word,as Chinaʼs heavy chemical industry bases, Shaanxi Province has abundant CO2 sources; and itsCO2 storage potential is also huge. All these factors make it convenient for early CCSdemonstrations.104REFERENCES[1] R.T. Dahowski, X. Li, C.L. Davidson, N. Wei, J.J. Dooley and R.H. Gentile. A PreliminaryCost Curve Assessment of Carbon Dioxide Capture and Storage Potential in China. 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International Journal of Greenhouse Gas Control,2007,1(4): 430–443107Appendix Ⅰ:Oil & Gas plants in Shaanxi ProvincePlant namePlant typeLocationScaleYananOil productionZichangcountry~400,000t/year in 2006YulinOil productionDingbianCountry~900,000t/year in 2007Yulin JingbianCountryOil productionYanan BaotaodistrictOil productionYananYanchangcountryOil productionYanan BaotaodistrictOil productionYanan ZhidancountryOil productionYanan ZhidancountryOil productionYanan AnsaicountryOil productionYanan BaotaodistrictOil productionYanan BaotaodistrictOil productionYananGanquancountryOil productionYanan ZichangOil productionAttatched to Yanchang PetroleumYanchang PetroleumZichang oil exploitationplantOil exploitationYanchang PetroleumDingbian oil exploitationplantOil exploitationYanchang PetroleumJingbian oil exploitationplantOil exploitationYanchang Petroleum Wuqioil exploitation plantOil exploitationYanchang PetroleumWangjiachuan oilexploitation plantOil exploitationYanchang PetroleumGanguyi oil exploitationplantOil exploitationYanchang PetroleumYongning oil exploitationplantOil exploitationYanchang Petroleum Xiquoil exploitation plantOil exploitationYanchang PetroleumXingxichuan oil exploitationplantOil exploitationYanchang PetroleumNanniwan oil exploitationplantOil exploitationYanchang PetroleumChuankou oil exploitationplantOil exploitationYanchang PetroleumXiasiwan oil exploitationplantOil exploitationYanchang PetroleumOil exploitation~780,000t/year in 2009~1400,000t/year~460,000t/year in 2008~260,000t/year in 2008~1260,000t/year in 2008~1000,000t/year~650,000t/year~500,000t/year~500,000t/year~420,000t/year108Wayaobao oil exploitationplantYanchang PetroleumQilicun oil exploitationplantOil exploitationYanchang Petroleum Zibeioil exploitation plantOil exploitationYanchang PetroleumHengshan oil exploitationplantOil exploitationYanchang PetroleumQingpingchuan oilexploitation plantOil exploitationYanchang PetroleumPanlong oil exploitationplantOil exploitationYanchang PetroleumZhiluo oil exploitation plantOil exploitationYanchang PetroleumNanqu oil exploitation plantOil exploitationYanchang PetroleumZizhou oil exploitation plantOil exploitationYanchang PetroleumYingwang oil exploitationplantOil exploitationcountry~350,000t/yearYananYanchangcountryOil productionYanan ZichangcountryOil productionYananHengshancountryOil productionYananYanchuancountryOil productionYanan BaotadistrictOil productionYanan FuOil productioncountry~70,000t/year-Oil production~300,000t/year-~140,000t/year~100,000t/year~140,000t/year~120,000t/yearYulin ZizhoucountryOil productionYanan Yichuancountry-~40,000t/yearAttatched to Changqing PetroleumChangqing Petroleum 3thoil exploitation plantOil exploitationYanan WuqicountryChangqing Petroleum 4thoil exploitation plantOil exploitationYulinChangqingindustry baseChangqing Petroleum 6thoil exploitation plantOil exploitationYulin Dingbiancountry109Identification, Analysis and Mapping of CCUS Target ProjectsSupporting early Carbon Capture Utilisation and Storage development in non-powerindustrial sectors1101. Introduction1.1 Objective of the reportCarbon Capture and Storage (CCS) is a key technology to reduce Chinaʼs carbon emissions, whilesatisfying its increasing demand for electricity and chemical products, and its continuous reliance oncoal. However, barriers to demonstration and cost-effective development of fully integrated CCSprojects in selected industries include (1) the identification of potentially cost-effective earlyopportunities and (2) a lack of government facilitation between capture and storage industries toensure optimal cost-effectiveness. Continued lack of such coordination through industrial policy,regulations and incentive policies will result in prohibitively high cost of initial CCS demonstrationprojects and is likely to delay further development of potentially cost-effective CCS projects in China.Preliminary work on CCS in China has focused on CCS in the power sector. However, capture in thepower sector is technically challenging, energy-intensive and expensive. Capture can be done atlower cost at large point sources of concentrated CO2, such as in fertiliser plants, coal-to-liquidsfacilities and refineries. China has a large industrial base in these sectors, resulting in a significantCO2 emission reduction potential through CCS.In recent years China has seen the development of Enhanced Oil Recovery (EOR) activities. EORinjects CO2 in oil reservoirs to enhance production and prolong the life of the reservoir. EOR iswidely applied in the United States and Canada and is in development in the Middle East. China hasa large EOR potential and an EOR industry is emerging. CO2 from nearby high-concentration pointsources has a value for EOR operations. This value can be used to develop early cost-effective CCSprojects involving industries where capture cost are relatively low.To date a number of separate preliminary pilots for the capture and storage of CO2 have been andare being undertaken in China. However, none of these pilots succeed in cost-effectivelyestablishing a fully integrated CCS chain, due to insufficient coordination between capture andstorage sectors.Early demonstration of cost-effective CCS potential in selected sectors can significantly advanceCCS development in China in selected industries, in time crossing over into other sectors, includingpower, as the technology and policy conditions mature.By directly engaging stakeholders from relevant industries and the EOR sector, the project willexplore carbon capture potential and the cost in these industries, and help NDRC and MOSTidentifying and better coordinating potential CCS early stage demonstration projects, while buildingawareness in these industries about potential opportunities for collaboration in CCS.1111.2 Methodology and project selecting criteriaTo identify the potential CCS project in Shaanxi Province, we set a series of criteria. The followingfactors need to considered when determining CCS demonstration project: the source-sink matching,the technological feasibility, economical, energy penalty character, policy factor, environment factor,transportation factor, public society factor, safety factor, demonstration effect, the and coordinationoperation difficulty of the project and so on.First, the most important factor in the selection of CCS demonstration project is whether the storagescale matches with the source scale. It is better to choose single CO2 emission source, and makesure this single source scale match well with the storage scale. In this way, the collection andtransportation cost caused by multi emission source can be avoided.Second, the technical feasibility should be taken into consideration in every project. To CCSdemonstration project, it includes the maturity of CO2 capture technology, transportation andsequestration technologies. For example, EOR is relatively more mature than other sequestrationoptions and significant operational experience has been accumulated in this field. Though lessmature, saltwater layer sequestration and coal bed methane mining should also be considered fordemonstration.Third, the cost should be minimised to enhance the economic demonstration effect. In the capturelink, high purity CO2 sources should be selected to reduce the capture cost. The transportation112should within the economic scope. For sequestration, EOR and ECBM which can bring extrabenefits (oil and coal bed gas) should be given priority. Fourth, besides the benefit factor, energypenalty factor is also of great importance. Too high energy penalty will increase the energyconsumption and lead to the rise of fuel/raw material price. Whatʼs more, it is adverse to the effect ofCCS demonstration. So choosing the high purity CO2 sources with little impurity can reduce the CO2capture cost, which meets the energy saving demands and achieve favourable emission reductioneffect.Fifth, with the increasing awareness of environment protection, the potential effect on the localenvironment of the CCS demonstration project should be taken into account. For example, thesequestrated CO2 may have impact on local water resources. And the water demand of CCS projectmay aggravate the local water shortage.Sixth, some social factors such as transportation, policy, safety and public support should also bepaid attention. In terms of transportation, the local terrain, the difficulty of pipe laying and thetransportation distance are factors that need to be considered. In terms of policy, the local policymakersʼ attitude toward CCS is important. In terms of security, the main factors are the pipelinecorrosion and the leakage of CO2 in the transportation process.Seventh, the demonstration effect of CCS project and the public acceptance for CCS need to beconsidered. Favourable demonstration effect could only be achieved with the proper selection oflocation, industry and scale of demonstration, because it is closely related to these factors. Thepublic may worry about the security (e.g. leakage and explosion) of CCS because they do not knowmuch about CCS. Therefore, the public acceptance is one of the considerations, and it can beincreased by propaganda and promotion.Eighth, the difficulty level of coordinating each chain in CCS demonstration project should beconsidered in the selection of potential project, because many organizations and enterprises indifferent industries may be involved, such as power plant, chemical plant and oil companies. Inconclusion, the selection principles of CCS demonstration project are summarized in Table 1.113Table 1 Selection criteria for choosing CCUS demonstration projects1.2.3.TechnicalfeasibilityMatch ofsource andsinkEconomicfactorEnergypenaltycharacterEnvironmental factorTransportation factorPolicy factorSocial factorTechnicalmaturityCO2 amount ofsourcesCapture costCaptureenergy penaltyContribution ofcarbonemissionreductionTransportationequipmentLocal policyfor CCSPublicacceptancedegreeSequestrationmethod andamountTransportationImpact onlocal waterresourcesTerraincostTransportationenergy penaltyMatch ofemission andsequestrationSequestrationcostSequestrationenergy penaltyImpact on theemissionamount ofparticlesTransportationdistance4.SecurityfactorDemonstration effectCO2transportationsecurityDemonstrationsiteCO2 leakageDemonstrationscaleOther impactonenvironment*The highlighted are necessary factors.114All the factors are divided into necessary and unnecessary factors. The necessaryfactors must be satisfied with a priority and are highlighted in Table 1.1. However, forthe unnecessary factors, we develop a scoring mechanism to evaluate these factors.For the unnecessary but important factors, such as cost and energy penalty, we canmark a high score/high weight. For those unnecessary but less important factors,such as demonstration, we can give low marks.Table 1.2: Scoring mechanism for unnecessary factors in choosing CCUSdemonstration projects012345Capture costTransportation costSequestration costCapture energy consumptionTransportation energy consumptionSequestration energy consumptionTraffic conditionsContribution to CO2 emission reductionImpact to local water resourcesDifficulty level in deploying the projectsNotice: mark an ʻXʼ in the box. 0-very low, 1-low, 2-middle, 3-high, 4-very high,5-extremely high2High-purity CO2 sources in Shaanxi2.1 Overview of potential CO2 sourcesAccording to the survey of CO2 sources in non-power industries of Shaanxi, thissection will give a detailed introduction of some typical and representative high purityCO2 sources, including emission scale, purity, factory type and so on, to providesome references for the selection of CO2 sources in the CCUS demonstration project.Ammonia synthesis plants1) Shaanxi Heimao Coaking Stock. Co. Ltd., located in Hancheng City, is arecycling economy enterprise involving sectors of coke, power generation, chemicalindustry and construction material. The company set up six projects, one of which isa co-production of ammonia with methanol project with an output of 100,000 t/y (thisproject belongs to its subsidiary company Heimao Energy Utilization Co. Ltd.). Its115synthesis of ammonia production is about 90,000 t/y, and the byproduct methanolproduction is about 10,000 t/y. About 380,000 tons of CO2with the purity of 99% isgenerated in this plant every year.2) Shaanxi Qinling Fertilizer Company, located in Baoji city, has synthesisammonia production capacity of 160,000 t/y. About 600,000 t/y of CO2 with a purityof 99% is generated in this plant.3) Shaanxi Weihe Coal Chemical Industry Group Co. Ltd., located in Weinan city,has the synthesis ammonia production of 300,000 t/y and the urea production of520,000 t/y with bituminous coal as a raw material. About 1,140,000 t/y of CO2 with apurity of 99% is generated in this plant.4) Shaanxi Chenghua Co. Ltd., located in Chenggu county, Hanzhong city, is theonly enterprise which has urea production and waste heat driven power generationprojects in Southern Shaanxi Province. It has synthesis ammonia production of120,000 t/y, urea production of 140,000 t/y and ammonium bicarbonate production of60,000 t/y. About 450,000 t/y of CO2 with a purity of 99% is generated in this plant.5) Shaanxi Coal and Chemical Industry Group Co. Ltd., located in the finechemical park of Hua county, Weinan city, has synthesis ammonia output of 260,000t/y, the urea output of 320,000 t/y, the ammonium phosphate output of 260,000 t/yand the three elements compound fertiliser output of 100,000 t/y. In addition, thetechnical improvement project for energy conservation and emission reductioncontracted by Shaanxi Coal and Chemcial Industry Group Co. Ltd. has started totalconstruction in October 2008, and was put into operation in November 2011. Thisproject has synthesis ammonia output of 300,000 t/y and urea output of 940,000 t/y.About 2,280,000 t/y of CO2 with a purity of 99% is generated in this plant.6) Yanchang Petroleum Xinghua Large Chemical Industry Project, owned byShaanxi Yanchang Petroleum (Group) Co. Ltd. and located in Xingping City, was putinto operation on 28 December 2011. It includes synthesis ammonia output of300,000 t/y, methanol output of 300,000 t/y, soda output of 300,000 t/y andammonium chloride output of 324,000 t/y. This is an integrated system with ammonia,alcohol and alkali outputs. In the system, the waste gases of CO and CO2 in theammonia synthesis process can be used for methanol synthesis, and the purge gasin the methanol synthesis process can be used for ammonia synthesis. This canreduce the green gas emissions and there are no sulphurous pollutants discharged inthe process. About 1,140,000 t/y of CO2 with a purity of 99% is generated in this plant.7) Shaanxi Fangyuan Chemical Industry (Group) Co., Ltd., located in Yuyangdistrict, Yulin City, operates a synthetic ammonia production line by adopting the116water coal slurry gasification technology, KELLOGG natural gas MEDP steamconversion technology and residual vaporisation technology. Synthetic ammoniaoutput is 300,000 t/y, among which 180,000 t/y is used for urea production and theremaining 120,000 t/y together with the by-product are used for soda production.About 1,140,000 t/y of CO2 with a purity of 99% is generated at this plant.Methanol plants8) The 1,800,000 t/y methanol project in Huangling County, Yanʼan City, has beenapproved and will be co-constructed by the People's Government of Yanʼan city,Shaanxi Yanchang Petroleum (Group) Co. Ltd. and the Hong Kong and China GasCompany Ltd. With coal, gas and oil as raw materials, this project has a methanoloutput of 1,800,000 t/y, MTO (methanol-to-olefin) output of 600,000 t/y, light oilreforming capacity of 400,000 t/y, polyethylene output of 450,000 t/y, polypropyleneoutput of 250,000 t/y, butanol-octanol output of 200,000 t/y, and ethylene propylenerubber output of 60,000 t/y. About 4,500,000 t/y of CO2 with a purity of 99% isgenerated in this plant.9) The 1,800,000 t/y methanol production and deep processing project in Fu County,Yanʼan City, was constructed and is operated by Yanchang Petroleum YanʼanEnergy Chemical Industry Co. Ltd., which is one of the subsidiary enterprises ofShaanxi Yanchang Petroleum (Group) Co. Ltd. About 6,800,000 t/y of CO2 with apurity of 99% is generated in this plant.10) The 1,800,000 t/y coal to methanol project in Jingbian County, Yanʼan City, isin the charge of Shaanxi Yanchang China Coal Yulin Energy Chemical Industry Co.Ltd.; a large scale chemical enterprise making comprehensive utilisation of coal, gas,oil and salt which was jointly established by Shaanxi Yanchang Petroleum (Group)Co. Ltd. and China National Coal Group Co. Ltd. It is responsible for the constructionof the start-up projects in the Jingbian industrial zone of the comprehensive utilisationof energy engineering and chemical industries, which is 10km away from thenortheast of Jingbian County. This industrial zone has total methanol output of1,800,000 t/y. This project is planned to be put into operation in 2014, and theexpected CO2 emission is 6,800,000 t/y with 99% purity.11) The 1,700,000 t/y methanol project in Yuheng industrial zone of Yulin City, isundertaken by Shaanxi Yanchang Petroleum Yulin Coal Chemical Company, a whollyowned subsidiary of Shaanxi Yanchang Petroleum (Group) Co. Ltd. The companyowned the acetic acid project with output of 1,000,000 t/y and is the key project of itskind in Shaanxi. The first stage project has methanol output of 200,000 t/y and aceticacid output of 200,000 t/y. The second stage has methanol output of 1,500,000 t/y,117acetic acid output of 400,000 t/y, vinyl acetate output of 300,000 t/y, acetic anhydrideoutput of 200,000 t/y and acetate fibre output of 100,000 t/y. The CO2 emissions areexpected to be 6,400,000 t/y with purity of 99%.12) The 600,000 t/y methanol project in Weicheng County, Xianyang City, isundertaken by Shaanxi Xianyang Chemical Industry Co. Ltd., a wholly ownedsubsidiary of Shaanxi Investment Group Co. Ltd. It has a coal to methanol output of600,000 t/y and a power generation capability of 25 MW. The CO2 emissions areabout 5,700,000 t/y.13) The gas to methanol/dimethyl ether project in Yanchang County, Yanʼan City,belongs to Shaanxi Yanchang Petroleum (Group) Co. Ltd. and the PeopleʼsGovernment of Yanʼan City. The methanol output of the first stage is 600,000 t/y. Thesecond stage is designed to produce dimethyl ether directly from syngas, with theoutput of 700,000 t/y and is in the phase of inviting investment. The CO2 emissionsare expected to be 3,250,000 t/y after the project is established.14) The coal to methanol project of Shaanxi Shenmu Chemical Industry Co.,located in the industrial development zone of Shenmu County, Yulin City. Thedesigned methanol output is 600,000 t/y. The first stage with output of 200,000 t/yhas already been put into production. The CO2 emissions are expected to be1,500,000 t/y.15) The coal to methanol project of Yanzhou Coal Yulin Energy Chemical Industry,located in the Caojiatan Town, Yuyang County, Shaanxi Province. The designedmethanol output is 2,300,000 t/y, and the present output is 600,000 t/y during the firststage. The CO2 emissions are 7,250,000 t/y.16) The coal to methanol project in the economic development zone of Yulin Cityhas a methanol output of 600,000 t/y and the CO2 emissions are 1,500,000 t/y.17) The methanol plant of Changqing Oilfield, located in Yulin City, belongs toChangqing Branch of China National Petroleum Corporation. The methanol output isabout 100,000 t/y. The CO2 emissions are about 250,000 t/y with purity of 99%.Hydrogen plant18) The 90,000 Nm3/h hydrogen project of Shaanxi Shenmutianyuan ChemicalIndustry Co. Ltd., located in Shenmu County, Yulin City, produces hydrogen fromcoal. The CO2 emissions are about 400,000 t/y with purity of 99%.(www.huaxigas.com/gsyj_js.asp)Ethanol plant11819) Shaanxi Baoji Alcohol Plant, located in Baoji City, is a large scale light industryenterprise which produces 350,000 tons of beer and 30,000 tons of alcohol everyyear. Its main products include superior alcohol and edible alcohol with the brand ofʻTangqingchencangʼ, and various types of beer with the brand of ʻBaojiʼ. The CO2emission amount is about 30,000 t/y.Dimethyl ether plants20) The 1,000,000 t/y dimethyl ether project in Pucheng County was constructed byShaanxi Coal and Chemical Industry Group Co. Ltd. It adopts advanced pressurisedgasification technology for coal-water slurry with coal as the raw material. Theoutputs of methanol and dimethyl ether are about 1,500,000 and 1,000,000 t/y,respectively. The expected annual CO2 emissions are about 6,000,000 tons.21) The 1,000,000 t/y dimethyl ether project in Xianyang City, was in the charge ofShaanxi Carbonification Energy Co. Ltd. The dimethyl ether outputs of the first andsecond stages are about 400,000 and 600,000 t/y, respectively. The construction willbe completed in 2013. The expected CO2 emissions amount are about 2,500,000 t/y.22) The 1,000,000 t/y dimethyl ether project in Yulin City, was in the charge ofShenfu economic development zone and is located in the Jinjie industrial park inShenmu County. The expected annual CO2 emissions are about 2,500,000 tons.The characteristics of CO2 sources directly affect the cost and energy penalty of CO2capture, and exert a great influence on the cost and energy penalty of the wholedemonstration project. Therefore, it is of key importance to select suitable CO2sources for the demonstration project. The most important factors that influent thedemonstration project are the technical feasibility, cost and energy penalty, so thefollowing two key principles must be taken into consideration when selecting CO2sources.1) Technical feasibility and maturity principle. This means that the capturetechnology is achievable in engineering, and the mature technology should be givenpriority to reduce the risk and uncertainty of the project.2) The energy penalty and cost minimisation principle. To get an effectivedemonstration, it is necessary to minimise the cost budget and energy penalty of theCCS. For the EOR technology, the benefits brought by the increase of oil exploitationshould not be less than the cost of capture and transportation. According to a survey,the acceptable price of CO2 for petroleum enterprise is 20$/t, so these enterprisescan only make balance or profit when the cost of capture and transportation is lessthan 20$/t.119Based on the above criteria, the selected proper CO2 sources for CCS demonstrationproject are shown in Table 2.1.Table 2.1: CO2 sources suitable for demonstration project.No.1.Plant NameYuhengLocationPlant typeEmissionCO2PolicyscalepuritysupportYulinMethanol6400000t/yHighYESindustry zone2.JingbianYananMethanol6800000t/yHighYES3.HuanglingYananMethanol4500000t/yHighYES4.YanchangYananMethanol/DME3250000t/yHighYES5.ShenmuYulinMethanol1500000t/yHighYES6.ChangqingYulinMethanol250000t/yHighYES7.ShenfuYulinDME2500000t/yHighYES8.FangyuanYulinAmmonia1140000t/yHighYESXingpingAmmonia1140000t/yHighYESYuyang9.YanchangPetroleum3. EOR potential in Shaanxi3.1 Characterisation of potential EOR sitesIn 2006, Chinaʼs national Ministry of Science and Technology approved ʻgreenhousegas-EOR resource utilisation and underground storageʼ supported by ʻNational KeyBasic Research Development Planʼ. In 2007, China National Petroleum Corporation(CNPC) settled a major science and technology project ʻgreenhouse gas CO2resource utilisation and underground storageʼ. Also in 2007, CNPC settled a majorpilot test ʻJilin Oilfield CO2-EOR and CO2 underground storage pilot testʼ. Thanks inpart to this, CO2-EOR and CO2 underground storage research has come into a newstage.120In China, gas fields fit for CO2 storage have reserves of 35×108 tons and increasedrecoverable reserves reaches 3.5×108 tons, which is about an 11×108 tons oilfield.Domestic research has built CO2 storage evaluation system and basic theories fit forChinaʼs geological features. They have also deployed CO2-EOR, cost-effective CO2capture, CO2 transport, corrosion and scaling researches. Meanwhile, PetroChinacarried out a CO2-EOR and storage pilot test. From these important achievements inCO2-EOR and storage, we can see the giant potential in CO2-EOR.The main EOR sites in Shaanxi Province are the Yanchang Oilfield and ChangqingOilfield.Yanchang Oilfield locates at Yanʼan (Yanʼan, Yulin, Inner Mongolia included),Shaanxi Province. It starts to produce oil with indigenous method in 1905 (the firstonshore oil well in China-Yan No.1 Well, was 80 metres deep and produced 1–1.5tons oil per day. It drilled well from 5 June to 6 September 1907 with purchasedJapanese Dayton drill rig, hiring Japanese technicians and seven workmen).Yanchang Oilfield produced 6,115 tons raw oil until 1948. In 1949 it produced 802tons raw oil and 176 tons gasoline, which supported the Peopleʼs Liberation Armymarching into the Northwest. Yanchang Oilfield deployed more exploration andconstruction project after liberation. Its raw oil production reached 150,000 tons in1985. Till 1998 it already had 10 well-drilling companies, producing 1.7522 milliontons raw oil per year. After reshuffle in 2005, its raw oil production grew even morerapidly. In 2007 its production exceeded 10 million tons and in 2009 its productionreached 11.2 million tons.The Changqing Oilfield exploration area is mainly located in the Shaanxi-GansuNingxia basin with an area of about 370,000 km2. In recent years, oil reserves inChangqing Oilfield have maintained robust growth laying the basis for the promotionof raw oil production. Changqing Oilfield has proven geological oil reserves of about335.79 million tons, controlled reserves of about 394.04 million tons and prognosticreserves of about 532.75 million tons since 1999. The four main oilfields ofChangqing are Shanbei Ansai, Jingʼan, Suijing and Wuqi.121Table 2.2 Inventory of oil field in ShaanxiPlant typeLocationScaleYanchang Petroleum Zichang oil exploitationplantOil exploitationYananZichang countryOil production~400,000t/year in 2006Yanchang Petroleum Dingbian oilexploitation plantOil exploitationYulinDingbian CountryOil production~900,000t/year in 2007Yanchang Petroleum Jingbian oil exploitationplantOil exploitationYulin Jingbian CountryOil production~780,000t/year in 2009Yanchang Petroleum Wuqi oil exploitationplantOil exploitationYanan Baotao districtOil production~1400,000t/yearYanchang Petroleum Wangjiachuan oilexploitation plantOil exploitationYanan Yanchang countryOil production~460,000t/year in 2008Yanchang Petroleum Ganguyi oil exploitationplantOil exploitationYanan Baotao districtOil production~260,000t/year in 2008Yanchang Petroleum Yongning oilexploitation plantOil exploitationYanan Zhidan countryOil production~1260,000t/year in 2008Yanchang Petroleum Xiqu oil exploitationplantOil exploitationYanan Zhidan countryOil production~1000,000t/yearYanchang Petroleum Xingxichuan oilexploitation plantOil exploitationYanan Ansai countryOil production~650,000t/yearYanchang Petroleum Nanniwan oilexploitation plantOil exploitationYanan Baotao districtOil production~500,000t/yearYanchang Petroleum Chuankou oilexploitation plantOil exploitationYanan Baotao districtOil production~500,000t/yearYanchang Petroleum Xiasiwan oilexploitation plantOil exploitationYanan Ganquan countryOil production~420,000t/yearPlant nameAttached to Yanchang Petroleum122Yanchang Petroleum Wayaobao oilexploitation plantOil exploitationYanan Zichang countryOil production~350,000t/yearYanchang Petroleum Qilicun oil exploitationplantOil exploitationYanan Yanchang countryOil production~300,000t/yearYanchang Petroleum Zibei oil exploitationplantOil exploitationYanan Zichang countryOil production-Yanchang Petroleum Hengshan oilexploitation plantOil exploitationYanan Hengshan countryOil production~140,000t/yearYanchang Petroleum Qingpingchuan oilexploitation plantOil exploitationYanan Yanchuan countryOil production~100,000t/yearYanchang Petroleum Panlong oil exploitationplantOil exploitationYanan Baota districtOil production~140,000t/yearYanchang Petroleum Zhiluo oil exploitationplantOil exploitationYanan FucountryOil production~70,000t/yearYanchang Petroleum Nanqu oil exploitationplantOil exploitation-Oil production~120,000t/yearYanchang Petroleum Zizhou oil exploitationplantOil exploitationYulin Zizhou countryOil production~40,000t/yearYanchang Petroleum Yingwang oilexploitation plantAttached to Changqing PetroleumOil exploitationYanan Yichuan country-Changqing Petroleum 3th oil exploitationplantChangqing Petroleum 4th oil exploitationplantChangqing Petroleum 6th oil exploitationplantOil exploitationYanan Wuqi countryOil exploitationYulin Changqing industrybaseYulin Dingbian countryOil exploitation123delivery temperature should also not be too high, because high temperature wouldmake the cost of heating and insulation increase rapidly, as the Canyon Reef Projectrequires, the CO2 transportation temperature does not exceed 48.9℃.Strict control of content of water and H2S and other acidic components is verynecessary, to prevent the emergence of excessive pipelines corrosion in thetransport process. Material flow should not contain free water, as well as the contentof H2S not exceeding the prescribed value (often 1500ppm). Different ways ofterminal handling (for sequestration or for oil), have different requirements of materialflow composition. Low nitrogen content flow is very important for EOR, but it is not soimportant if CO2 is to be sealed in the brine layer.•Rail/ RoadThe liquid CO2 can be transported by the tank truck with a low temperature adiabaticrefrigerated tank. The storage conditions of CO2 in the tank truck should beconsidered according to the specific circumstances, which are usually (1.7MPa, 30℃) or (2.08MPa, -18℃). The capacities of the tank are in the range of 2t to 50t.Tailor-made tank is necessary when using railway and its transport pressure is about2.6MPa.Tank transport by highway and railway, has the advantages of flexible, adaptable,convenient, reliable and so on, but has much higher cost than pipeline transport. AnIPCC report (2005) indicated that this type of transport system is not economical(except for small scale transport) compared to the pipeline transport and shiptransport, so it is impossible to be used in large scale CCS system.It was necessary to state that there is also vaporisation problem in the truck transportprocess. The vaporised rate depends on the storage time in the truck, and it canreach up to 10%.•ShipShip transport of CO2 may be more attractive from the view of economic feasibility insome cases, especially for long distance transport or cross-sea transport. The largescale transport of LPG (which consists mainly of propane and butane) by seagoingtanker has been commercialised. The feature of liquid CO2 is similar to that of LPG,so the same method can be adopted for CO2 transport. However, due to the limiteddemand for CO2, the current transport scale is relatively small. If there is demand forthis type of system, this technology can be gradually employed in the large scale CO2transport ships.125The pressure of CO2 is usually kept at 0.7MPa when using ship transport. Thecapacity of the liquid tank and the character of the loading and unloading system arethe key factors that determine the total transport cost (IPCC, 2005). ASPELUNDet.al.(2006) pointed out that it was the most economical way to transport CO2 afterbring compressed to 6.5 bar and -52ºC. They also pointed out that when the distancewas 1500km, the energy consumption rate was 142kWh/tCO2 and the transport costwas 0.351RMB/t/km. Statoil et.al.(2004) and IEA GHG(2004) pointed out respectivelythat the transport cost were 42US$/t (7600km) and 35US$/t (7600km).The comparisons of different transportation method, including economic andpreferable scale comparison, are shown in Table 4.1.Table 4.1: Comparisons of different transportation methodTransportation methodPreferable scaleCO2 transportation costPipelineLarge scale, >2Mt/year~1$/t/100kmRailway/Road tanksSmall scale6~17$/ t /100kmShipMedian-large0.6~5$/ t /100km4.2 Existing transportation infrastructure and potential physical barriers inShaanxiAs a major coal-producing province in China, Shaanxi has a developed traffic system.Shaanxi Province has a developed railway network formed of north (Shenshuo),middle (Houxi and Longhai) and south (Xihe, Xikang and Baocheng) transportchannels. These channels connect the railway network of northern Shaanxi,Guanzhong and southern Shaanxi. Moreover, construction of Taizhong-Yinchuanrailway, Xiyan railway and the Xiping railway and railway extension guarantees theexport of energy resources from Shaanxi Province. In pipeline construction, somecities of Shaanxi Province are in the West-East line; thus Shaanxi has some pipelinetransport capacity.Up to the end of 2007, highways in Shaanxi had reached 121,300km, highwaydensity has increased from 26km per hundred square kilometers in 2005 to 58.9kmper hundred square kilometers in 2007, which was 21.7% higher than the nationalaverage level. Expressway density has reached 1km per square kilometer, 0.44%higher than the national average level. In Shaanxi Province, expressway was2063km; first and second class highway was 6771km; and three and four class126highway was 81995km. 55.9% of them were bituminous or cement roads. Since 2005,Shaanxi has built many expressways, like those connecting Yangxian-HanzhongMianxian, Fuping-Yumenkou, Huangling-Yanʼan-Yulin-boundary of Shaanxi and InnerMongolia, and new mileage was 1012km. In 2007, Shaanxi built five expressways,include Qinling Zhongnanshan tunnel, Huxian-Yangxian, Wubao-Zizhou-Jingbian,Xianyang-Yongshou. New mileage was 418km; total mileage reached 2063km. Afterthe breakthrough of 1000km in 2003, it was the first to exceed 2000km in West China,ranking 10th in the country; eight cities, one district and 65 counties were connectedby expressway. Based on the construction of expressway and rural highway, ShaanxiProvince also promoted the transformation of national and provincial highways and219km first class highways and 727km second highways were built in three years,this substantially improved the road conditions and technical level. Also in 2007,national and provincial highways, such as the Guanzhong ring road, G316, S201,S303, etc. as key objects, attracted 1.1 million Yuan and 350km highway was built.The entire construction of Guanzhong ring road pushed forward the developmentstrategy of Guanzhong ʻOne Line, Two Districtsʼ.Traffic conditions in Shaanxi Province indicate that Shaanxi has a relatively welldeveloped railway and highway system, and it can basically meet the need for energyexport. Besides, Shaanxi Province is located in the West-gas-to-East pipeline,making it has a certain pipeline capacity, and the terrain conditions are fit for pipelinelaying.4.3 Recommendations on selection of transport optionsConsidering traffic situation in Shaanxi Province and the feature and cost of differentCO2 transportation methods, we suggest taking railway or tanks to transport CO2 forsmall scale CCS demos. As the demos scale reach a high level, for instance if wecan sequestrate two mega tons/year CO2, then the pipeline transportation methodcan be used.5. Source-sink matching options5.1 Description of source-sink matching options according to selection criteriaIn consideration of economics, we selected CO2-EOR as our recommended CCUSdemonstration. As outlined previously, Shaanxi Province has two oil fields – theYanchang Oilfield and Changqing Oilfield. Around these two oil fields, the potentialCO2 sources for CCS demonstration project in Shaanxi Province are shown in Figure1275.1. Most of these sources are methanol plants, dimethyl ether plants and ammoniasynthesis plants. These plants have high purity CO2, which leads to low cost andenergy penalty for CO2 capture and needs no pre-treatment before transportation.These sources are suitable for the early CCUS demonstration project. Theseemission sources are located intensively in heavy chemical industry bases, such asYulin and Weinan. The Yulin area is abundant in coal and natural gas, and it is alsoone of the ideal CO2 sequestration sites. CO2-ECBM or CO2-EOR can bedemonstrated in these areas. There are also many high purity CO2sources in theYanʼan area, and some of these sources are owned by Yanchang Oilfield orChangqing Oilfield. So the CO2 from sources can be used directly to enhance oilrecovery rates. In brief, as one of the national heavy chemical industry bases,Shaanxi Province has a large number of high purity CO2 sources and large potentialfor CO2 sequestration, so it is suitable to apply an early CCUS demonstration project.Figure 5.1: The applicable CO2 sources for CCS demonstration.128According to the CCUS project selection criteria, the recommended projects inShaanxi Province are listed in Table 5.1.Table 5.1: Recommended non-power CCUS projects in Shaanxi ProvinceCase 1Case 2CO2 sourcesTransportationmethodYanchang oilfield methanolplantPipelineYanan Fuxianmethanol plantPipelineCase 3Changqing oilfield methanolplantCase 4Jingbianmethanol plantHighway/railwaytanksStoragetypeStorage locationEORYanchang OilfieldEORYanchang OilfieldEORChangqing OilfieldEORChangqing OilfieldPipeline5.2 Further description of selected source-sink matches5.2.1 Description of stakeholders involvedChinese governmental institutions are playing major roles in monitoring, managing,and developing CCS technologies and regulations, while big businesses, like powergeneration and resource companies, are also key stakeholders. The following areseveral institutions that are very likely to be involved in the CSS field:Chinaʼs non-power generation development and related climate change issues arecoordinated by the State Council, in which the National Leading Committee onClimate Change was established; it is led by Premier Wen Jiabao. Under the StateCouncil, several key government ministries related to climate change issues includethe National Development and Reform Commission (NDRC), the Ministry of Scienceand Technology (MoST), the Ministry of Finance (MoF), the Ministry of EnvironmentalProtection (MEP), the Ministry of Land and Resources (MLR), the StateAdministration of Work Safety (SAWS) and local governments like ProvincialGovernments, Autonomous Regions, and Municipalities. Various stakeholders of theministries are now adopting different roles in policy establishment, project approval,international negotiation, investment and project planning, research and developmentof CCS technologies, and the environmental issues related to development of cleancoal and advanced power generation.129Investment and implementation of CCS related technologies have been carried outby several energy companies, for example power generation groups such asHuaneng and Huadian, the electric grid companies like State Grid Corporation ofChina, resource companies like PetroChina, Sinopec, and Shenhua group, Yanchang Petroleum and so on.In consideration of the cooperation among multiple authorities, it is better that theproject implementers are those who own the CO2 sources and oil fileds. Yan ChangPetroleum is recommended as the project construction and operator for case 1 andcase 2, and Changqing Petroleum for case 3 and case 4.5.2.2 Qualitative assessment of economics (more/less expensive thanpublished cost)Table 5.2 is the preliminary economic evaluation of the indentified CCS projects inShaanxi Province. Compared with application in power sector, CCS demonstration innon-power sector, especially in chemical industry with high-purity CO2 emissions, hasthe advantage of cost reduction. Typically, the CO2 capture cost from PC (coalpulverised plant) ranges from 35–50$/t, but is only 15–20$/t in a methanol plant.Considering the benefit from oil production, the total CCS cost of the recommendedcases shows obvious economic attractions.Table 5.2: Qualitative assessment economicsTransportationcostCO2capturecostCase 1Case 2Case 3Case 4Capturefrom powersector15~20$/t1.5$/t15~20$/t15~20$/t15~20$/t35~50$/t81Injection5costTotal CCS6costTotal CCS costafter considering7the oil benefit6$/t22.5~27.5$/t-50.5~5.5$/t3$/t26$/t24~29$/t-46~7$/t8$/t36$/t29~34$/t-41~12$/t3$/t46$/t24~29$/t-46~7$/t3$/t96$/t44~59$/t-20~37$/t1.Pipeline transportation, 150km. 2. Pipeline transportation, 300km. 3. Highway tanks transportation,100km. 4. Pipeline transportation, 300km. 5. Excluding benefit from enhanced oil, data from IPCCspecial report on carbon capture and storage. 6. Excluding benefit from enhanced oil. 7. Including thebenefit from oil production. Based on IPCC report, the net EOR cost is around -16$/t assuming the oilprice is 20$/t. In this report, the oil price is assumed to range from 20$/t to 100$/t. 8. CO2 is capturedfrom traditional coal-fired power plant. 9. Pipeline transportation, 300km.1306. Conclusions6.1 Total identified potential for cost-effective source-sink matchingIn this project, we investigated the high-purity CO2 sources, the oil reserves, and theearly CCUS opportunities in non-power sector in Shaanxi Province. According to ourstudy, Table 6.1 listed our recommended CCUS projects in Shaanxi Province. Thecost performance of the four selected cases area summarised in Figure 6.1. All thesecases show obvious economic advantages, which indicate that CCUS application inthe non-power sector in economically feasible.Table 6.1 Recommended non-power CCUS projects in Shaanxi provinceCO2sourcetypeSourcelocationCase1Yanchangoil fieldmethanolplantYananCase2YananFuxianmethanolplantYananCase3Changqingoil fieldmethanolplantYulinCase4JingbianmethanolplantYulinTransportationmethodStoragetypeStoragelocationEORYanchangOilfield3.2 milliontons/yearYananEORYanchangOilfield6.8 milliontons/yearYananEORChangqing Oilfield0.25milliontons/yearYulinEORChangqing Oilfield6.8 milliontons/yearYulinPipelinePipelineHighwaytanksPipelineCO2injectionscaleOil fieldlocationFigure 6.1 Cost performance of the selected cases131!"#$%&'($&")*#+&$(*$+&",'(-+$".(!+*$/'0!.%12),(+2.(3')'42$5(-+$".(!+*$/2)!.%12),(+2.(3')'42$6(72,75(-+$".(!+*$/2)!.%12),(+2.(3')'42$6(.+85(6.2 RecommendationsThis report has identified 4 cost-effective full-chain CCUS projects based on amatching of high-purity industrial CO2 point sources and EOR potential in Shaanxi. Inorder to develop these projects we here present our key recommendations:a. Support further technical and economic feasibility studies on the proposeddemonstration projectsb. Encourage discussion among relevant stakeholders on implementationaspects of the proposed demonstration projectsc. Identify key project risks and barriers and develop government measuresto mitigate these risks and barriersd. Provide long-term stable investment conditions and incentives for projectparticipants in capture, transportation and utilization sectors.e. Select one key demonstration project to focus further effort on.f.Develop medium-term plan for developing other cost-effective CCUSprojects in ShaanxiImplementing CCS demonstration project. Form a government supported andenterprise mainstay regime to coordinate interests among industries; implementdemonstration projects; accelerate the transfer of scientific achievements; andrealise the combination of scientific and industrial plans. Use foreign funds tosupport CCS demonstration projects, and meanwhile make sure that the nationʼsfund takes a substantial proportion of the total investment to mitigate theenterpriseʼs risk and responsibility.132Building CCS technological platform and strengthening internationalcooperation. Form a national low carbon technology research centre and analliance between industry, academia and the research community to make CCSkey technology breakthroughs. Strengthen international cooperation in low carbonrevolution areas, and build an international regime with low carbon technologyR&D, competition and optimisation.The project strongly recommends that (at least) the first demonstrationproject should be a national programme, conducted by a consortium ofcomplementary partners led by a pioneering company with government supportand the learning and experiences gained during demonstration can be accessedamong all interested enterprises. Chinese enterprises have started taking actionsin CCS research and development. However, there is an absolute necessity forstrong government leadership to form a national CCS consortium. Ademonstration project should be a horizontally integrated project along the CCSvalue chain in order to combine strengths and reduce weaknesses substantially.Such integration could be achieved through either signing long‐term contractamong participating companies in capture, transportation and storage along theCCS value chain or establishing a joint venture among shareholder companies toshare risk among different companies.China has an opportunity to observe and draw lessons from theexperiences of other countries in deciding how it wants to proceed indeveloping regulations. At the same time, it is important to recognise that theseregulatory frameworks are being prepared by nations that expect to establish alegal basis for the commercial deployment of CCS. 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(2010) CO2 emissions and mitigationpotential in China's ammonia industry, Energy Policy 38/7, pp. 3701-3709,http://www.sciencedirect.com/science/article/pii/S0301421510001527.136Summary Report: Technical, Financial and RegulatoryAssessments of CCUS in Shaanxi ProvinceSupporting early Carbon Capture Utilisation and Storage development in non-powerindustrial sectors1361. Background and Introduction1.1 Status and rationale for CCUS in Shaanxi ProvinceShaanxi province in Central Mainland China is a region that has abundant fossil fuel resources ofcoal, natural gas and crude oil and has been ranked third in China for the production of theseresources. The many fossil fuel consuming industries in the province accounted for 138 million tonsof CO2 emissions in 2005, making up 2.4 % of Chinaʼs total emissions. By 2009, the CO2 emissionsfrom Shaanxi rose to 209 million tons/year and they may reach 450 million tons/year by 2015. Theprovince is home to numerous coal fired power stations, which account for 70 % of the overallemissions. In addition, there is also a substantial cement production industry, which accounts for 10% of the CO2 emissions. The large chemical coal industry (e.g. ammonia and methanol production)in the region accounts for around 20 % of the CO2 emissions.In the context of this report, Carbon Capture and Utilisation Storage (CCUS) refers to the matchingof industrial high-purity CO2 sources, such as those of fertiliser plants or coal-to-liquid fuels facilities,with a sink industry which would make beneficial use of the captured and transported CO2, such asEnhanced Oil Recovery (EOR). The capture of CO2 from industrial high-purity sources requiresmuch less additional process development than conventional carbon capture from the powergeneration industries because the production of pure CO2 is already an inherent part of the process,often arising from gasification technology. Similarly, the sink industries may require lessdevelopment than conventional CO2 storage in geological formations like saline aquifers; hence,CCUS does not refer here to conventional carbon capture and storage.As Shaanxi is home to many high-purity CO2 source industries and has oilfields operated byChangqing oilfield company and Shaanxi Yanchang Petroleum Group which are believed to beamenable to CO2-EOR with an estimated vast CO2 storage capacity, it makes an excellent candidateregion for the development of CCUS demonstration projects which could prepare the way for largerscale deployment of CCUS, and eventually conventional CCS from the power generation sector. Inaddition, the Ordos Coal Basin sites Coal Bed Methane (CBM) extraction that could also potentiallybenefit from enhanced recovery via CO2 injection.Local and national politics is supportive of CCUS activities in Shaanxi. In the report “The 12th fiveyear plan for national economic and social development of Shaanxi Province”, a CO2 emissionreduction target of 15% was set for the province over the period 2016-2020 and Shaanxi isenvisaged to be Chinaʼs low carbon demonstration province. Low carbon development is expectedto be an important theme of the economy of the province. In 2010, Shaanxi was selected as one ofChinaʼs low carbon experimental provinces. In the same year, the province came up with “Lowcarbon pilot implementation programme in Shaanxi Province”. This programme set out the lowcarbon development roadmap for Shaanxi, with recommendations for adjusting the economicstructure, deploying pilot demonstrations, developing low carbon technology and promoting CCUScooperation with the USA, Holland and other countries. The aim of this programme is to reduce thecarbon emissions by 17% of those of 2010 by 2015. Deploying CO2 emission reduction technologyin Shaanxi is therefore essential. As an important CO2 reduction emission technology, early CCUSdemonstration will be an important development in Shaanxi, which would enhance the provinceʼsnational and international reputation. The government is supportive of a CCUS demonstrationproject in Shaanxi province.There have not yet been any fully linked CCUS demonstration projects in Shaanxi. However, theYulin natural gas chemical company employed CO2 capture equipment in their facilities from 2004-1372010. Research and Development on low carbon technology has been conducted in Shaanxiprovince since 2004 and the academic community and government agencies have held numerousseminars and published many papers and reports on the topic.1.2 Objectives and approachThe major objective of this work is to promote early opportunities for CCUS using high purity nonpower industrial sources of Shaanxi, which may act as a catalyst for the larger scale deployment ofthe technology. A number of actions have been taken in support of this. Firstly, a review of thetechnical, policy, legislative and economic gaps and barriers relating to CCUS implementation inShaanxi was conducted and reported.The identification of a suitable CCUS demonstration project in Shaanxi Province would help topromote the wider deployment of low carbon technologies. To do this, inventories of suitable highpurity industrial CO2 sources and CO2 sink industries of EOR and ECBM have been compiled. Theinformation has been gathered from a combination of industry surveys and publicly availableinformation in academic papers, reports and on the Internet. Based on a set of selection criteria andpoints system a number of potential CO2 source-sink matches for a CCUS demonstration projectwere then identified and ranked for preference. During the course of the project a number ofworkshops were organised with attendance of relevant stakeholders from CO2 source and sinkindustries and local government. The workshops brought together the involved parties thusfacilitating dialogue on promoting CCUS and were used to disseminate the project findings.2. Policy and Regulation for CCUS2.1 Implementing an emissions trading schemeAlthough there may be economic benefits for investing in CCUS with the combination of EOR, suchbusiness models may only be applicable in combination with a low cost (high purity) source of CO2,a minimum transport distances and the suitability of the oil field in question. Furthermore, merelyapplying CCUS to high purity sources of CO2 will not have a sizeable impact on Chinaʼs CO2emissions. These primarily stem from power generation and industrial production, which generallyhave lower concentrations of CO2 in their associated exhaust streams. Therefore, in order tosustainably encourage the deployment of CCUS to maximise the technologyʼs contribution to CO2abatement, policy mechanisms will be required. This section introduces a number of these potentialpolicy mechanisms.A CO2 emissions trading scheme, or cap-and-trade scheme, places an emissions cap on a numberof identified installations in a geographical area. Emissions allowances are provided to theinstallations owners prior to the start of the trading period, either based on their existing emissions,or the government may issue fewer allowances in order to reach an overall emissions target for theemitters in the scheme. At the end of a verification period, operators must submit one allowance forevery ton of CO2 (or other pollutant) emitted. However, by investing in abatement technologies theoperator can retain a number of allowances that can be traded for financial reward on a marketplatform. The principle of a cap-and-trade system is that operators who are able to reduce theiremissions at the lowest cost will do so, leading to the lowest cost to emissions reduction for societyas a whole.138The State Councilʼs Energy Saving and Emission Reduction Working Plan in Twelfth Five-Year Plan(September 2011) aims to build up carbon trading market by launching ETS pilots and voluntaryreduction mechanism. The NRDC government has encouraged establishing pilot emissions tradingschemes in the Cities of Chongqing, Beijing, Tianjin, Shanghai and Shenzhen, as well as theProvinces of Hubei and Guangdong. The pilot schemes, announced in November 2011, aim toundertake the tasks of:••••Calculating the emissions capDesigning allocation plan for emission allowancesSetting up the monitoring and registry systemBuilding up the trading platformThe timeline for implementation of these ETS pilots is not yet clear. Calculating the emissions cap iskey to determining the success of an emissions trading scheme. It is unclear how the emission capwill be calculated, as China has no absolute emissions target, however the CO2 reduction target isbased on CO2 per unit of GDP. In 2009, the Chinese government committed to cut its CO2 emissionsper unit of gross domestic product (GDP) by 40% to 45% of 2005 levels by 2020. Subsequently, in2011 the Chinese government set the target of 17% reduction of CO2 emissions during the TwelfthFive-Year Plan. The selection for CO2 reduction based on emissions intensity can allow industrialgrowth to continue how in a less emission intensive manner. However, this form of CO2 reduction isdistant to the approach used in the United Nations Framework Convention on Climate ChangeʼsKyoto Protocol, which has fostered the agreement of absolute emissions targets for a number ofdeveloped countries.It is also unclear how the CO2 intensity target can be transposed into a cap-and-trade system, aswith the intensity target there is no actual cap on emissions. For example, in the European EmissionTrading Scheme the fungible trading permit is equal simply to one ton of CO2, whereas a tradingscheme based on emissions intensity would require the development of a new metric (for exampleprovincial CO2 emissions/provincial output), or to convert the CO2 intensity target based on projectedGDP to the estimated emissions reduction requirement. Another question is how the intensity targetsmay be allocated regionally to reach the national intensity target.Once the scope of the emissions trading scheme has been established, the method in which thepermits are allocated is key to influencing what the eventual price of tradable credits will be on themarket platform. If too many allowances are allocated then the price per credit will be too long tospur investment in any abatement technologies, whereas if the allocation is too strict the credit pricewill be high and could impact on regional competitiveness in trade, increasing the price of goods andpower. For example, the first round of the EU ETS between 2005-2007 adopted the ʻgrandfatheringʼapproach for allocation, distributing allowances based on previous emissions of the emitters. Insome cases this led to windfall profits for certain companies as they were able reduce emissionsrelatively cheaply and retain a large surplus of credits. The other option is to ʻauctionʼ a percentageof the allowances at a cost equal to or close to the desired carbon prices in order to reduce theamount of allowances in the scheme.In order for any emissions trading system to work, the emissions of the operator will need tomeasured periodically in order to the be reported to the governing authority. The measurements willalso need to be verified by a third-party. Even if the emissions trading schemes start in certainsectors in separate regions, China should strive to ensure that the monitoring and verification139techniques are consistent throughout the country. This is important so that in some point in thefuture, emission credits could be traded nationally and internationally.Given NDRC and State Council announcements on emission trading and the significant pilotingeffort under way in five cities and two provinces, it seems likely that some form of emissions tradingwill be introduced in China in the future, possibly during the Thirteenth Five-Year period. However,the implementation modalities of such an ETS would likely significantly differ from current ETS weknow elsewhere in the world and it remains highly uncertain if such systems will result in a carbonprice in China that is high and stable enough to improve the economics of CCUS.2.2 Regulation of CO2 transport and storageIn parallel to the development and commercialisation of CCUS technologies, a legislative orregulatory framework is a key enabling factor for the deployment of CCUS in any country. However,akin to the majority of countries across the globe, no legal framework exists in China that canregulate this multifaceted and innovative abatement technology. Basically, effective regulation isessential to ensure that CCS operations are conducted in a manner that causes no harm to peopleand the environment. Furthermore, the development of a comprehensive regulatory framework is afundamental step to ensure community and industry confidence regarding the capture, transport andstorage of CO2.2.2.1 CO2 transport and associated infrastructureThe regulation concerned with transporting CO2 can be divided in two categories; i) regulation of thecaptured CO2 itself; and ii) regulation concerning the development of CO2 transportationinfrastructure. The large-scale transportation of CO2 is not a common activity in many countries. InChina, the captured CO2 may be classified as a waste product, and thereby the capture CO2 couldbe exposed to existing legislation, which prohibits geological storage. In the EU Directive on thegeological storage of CO21, Article 35 amends Article 2(1)(a) of the Waste Framework Directive,categorically removing from the definition of ʻwasteʼ, carbon dioxide captured and transported for thepurposes of geological storage, provided it is geologically stored in accordance with the CCSDirective. Although having CO2 classified as a waste does not prevent the movement of thesubstance, the movement and disposal of waste often has additional administrative and permittingrequirements.Another area of regulation that may be required concerns the purity of the CO2 stream to betransported. Impurities in CO2 streams can include nitrogen (N2), oxygen (O2) and water (H2O), butalso air pollutants such as sulphur and nitrogen oxides (SOx and NOx), particulates, hydrochloricacid (HCl), hydrogen fluoride (HF), mercury, other metals and trace organic and inorganiccontaminants. The removal of certain contaminants may be required for health, safety andenvironmental protection reasons, but also to ensure the effective transport and storage of the CO2stream. The EU Directive of the geological storage of CO2 does not place quantitative limits on thecomposition of the captured CO2 stream, however it states that the stream should consistoverwhelmingly of CO2. This qualitative approach has been both praised, for providing flexibility in1Directive 2009/31/EC140the early stages of the development of capture systems, and criticised for creating uncertainty in therequired stream specifications.In terms of the regulation of CO2 transport infrastructure, amendments may need to be made toexisting Chinese regulations and potentially new legislation developed. As mentioned previously, inthe EU Directive the requirements of EIA were extended to CO2 pipeline developments. TheDirective stipulates that pipelines with a diameter greater than 800mm and over 40km in length forthe transport of CO2, will be subject to a mandatory EIA. In China the State Environmental ProtectionAdministration (SEPA) is responsible for overlooking that EIA are completed on relevantdevelopments.2.2.2 Storage regulationRegulation must be developed that ensures the safe and long-term storage of CO2. The backbone ofa regulatory framework for CO2 storage in any country must cover the following three elements:•Selection and characterisation of the geological storage site•Risk and safety assessment•MonitoringFirst, the prospective storage site must be characterised to assess its suitability. This stage involvessub-surface data collection using well logging to gain an insight into the permeability and porosity ofthe facies and seismology to understand the characteristics and rock layers that make up thestorage formation. Once sufficient data has been collected, a static geological model can bedeveloped. In order to test the performance of storage formation given the introduction ofsupercritical CO2, dynamic modeling must be conducted. Dynamic modeling should show how thesite will react, and from which a risk and safety assessment can be developed. The competentauthority must then use these assessments to assess whether a storage permit can be issued.A robust site-specific monitoring plan must also be developed prior to injection. The principal goal ofmonitoring is to verify that the CO2 in the storage system is behaving as has been predicted by thegeological model. The success of all monitoring techniques depends greatly on creating a robustpre-injection baseline, measured over a substantial period of time, against which all futuremeasurements can be compared afterwards. Creation of such a baseline should enable to interpretmonitoring results in case of significant irregularities or migration of CO2 out of the storage complex.A monitoring plan should include both subsurface techniques such as 2, 3 and 4D seismic, downhole temperature and pressure measurements and geophysical logging, as well as shallow-focusedmonitoring techniques such as soil gas/surface flux measurements, tiltmeters, microbiology testingand bubble chemistry and measurement techniques (the latter in the case of offshore storage).3. Investment for CCUS infrastructureFinance for large scale CCUS is currently not developed in China. If cost-effective full-chain CCUSprojects can be identified, it is possible that investment from the corporate and financial sector canbe attracted to finance (parts of) these projects. For example, in the case of EOR the oil companythat uses the CO2 would invest in the CO2 infrastructure at its injection sites. Financing options forthe capture installations at the source industries depend on the nature of the contract between theUtilisation and the Source parties. A strong long-term contract with strong counterparties may be141able to allow external financing or financing off the balance sheet of the parties involved. However,at present business models and commercial arrangements for establishing a full-chain CCUS projectare undefined and therefore any notion on the source of finance remains theoretical.The government could be a key source of finance for CCUS projects, both directly and indirectly.The Ministry of Science and Technology (MOST) has supported a number of CCUS demonstrationprojects (see Table 3.1)142Table 3.1 Existing and planned CCUS infrastructures in China.ProjectCapture MethodStorage/UsageScaleCurrent SituationBeijing Thermal Power Plant CaptureProject, Huaneng GroupPost-combustion CaptureFood industry, industry3,000 tons/yearUnder operationShanghai Shidongkou Power Plant CaptureProject, Huaneng GroupPost-combustion CaptureFood industry, industry120,000 tons/yearUnder operationChongqing Shuanghuai Power PlantCapture Demonstration, China PowerInvestment CorporationPost-combustion CaptureN/A10,000 tons/yearUnder operationJilin Oil Field CO2-EOR R&D project, ChinaNational Petroleum CorporationNatural Gas CO2SeparationEOR0.8-1 million tons/yearPhase I finished;Biodegradable Plastic Production usingCO2, China National Offshore OilCorporationNatural Gas CO2SeparationBiodegradable Plastic Production2,100 tons/yearUnder operationCO2-ECBM Project, China CBMPurchaseECBM40 tons/daySuspendedNew Chemical Material Production usingCO2, ZHONGKEJINLONG Chemical Co., LtdCO2 Captured From AlcoholPlantsChemical Material Production8,000 tons/yearUnder operationGreenGen Tianjin IGCC Demonstration,Huaneng GroupPre-combustion CaptureEORLianyungang Clean Energy DemonstrationPre-combustion CaptureSaline Aquifer Sequestration1 million tons/yearPreparatoryHubei Yingcheng 35MWt Oxy-fuelCombustion DemonstrationOxy-fuelSalt Mine Sequestration100,000 tons/yearPreparatoryCCUS Demonstration, China GuodianCorporationPost-combustionFood industry20,000 tons/yearPreparatoryPhase II ongoingPhase I ongoingCapture143Microalgae Carbon Sequestration Bioenergy Demonstration, ENN GroupCO2 Captured from CoalChemical IndustriesBio-sequestration320,000 tons/yearOngoingCCS Project, Shenhua GroupCO2 Captured from CoalLiquefaction IndustriesSaline Aquifer Sequestration100,000 tons/yearUnder OperationShengli Oil Field CO2-EOR Demonstration,Sinopec GroupPost-combustion CaptureEOR30,000 tons/yearUnder Operation1 million tons/yearPreparatoryCCS-EOR Demonstration144However, government funding levels have been mostly research focused and have been deployedat relatively small scale. Indirectly, the government can encourage investment in CCUS projects bythe State Owned Enterprises that dominate the power, oil and gas and chemical industry sectors. Infact, in the largest CCUS demonstration project in China, the Huaneng Tianjin IGCC polygenerationand CCUS demonstration project, MOST has contributed 50 mRMB from the 863 funds of theoverall 1.5 blnRMB investment for this project. The remaining investment in this case comes fromHuaneng, one of the five large state-owned power generating companies in China. While this seemslike a large investment in CCUS, it should be noted that the main part of the investment goes todeveloping an advanced IGCC project and CCUS is only a small part of the overall project.One of the main areas for government finance in establishing a full-chain CCUS demonstration couldbe the transportation network. While transportation costs do not have to be a bottleneck fordeveloping CCUS projects from a mere cost perspective, government investment for basicinfrastructure, to which sources and sinks can connect, can help to reduce the risk of investment incapture or storage infrastructure. A basic transportation backbone will ensure easier access to awider set of sources and sinks, therefore providing better insurances that stable CO2 supply anddemand can be maintained cost-effectively throughout the life of the project. Furthermore, thegovernment can finance infrastructure at more favourable conditions, thereby lowering the cost oftransportation. With the resulting reduced market risk and lower transportation cost, the risk profile ofa capture and/or utilisation investment significantly improves, thus enhancing the various financingoptions to both source and utilisation industries.4. EOR storage and other utilisation options in Shaanxi ProvinceAs is widely acknowledged that CO2 can be utilised to enhance coal bed methane (ECBM), toenhance oil recovery (EOR) and to enhance gas recovery (EGR). Shaanxi Province is rich in coaland gas resources, and it has some large oil fields. Therefore, Shaanxi Province has great potentialto store and utilise CO2. Also, Shaanxi Province is the core of the Chinese coal chemical industryand the CO2 can be utilised in chemical plants.4.1 Assessment of EOR storage capacitySequestrating CO2 in depleted oil and gas field allows for storage of CO2 by the exploiting of oil andgas. Assuming that all the room that was filled by minable oil and gas underground can be replacedby CO2, then the CO2 capacity in oil or gas fields can be calculated by the following equation:(Eq. 1)In the equation, VCO2 is the CO2 capacity Mt; Voil(stp) is the volume of minable oil in standardcondition; Bo is the reservoir volume coefficient, non-dimensional; ρ CO2 is the density of CO2 inreservoir conditions.Hendriks (2004) and Christensen (2003) estimate the potential CO2 sequestration volume aroundthe world – depleted oil and gas fields in China have a CO2 capacity of 10 billion tons at most.1454.2 EOR potentialCO2-EOR is an important technology for CCUS – it can both reduce the emissions of greenhousegases and promote the production of oil, and thus will make some benefits. According to the currentgeological investigations, the potential of CO2-EOR is about 1600urrent geologibarrels, which isabout 15% of the EOR production in the world. Most of the CO2-EOR projects are in the USA.In 2008, EOR production in the world was 186.1ld. Most of the ; CO2-EOR production was 27.25eworld was 186.; that is 15.1% of the total EOR production. That is far less than steam-EORproduction, which is widely used in oil fields. But with the development of CO2-EOR, it will replacesteam-EOR gradually. For instance, the USA has realised the industrial application of CO2-EOR in2008, 105 CO2-EOR projects were built with a production of 25-EOR, it will replace steam-EORgradually. ermian basin. That is 38% of the total EOR production and 91% of the CO2-EORproduction in the world. In addition, the number of CO2-EOR projects in the USA is 85% of theworld.Chinaʼs national ministry of science and technology approved ʻgreenhouse gas-EOR resourceutilisation and underground storageʼ supported by the ʻNational Key Basic Research DevelopmentPlanʼ in 2006. China National Petroleum Corporation (CNPC) settled a major science andtechnology project ʻgreenhouse gas CO2 resource utilisation and underground storageʼ in 2007.CNPC also settled a major pilot test ʻJilin Oilfield CO2-EOR and CO2 underground storage pilot testʼin 2007. Thus, CO2-EOR and CO2 underground storage research has come into a new stage.In China, gas fields fit for CO2 storage have reserves of 35×108 tons, increased recoverablereserves could reache 3.5×108 tons from about 11 fields that are fit for CO2 storage. There has alsobeen research on deployment of CO2-EOR, cost-effective CO2 capture, CO2 transport, corrosionand scaling. Meanwhile, PetroChina carried out a CO2-EOR and storage pilot test. From theseactivities in CO2-EOR and storage, we can see the giant potential in CO2-EOR.4.3 Changqing Oilfield CompanyPetroChina Changqing Oilfield Company (PCOC) headquartered in Xiʼan is a regional oilfieldcompany subordinated to PetroChina. The primary business of Changqing Oilfield Company is theprospecting, exploration, development, transport and marketing of oil, natural gas and symbiosis,associated resources and non-oil and gas resources in Erdos and its peripheral basin.The exploration area of Changqing Oilfield is mainly located in the Shaanxi-Gansu-Ningxia basin, anarea of 370,000km2. Oil and gas exploration began in 1970 – three gas fields and 19 oil fields wereexploited and the total oil and gas reserves found to be about 541,888,000 tons (233.008 billion m3natural gas reserves included, calculated in equivalent amount of crude oil reserves).Changqing Oilfield realised an increase in production from 10 million tons to 20 million tons in thefour years from 2003 to December 2007, becoming the second largest oilfield in China followingDaqing Oilfield. To the end of 2007, Changqing Oilfield has exploited 106 million tons of crude oiland 49.7 billion m3 natural gas.Mineral resources registered area of Changqing Oilfield is 257,800 km2 across five provinces andseven basins (14% of the total registered area of PetroChina). Changqing Oilfield has becomeChinaʼs important energy base and main battlefield of oil and gas production. In 2009, ChangqingOilfield exploited 30 million tons oil and natural gas, which makes it the second largest oilfield in146China. In accordance with the planning objectives of PetroChina, Changqing Oilfield Company's goalin 2015 is to exploit 50 million tons of oil equivalent.4.4 Shaanxi Yanchang Petroleum GroupShaanxi Yanchang Petroleum (Group) Corp. Ltd. (abbreviated as Yanchang Petroleum Group),directly attached to Shaanxi Peopleʼs Provincial Government, is one of the four qualified enterprisesfor oil and gas exploration in China. Yanchang Petroleum Factory was established in 1905; In 1907it drilled the first oil well in mainland China; and in 1944, Mao Zedong wrote the inscription ʻImmergein hard workʼ. Since China adopted the ʻReform and Opening-upʼ policy, Yanchang Petroleum hasadhered to ʻSupporting the enterprise via oil, combining mining with refining, and rolling developingʼ.In 1998 and 2005, two great restructurings took place, resulting in the integration and reorganisationof Shaanxi Yanchang Petroleum (Group) Co. Ltd. In 2010,it ranked No.72 in the top 500 Chinesecompanies, No.69 among top 200 Chinese companies with best profit, and No.16 among top 200Chinese corporate taxpayers.Shaanxi Yanchang Petroleum (Group) Corp. Ltd. is a newly built petroleum and chemical enterpriseaccording to the Act to Reshuffle Northern Shaanxi Petroleum Enterprises by the provincial CPCcommittee and government. It is one of the four enterprises in the country that are entitled to exploreand mine petroleum and natural gas. Businesses include oil and gas exploration, engineeringconstruction, technical research and development, equipment manufacturing, oil and gasdevelopment, petrochemical engineering, oil refining, comprehensive chemical engineering of oil,gas, coal, and salt, pipeline transport, etc. The company leaders attach great importance to energyconservation, and make the conservation targets and duties clear for all levels after signing theEleventh Five-Year Plan energy conservation target and duty contract. To ensure that the target ismet, the group gives great priority to the work of energy conservation. Through analyzing the presentsituation and applying new technologies, skills and facilities, the company achieved good results inits energy conservation work and met the requirements of the state and the provincial committee ofdevelopment and reform.4.5 Other utilisation optionsCO2-ECBM: CO2 underground storage is an effective measure to reduce CO2 in the atmosphereand alleviate the greenhouse effect. CO2-ECBM can reduce CO2 emission as well as promote coalbed methane (CBM) yield and decrease the cost of CO2 underground storage. CO2-ECBM is a safeand reliable way to store CO2 by adsorbing CO2 in the coal matrix. China has abundant coalresources; coal seams are widespread all around China. Therefore, CO2-ECBM can be thepreferred choice of CO2 underground storage. According to coal and CBM exploration data in China,the reserves distribution of different coal, and the replacement ratio of CO2 and CH4, we conducteda preliminary evaluation of CO2 storage capacity in coal seams, which are about 300–5000 metersdeep and rich of CBM. The result indicated that minable CBM in China can reach 1.632×1012m3,meanwhile that would be able to store 120.78×108 tons CO2 which is about 3.6 times of Chinaʼs CO2emission in 2002.Food industry: In the food industry, CO2 is used for food refrigeration, sterilisation, mildew proofand retain freshness, etc. In order to adjust the competition in international food markets and meetdomestic high-end food preservation needs, this will be a potential market of liquid and solid CO2.147Also, CO2 can be used as additive of soda drink, beer, cola and carbonated beverage. CO2consumption in west Europe is 1.6 million tons/year, 80% of this is liquid CO2, mainly used forcarbonated beverage and food, then for weld and refrigerated transport. Germany produces themost CO2 by separating it from natural gas – more than 30 liquid CO2 factories are located inGermany. It is forecast that CO2 consumption, which consists of 80% liquid CO2 and 20% solid CO2,will increase by 3–4% in the next few years in western Europe. In China, the beverage industry isthe largest CO2 consumer, taking about 30%. However, drink consumption per person is less thanfive kilos/year; while in the USA it is 150 kilos/year and in western Europe it is 110 kilos/year. As theimprovement of peopleʼs living standards in China, CO2 consumption in the beverage industry willsignificantly increase.Plastic material: Using CO2 as chemical feedstock to produce plastic has taken shape globally. Inrecent years 110 million tons of CO2 has been sequestrated through this chemical method everyyear. Urea is the largest product sequestrating CO2, consuming more than 70 million tons everyyear. Inorganic carbonate is the second largest, consuming 30 million tons per year. Hydrogenationof CO2 to synthesize CO also consumes six million tons CO2. Twenty thousand tons of CO2 is usedfor synthesize salicylic acid and propylene carbonate, which is used for drug manufacturing.Synthesized urea with CO2 and ammonia is the most successful example of sequestrating and usingCO2. Based on urea, we still can produce dimethyl carbonate with CO2, making urea an effectivecarrier of CO2. Replacing phosgene by CO2 to synthesize high value-added chemical feedstock(dimethyl carbonate, isocyanate, methyl methacrylate, etc.) can realise cleaner production; while atthe same time reacting at mild conditions so as to improve the economy and security of the process.At present, CO2-based plastic represented by CO2 and epoxide copolymers is also a hot issue. Thiskind of plastic is biodegradable which makes it helpful to resolve the ʻwhite pollutionʼ problem. ChinaNational Offshore Oil Corporation (CNOOC) and Inner Mongolia Melic Sea High-Tech GroupCompany, representing the most advanced CO2-based plastic industrial technology in the world,have built two production lines of thousand-tons-level. Henan Tianguan Group has also built a CO2copolymer pilot plant with its self-initiated catalysis system. Low molecular weight of CO2 copolymertechnology, researched by Guangzhou Institute of Chemistry, Chinese Academy of Sciences, hasbeen used in Taixing, Jiangsu – this technology uses a low molecular weight of CO2 and epoxidecopolymer as feedstock of polyurethane foam materials.5. Analysis of logistical challenges to CCUSTo some extent, developing CCUS in China faces a more complicated situation than other countries.For instance, there are challenges, such as potential safety hazards, high energy penalties, match ofCO2 sources and sinks, evaluation of storage potential, cross-industry cooperation, financial facilitiesand public awareness. Many of these challenges are derived from the uncertainty of technology; sotechnological breakthrough is the key to implementing CCUS in China. Besides, a well developedmethodology, standards and regulations system can help to solve these problems; and obviouslythat demands the governmentʼs guidance and support, and the participation of enterprises,academia, NGOs and the public.1485.1. Location of EOR sites in comparison to high purity CO2 sourcesChinaʼs distribution of CO2 potential storage site and energy consumption center brings a bigchallenge in terms of matching CO2 sources and sinks, transport path plans and means of transport.Chinaʼs energy consumption center is in the east, while the potential storage site is in the west.Transporting the CO2 captured in the east to the storage site in the west could have high associatedcosts bring safety risks to the environment and the public.EOR sites in Shaanxi Province are mainly the Yanchang Oilfield and Changqing Oilfield. YanchangOilfield is located at Yanʼan (Yanʼan, Yulin, Inner Mongolia included), Shaanxi Province. It started toproduce oil with indigenous method in 1905 (the first onshore oil well in China-Yan No.1 Well, 80meters deep, produce 1–1.5 tons oil per day). To 1948, Yanchang Oilfield produced 6,115 tons rawoil. In 1949 it produced 802 tons raw oil and 176 tons gasoline, which supported the PeopleʼsLiberation Army marching into the Northwest. Yanchang Oilfield deployed more exploration andconstruction project after liberation. Its raw oil production reached 150 thousand tons in 1985. Till1998 it already had 10 well-drilling companies, producing 1.7522 million tons raw oil per year. Afterreshuffle in 2005, its raw oil production grew even more rapidly. In 2007 its production exceeded 10million tons and in 2009 its production reached 11.2 million tons.Changqing Oilfield has proven geological oil reserves of about 335.79 million tons, controlledreserves of about 394.04 million tons and prognostic reserves of about 532.75 million tons since1999. Four mainly oil fields of Changqing are Shanbei Ansai, Jingʼan, Suijing and Wuqi.There are many CO2 sources suitable for CCS demonstrations in Shaanxi Province. These sourcesare mainly methanol, dimethyl ether and synthesis ammonia plants, which have high-concentrationCO2 emissions. As these CO2 emissions cost relatively less to capture and they donʼt need too muchpre-treatment before transport, itʼs an ideal choice to deploy early CCS demos in these industries.CO2 sources are mainly located at heavy chemical industry bases in Yulin, north Shaanxi andWeinan, south Shaanxi. Yulin District has abundant coal and natural gas resources; itʼs an ideal sitefor CO2 geological storage where CO2-ECBM can be deployed. Yanʼan District also has many highconcentrated CO2 sources. Some of these sources are owned by Yanchang and/or ChangqingOilfield and can be used for CO2-EOR.In conclusion, as Chinaʼs heavy chemical industry base, Shaanxi Province has abundant CO2sources, as well as huge CO2 storage potential. All these factors make it convenient for early CCSdemonstrations.5.2. Current CO2 emission levels and potential EOR usage ratesThe evaluation of the CO2-EOR potential is also a challenge of implementing CCUS in China. Inorder to know the CO2-EOR potential we must first understand the basic information of the oil/gasfields. For those oil/gas fields that have been mined, we can use the stimulated reservoir informationas a reference – whether the chosen oil/gas field is suitable for long period CO2-EOR and how muchCO2 it can store needs further research. For a long time, the oil field reservoir information was in thehands of a few oil giants and not available to the public. In order to acquire this information we mustpromote multi-cooperation and even attract the government to take part. An initial evaluation showsthat the total CO2 storage potential in China is 3,088 Gt, of which the saline aquifer storage potentialis 3,066 Gt and the oil field storage potential is 4.8 Gt.149The CO2 emission levels are different according to different plant types and scales. Table 5.1 liststhe CO2 emission scale of different CO2 sources.Table 5.1: Current CO2ƒ emission levelsTypePower PlantAlcohol/Methanol/DimethylEther PlantSteel PlantCement/Building MaterialsFactoryOil refining/Chemical PlantFertiliser PlantCO2 sourceFuel-CoalFuel-OilFuel-GasAlcohol/Methanol/DimethylEther PlantSteel PlantCement PlantEmission scale7.5–60 million tons/year3.75–30 million tons/year3–24 million tons/year0.25–2.5 million tons/yearRefineryEthylene PlantEthylene Oxide PlantHydrogen PlantSynthesis Ammonia Plant0.1–0.6 million tons/year0.25–2.5 million tons/year0.2–1 million tons/year0.2–0.6 million tons/year0.38–3.8 million tons/year2–10 million tons/year0.1–2 million tons/yearCurrently, there are already some commercial CO2–EOR projects: Canyon Reef, Bravo Dome,Cortez, Weyburn and Sheep Mountain. One of these, Weyburn Oilfield in Canada, has a CO2transport capacity of five million tons/year, the typical composition of the material flow was: CO296%, H2S 0.9%, CH4 0.7%, C2 + 2.3%, CO 0.1%, N2 <300ppm, O2 <50ppm, H2O <20ppm (UKDepartment of Trade and Industry, 2002).At present, 11% of the USAʼs CO2 consumption is used for CO2-EOR weighing 530,000–550,000tons/year. China has launched several CO2-EOR research projects in the Xinjiang, Daqing andShengli Oilfields, accumulating some data and practical experiences.6. Technical Opportunities and ChallengesCCUS, which includes the capture, transportation and potential underground storage of CO2, hassome serious issues due to the complex nature of the transported material. Small fluctuations intemperature and pressure can lead to sudden and drastic changes of the CO2 physical properties,that is, phase and density. Multiphase flow within CCUS systems is undesirable because it leads toinefficiency; this must be carefully controlled and presents technical challenges.The following sections analyse the technical challenges and opportunities relating to a CCUSdemonstration and wider deployment of CCUS infrastructure in Shaanxi. The aim of the analysis isto identify specific areas of the concept, which may require further assessment in later phases ofdevelopment. The potential to share CCUS infrastructure such as pipelines will be heavilydependent of location and route considerations; this is discussed in the next section.1506.1. CCUS infrastructure sharingAfter a successful demonstration project, CCUS can be introduced on a larger scale. Clusters ofprojects may emerge, incorporating multiple emitters and sink industries that could workcollaboratively to share capture and transport infrastructure. The development of CCUS clusters hasa great potential for providing access for additional industrial stakeholders to CO2 and of sharingcosts so that they are considerably below that of developing each project on an individual basis [1].As early opportunity CCUS applications propose to use already available high purity industrial CO2sources, only a relatively small amount of extra process equipment will be needed for the capturesection of the CCUS chain. The main requirement would be to compress the CO2 to high pressure,usually >100 bar. It may also be necessary to dehydrate the CO2 stream prior to transport. Thepotential to share facilities for CO2 compression, dehydration and liquefaction could be explored forCCUS clusters because this may be more economic in terms of both capital investment required andoperational costs compared to standalone projects.The presence of free water in the CO2 stream is a serious corrosion risk to the carbon steel of theinternal pipeline system due to the formation of carbonic acid. The use of corrosion resistantmaterials may be considered but is unlikely to be economically feasible for long pipeline systems.Therefore, the CO2 stream must undergo a dehydration process to remove virtually all of the waterbeing transported any substantial distance by pipeline. For this reason, it is unlikely that the sharingof dehydration equipment will be feasible.CO2 compression is required prior to its transport via pipeline and for most of its applications anduses. Compressors usually change the phase of CO2 from gas to either liquid or the supercriticalphase – this is done to increase the density and therefore reduce the volume of the fluid, allowing areduction in the size of the pipeline diameter. Significant operational costs can be incurred at thecompression stage so the use of compressors should be minimised where possible, although therewill be an economic trade-off between pipeline diameter. Design and operation of the compressioninfrastructure and a pipeline network must consider the possibility of phase change as the pipelinemoves into different local environments. Pressure drop along the transportation pipeline must betaken into account so that CO2 is delivered to its application at the intended pressure and phase.Shared compressor systems might be located near groups of industrial CO2 emission sources or atother locations across a CO2 pipeline network; the locations should be based on techno-economicassessments in order to optimise the energy requirements and use of steel materials.For small emitters of CO2, or for when smaller amounts of CO2 are required for small-scaledemonstration, it may be possible to use road tankers for short distance transportation. Roadtankers have been used to transport CO2 for over 40 years – each tanker can hold up to 20 tons ofCO2 [2] and it is generally considered to be a safe method of transporting CO2. Where road tankersare used, CO2 must be compressed onsite before using the road network. In addition, the CO2 sinkindustry may require CO2 storage tanks and additional transfer facilities. A drawback of thisapproach is the large cost, the environmental impact of fuel usage and the scale limitation.When considering the engineering opportunities and challenges for CO2 handling and transport, it isimportant to discuss the health and safety issues. Although CO2 is benign at the kinds ofconcentrations usually encountered in the natural environment, it is an asphyxiant gas at the highconcentrations of those of CCS applications and can be considered as a hazardous substance. Amajor release of CO2 from a CCS system, would pose a significant risk to any nearby populatedareas because CO2 is denser than air and therefore has the potential to accumulate in low-lying151areas under the right conditions. The consideration of odorants may be worthwhile in highconsequence areas [3].In the event of pipeline depressurisation or loss of containment, the escaping CO2 will experience asudden change in phase as the CO2 rapidly expands and a proportion vaporises. In addition, dry iceprojectiles being expelled at very high velocities may result. Other hazards include cryogenic burnsto the skin and catastrophic failure of carbon steel equipment due to low temperature metalembitterment [4]. The pipeline must be designed to mitigate the health and safety risks byconsideration of the route, buried depth, pipeline thickness and others. In possibility of CO2 pipelinerupture must be considered; risk assessments must consider pipeline block-valve spacingphilosophy however including too many valves from the compressor to the injection or storage pointcan also be a problem due to the creation of extra potential leakage paths. All pipelines should haveboth operating and emergency pressure-relief systems. Designers must ensure that adequateprocedures are in place to handle leaks and that there is a risk review process, which includes anemergency-response team [5]. Stakeholders should build a shared understanding of the risksassociated with CCUS and develop mitigation strategies.Pipeline sharing for the wider scale deployment of CCUS represents the most cost effective andtechnically viable option for transportation of CO2. The economic benefits mainly arise from theeconomy of scale, increased reliability, lower barriers to entry and consolidation of planning issues.A larger trunk pipeline with multiple CO2 sources would be better able to cope with fluctuations indelivery. A networked approach would also reduce environmental damage and public inconvenienceby avoiding the construction of multiple pipelines along similar routes within a relatively shorttimeframe. However, in order to establish a networked approach it may be necessary to initiallyoversize the pipeline infrastructure and this brings financing issues which maybe too risky forindividual organisations; therefore government co-funding is likely to be necessary. The coordination of operations between multiple sites for CO2 transportation networks is another technicaldifficulty.Four potential point-to-point CCUS demonstration projects for CO2-EOR have been identified duringthe course of this project. For three of these, pipeline has been identified as the most economicalmethod for CO2 transportation and road tanker transport for the remaining one. The estimated CO2pipeline lengths required for the demonstration range from 40–170 km whereas the transportationdistance for road tanker is 40 km. The terrain is largely fit for laying pipeline in Shaanxi Province andthere are many existing pipelines.Pipeline and compression infrastructure must be designed so that the arrival pressure is correct forthe intended application. Pipeline design must also consider that reservoir conditions will changeover the course of EOR operation and pressure will increase in response to CO2 injection. Reservoirmodelling must be performed to understand and predict the pressure changes during the CO2injection phase.Operating regimes of CO2 source industries will have an impact on CO2 EOR operations due tofluctuating CO2 flow rates. During short periods of increased volumetric flows, CO2 can betemporarily stored in the pipeline itself, through a process called line packing. During periods of highdemand, increased quantities of CO2 can be withdrawn from the pipeline at the application area,than is injected at the production area. Longer term stoppages from CO2 source operations, e.g.,major and minor outages at chemical production plants, will require careful consideration which islikely to see the reservoir held at an equilibrium pressure for no flow periods.152The oilfield operators may also require stoppages. Where these are planned it would be sensible tocoordinate these with scheduled emitter outages.If there are significant future opportunities for additional CO2 source industries to join a sharedpipeline, it may be worth considering the sizing of the pipeline to accommodate these and installingtee joints during the pipeline commissioning phase. The tee joints would be placed at anticipatedlocations where future CO2 source industries would join the major pipeline. Similarly, tee joints couldbe installed closer to multiple CO2 sink industries where the pipeline may diverge in future. The teejoints would allow a much more economical connection in future and diminish the potential forinterruption to the existing CO2 pipeline. Where many tee joints would join a major CO2 pipeline (e.g.a potential Yulin cluster), input pressures would need to be controlled at the junction points so thatthey match as much as possible to the pressure of the major CO2 pipeline. A control system wouldbe required to relay information to the compressor station of the CO2 source industry.To reduce the costs of implementing CCUS in Shaanxi, the reuse of existing oil and gas pipelinesshould be considered, such that these might be reverse engineered to take CO2 to the oilfields fromwhich the pipelines previously transported hydrocarbons away from them.6.2. CO2 impurity impactsCO2 quality levels are an important technical consideration for CCUS. Inadequate quality levels cannegatively affect operations, maintenance and most importantly the safety of the CCUS system andthe public. The effects and cross effects of impurities require a better understanding during densephase CO2 transport. Quality requirements that are too strict may result in a significant economicburden, due to the investment in gas cleaning facilities, operational costs and increased downtime.The DYNAMIS European project [6] made recommendations on allowable impurity levels fortransport via pipelines for pre-combustion and post-combustion processes. The impacts of theimpurities on application of the CO2 for EOR were also discussed. There are parallels that can bedrawn from CO2 sources derived from pre-combustion carbon capture power generation and highpurity industrial sources of CO2 derived from gasification, such as, coal-to-liquids (Fischer-Tropcsh)or ammonia/fertiliser plants. The concentration limits and an explanation of the technical or safetylimitations are given in Table 6.1.153Table 6.1. DYNAMIS recommendations for CO2 quality [6,7]ComponentH 2OConcentration500 ppmH 2S200 ppmCO2000 ppmO2Aquifer < 4 vol%, EOR < 100 –1000 ppmCH4Aquifer < 4 vol%, EOR < 2 vol%N2< 4 vol % (all non-condensablegases)< 4 vol % (all non-condensablegases)< 4 vol % (all non- condensablegases)ArH2SOX100 ppmNOX100 ppmCO2>95.5%LimitationTechnical: below solubility limitof H2O in CO2. No significantcross effect of H2O and H2S.Cross effect of H2O and CH4 issignificant but within limits forwater solubility.Health and safetyconsiderationsHealth and safetyconsiderationsTechnical: range for EORbecause of lack of practicalexperiments on effects of O2underground.Energy consumption forcompression and miscibilitypressure for EOREnergy consumption forcompressionEnergy consumption forcompressionFurther reduction of H2 isrecommended because of itsenergy contentHealth and safetyconsiderationsHealth and safetyconsiderationsBalanced with other compoundsin CO2For the purpose of CO2-EOR, CO2 purity should be more than 94-95 vol.% in order to achievemiscible conditions in the oil reservoir. The Minimum Miscibility pressure (MMP), reservoir depth andthe API gravity of the oil determine if the reservoir is suitable for CO2-EOR. SO2, H2S and C3+species impurities in the CO2 will decrease the MMP whereas O2, N2, Ar and NO impurities willincrease the MMP. For CO2 transport via pipeline to an EOR site, consideration must be given toimpact the impurities could have on pipeline corrosion or phase change of the transported fluid [8].The presence of SO2 as an impurity could accelerate pipeline corrosion since this gas forms an acidwhen dissolved in water. Water levels should therefore be reduced to a certain level but to exactlywhat extent is controversial. Visser et al. recommends an upper limit of 500 ppm of H2O in the CO2stream [6]. The presence of O2 with H2O can accelerate cathodic reaction leading to internal pipelinecorrosion. The presence of impurities could result in the formation of a second liquid phase duringthe transport of supercritical CO2, which could have consequences of flow instability and cavitation inthe pipe. It would also lead to undesirable high and low pressure peaks that oscillate within the154pipeline [9]. Most EOR operators recommend levels of oxygen to be below 10 ppm for reservoirsafety reasons. In addition, impurities in the CO2 stream may have an impact on sequestration. TheCO2 impurities can have the same corrosion impacts on well injection equipment as they do onpipeline equipment, which could affect injection well integrity.6.3. EOR CO2 injectionThere are two main types of CO2-EOR, namely; miscible flooding and immiscible flooding. MiscibleCO2 flooding is the most common form of CO2-EOR and refers to when the injected CO2 and oil mixto form a miscible fluid so that the interfacial tension between the two initial phases effectivelydisappears, enabling the CO2 to displace the oil from the rock pores and push it towards theproduction wells. Immiscible flooding refers to when CO2 and oil do not fully form a miscible mixturesuch with low-pressure reservoirs or for heavy crude oil where the mechanism for oil recovery isusually associated with gravity displacement.It is anticipated that many of the existing oil production plants associated with the oil and gas fieldsin Shaanxi can be used to accommodated CO2 pipeline and CO2-EOR projects.Chanqing oilfieldsMost oil reservoirs in the Changqing Oilfield area are of low permeability and have entered middledevelopment stages after several decades of production. They are therefore suitable for applyingCO2-EOR and CO2 sequestration techniques. A recent study by Liao et al [10], assessed thepotential of CO2-EOR and storage in the Changqing Oilfields based on the data of 261 mature oilreservoirs. The assessments included regional geology assessments, storage site screening andreservoir screening for CO2-EOR, EOR potential and storage capacity calculations. Of the 261reservoirs, 113 were found to be suitable for miscible or near miscible flooding CO2-EOR andstorage. The total EOR potential is estimated to be 98 million tons and the CO2 storage potentialcould reach 239 million tons. The average incremental oil recovery rate in reservoirs suitable formiscible or near miscible flooding conditions was around 12% whereas that immiscible flooding isthought to be around 7%. Greater potential for CO2-EOR and storage is found in reservoirs with thegreatest Original Oil In Place (OOIP) and hence these will be the preferred sites for CO2 storage.6.4. Flow rate measurementAccurate measurement of the inventories of CO2 throughout the CCUS process is an important partof the CCUS infrastructure and will be essential for the operation of these systems. This is requiredto identify if there are any potential leakages in the system, for aiding payments across differententities of the operating CCUS chain and to account for carbon under any future potential EmissionTrading Schemes. The detection of any leakages will be important to CCUS regulatory bodies.There are significant challenges with measuring the quantities of CO2 captured, transported andstored which relate to the physical properties of CO2 and the CCUS operating conditions. Thesehave been reviewed by TUV NEL [11] and are as follows:•To keep CO2 in the desired phase, CCUS systems are likely to span a relatively narrowrange of temperature and pressure. However, at these conditions, phase variability betweengaseous and liquid flow is still a possibility, creating a significant challenge to accuratemeasurement since flow meters are generally designed for one specific phase. Therefore,155•••phase boundaries for CO2 and CO2 mixtures need to be established along with an accuratemodel for density within the gas, liquid and supercritical phases.The presence of impurities adds another layer of complexity, which will be especiallyapparent when multiple CO2 source industries join a shared pipeline. This can be alleviatedby using accurate sampling techniques need to be developed to determine the CO2 contentin the captured gas and to determine the purity of CO2 transported into the CCS pipelineinfrastructure, by using a Continuous Emissions Measurement System (CEM) for example.However, for CEMs to work accurate physical property models at the temperatures andpressures that prevail in CCUS applications are needed.There are considerable gaps in knowledge on CO2 flow metering. Although CO2 flowmeasurement has been done in the US for some time, there has been no appraisal of theirperformance. The reliability of flow metering technologies and associated instrumentationshould be assessed for CO2 and CO2 mixtures over a range of test conditions.The relevant industries involved in CCUS require guidance on monitoring and reporting CO2flows.The first flow metering location should be post capture and prior to entry to the CO2 pipeline. Themain types of flow meters that have been previously used in EOR applications are Orifice PlateMeters, Turbine Meters, Ultrasonic and Coriolis meters. Amongst these, Ultrasonic and Coriolismeters have undergone recent developments, which may make them suitable for CCUSapplications. Venturi and V-cone meters have no known experience in CO2 applications; howeverthe latter have been used for multiphase flow. Research into improving CO2 flow metering is ongoing[11].6.5. Monitoring CO2 storage sitesThe safe geological storage of CO2 will depend upon the use of appropriate operational practices,regulations, monitoring and materials [12]. Detailed plans for CO2 monitoring at storage sites arelikely to be needed in order for a licence for EOR to be issued. Rigorous monitoring of CO2 storagesites is done for a number of reasons; including:To detect any leakage of CO2To provide confidence of long-term storage integrityTo provide early warning of significant irregularitiesTo test and compare conventional modelling predictions with actual CO2 flood movements inthe storage siteTo observe any migration of CO2 in the reservoir.•••••The monitoring of CO2 storage sites represents a considerable long-term commitment for storagesite operators and present a range of technical challenges. There are a number of approaches toCO2 storage site monitoring, such as:••Acquiring baseline measurements against which subsequent monitoring is comparedProduction data sampling of well pressures and volumes of injected and produced fluids156••••Measurement of changes in reservoir fluid chemistrySeismic imaging of reservoir propertiesRecording of microseismic activity in the reservoirSampling of surface soil gas for detecting traces of leaking CO2.7 Options for an EOR demonstration project integrated with an industrial high purity CO2sourceThis project has identified four CO2 source-sink matches for a potential CO2-EOR demonstrationproject. These are:1. EOR at Jingbian oil exploitation plant in Jingbian County, using CO2 captured from YanchangOilfield methanol plant2. EOR at Yanchang Petroleum Zhiluo oil exploitation plant in Fu County using CO2 captured fromYanan Fuxian methanol plant3. EOR at Changqing Petroleum 4th oil exploitation plant in Yulin Changqing industry base, usingCO2 captured from Changqing Oilfield methanol plant4. EOR at Changqing Petroleum 4th oil exploitation plant in Yulin Changqing industry base, usingCO2 captured from Jingbian methanol plantThe locations of these facilities in Shaanxi Province are shown in Figure 1.Figure 1. CO2 sources and EOR sites for suggested demonstration projects in Shaanxi Province.These options have similar estimated costs for capture and EOR injection costs (per ton of CO2handled) but transport costs differ. These options are not necessarily mutually exclusive but couldcomplement each other, for example in a mini-cluster based approach. They would all use CO2captured from methanol plants where steam reforming of coal or methane is performed to produce afeed gas and also generates an exhaust gas rich in CO2.1577.1 EOR in Yanchang Oilfield, Yanan, using CO2 captured from Yanchang Oilfield methanolplantThe Yanchang Oilfield methanol plant produces 99% purity CO2 at a rate of 3.25 million tons/year.The entire amount of CO2 could be utilised for EOR in oilfields located. The total CCUS cost afterconsideration of the benefits to the oil industry has been estimated to be between -50.4 and 5.6$/tCO2. This option has a pipeline transportation distance at 160 km giving it a transportation cost at1.6 $/t. This project is believed to bring the most economic benefit out of the four demonstrationprojects.7.2 EOR in Yanchang Oilfield, Yanan, using CO2 captured from Yanan Fuxian methanolThe Yanan Fuxian methanol plant produces 6.8 million tons/year of 99% purity CO2, which could allbe potentially be utilised in the Yanchang Oilfield near Yanan for EOR. The source to sink CO2pipeline distance has been estimated to be 170 km, giving this a slightly higher transportation cost of1.7 $/t. The total CCUS cost after considering the benefit to the oil industry is estimated to bebetween -47.3 and 5.7 $/t.7.3 EOR in Chanqing Oilfield, Yulin, using CO2 captured from Changqing Oilfield methanolplantUtilising the 250,000 t/y of high purity CO2 produced by the Changqing Oilfield methanolplant in EOR at Chanqing Oilfield, Yulin, has been identified as another potential CCUSdemonstration project. This would be a smaller operation due to the smaller volume of CO2being utilsed. As a result, road tanker transportation has been deemed to be the mosteffective method of CO2 transportation over 40 km, albeit at a higher cost of 3.2 $/tCO2transported. The total CCS cost when considering the benefit brought by enhanced oilrecovery has been estimated to be between -45.8 and 7.2 $/t CO2.7.4 EOR in Changqing Oilfield, Yulin, using CO2 captured from Jingbian methanol plantThe source-sink matching procedure identified one additional option for an EORdemonstration, which was to apply it to Changqing Oilfield using 6.8 million t/y of high purityCO2 captured from Jingbian methanol plant in the northwest of Shaanxi. Pipeline transportwould be used for this option over a relatively short distance of 40 km and the total cost aftertaking into account the benefit brought by EOR was estimated to be between -48.6 and 4.4$/t making this option economically attractive.8. Commercial Arrangements8.1. Drivers for CCUSIt is helpful to set out the following discussion on commercial arrangements with a summary of themain drivers for high purity CO2 source industries and oil field operators in Shaanxi to invest inCCUS infrastructure, as follows:158• CCUS gives emitters of high purity source industries the opportunity to sell their CO2 rather thanventing to atmosphere.• Potential future regulation for chemical process industry on reducing CO2 emissions• Injecting CO2 into an oil reservoir can increase the recovery rate therefore increasing theprofitability of the petroleum activity.• Shortages of large volumes of water that are needed for efficient secondary recovery.• Preserves natural gas reserves, which may otherwise have been used for gas injection.• Funding from the Ministry of Science and Technology.Sections 8.2 and 8.6 provide details of the important issues surrounding emerging commercialarrangements, which will be required to develop CCUS projects and possible future clusters.8.2. Roles of CO2 sources and sinksDemand for CCUS infrastructure will be driven by both industrial sources of CO2 and EORoperators because both industries stand to profit from the activity and can both generate revenuesfrom these (via CO2 sale for source industries and increased oil sales for sink industries). As aresult, CO2 source and sink industries could be expected to form partnership proposals that leadconsortia of organisations bidding for funding from the MOST. It is likely that contracts would beagreed upon, whereby revenue generated by the activity from source and sink industry would bepassed to transport and other storage elements (e.g. storage monitoring), whether these are ownedby the source or sink industries or are outsourced to external companies.The policy and regulation of CCUS outlined in Section 2 is likely to cause additional CO2 sourceindustries to seek further development or access to CCUS, leading to the extension of the durationof operation of CCUS and future expansion of the infrastructure. However, the high capitalinvestment costs means that CCUS will not be economically viable without public funding for someyears. A successful demonstration in Shaanxi should alleviate some of the financial risk and bringdown some of the costs such that a range of CO2 source and sink industries could join CCUS in acluster based approach.8.3. EOR, Licensing, Business models and risk transferSignificant business risks associated with the integration of CCUS technologies exist and would becarried by developers of the required infrastructure. Worst-case scenarios could lead to significantstranded assets.Some issues await the assessment and granting of licences for CO2-EOR and how to tax theproduction of additional oil reliably and securely. However, one advantage that CO2-EOR has overother storage options is that it is usually permissible within existing petroleum licensing agreements[13]. Nevertheless, there may be some requirements to modify laws so that EOR operations can beconverted to dedicated storage sites for climate measures. The business principle of this is based onthe avoidance of purchasing carbon credits. In China, licensing of CO2-EOR is likely to be handledby the NDRC or state council.A business idea related to CO2-EOR is to sell CO2 to the oil and gas producing licenses at regulatedprices, whereby the pricing of CO2 sales follows the oil price. The financial risk associated toinvestment in CCUS infrastructure would be too high for oil companies due to possible low159profitability from low oil prices. The state usually has high revenues from production tax as well asequity in hydrocarbon resources, therefore CO2-EOR will be profitable even at very low oil prices.The use of variable price fixing of CO2 delivered to the fields based on the current oil and gas pricesreduces the financial risk for production licenses since the price of CO2 will be very low at low oilprices [14].In addition, through the capture and storage of millions of tons of CO2, China would potentially avoidthe need to purchase carbon credits on the international market. This reduction in carbon creditcosts derives directly from the establishment of CCUS and should therefore be part of the stateʼseconomic assessments of the investments and operating costs the CO2 source and sink industriesincur.No financial security currently exists for CCUS. CO2 source industries like methanol plants aredependent on a secure and continuous sale of CO2 in order to defend significant investments in CO2capture and compression equipment. Oilfield operators, being the potential buyers, are dependenton significant volumes, probably larger that single sources in Shaanxi can supply. Oilfield operatorsalso require flexibility in supply, which may incur intermediate CO2 storage. Investment decisions aremade in each license where owner shares are held by many companies. Greatest profitability can beachieved when the investment costs for CCUS are shared in several licenses. Investment decisionscan be hindered when all of the investment for CCUS infrastructure falls on the first of licenses.CCUS infrastructure could be used by several licenses and has a longer lifetime than individuallicenses; it would therefore be advisable to create financial instruments that make cost sharingbetween licenses over a longer time frame feasible.Due to the large taxes on petroleum activities, large financial rewards from increased incremental oilrecovery are gained by the State. The interests of the state and industries are not necessarilyshared. The state that owns the oil reserves of Shaanxi seeks to extract as much oil from each fieldas possible and uses different measures to achieve this. Any remaining oil in the field after closurerepresents an economic loss to the state. For the oilfield operators, the main objective is to secureas a high a return on invested capital as possible. As the state stands to profit from CO2-EOR itseems logical that it should carry some of the risk, which may be achieved through a modification oftaxation system. For example, tax exemptions could be applied by government to secure the oilfieldoperators a defined regulated return on investment for CO2-EOR projects. This should be definedthrough agreements between the government and the individual license. In this way, the stateassumes some of the risk but also the financial reward [14].Financial risks for CCUS would be expected to diminish in future due to the ability of industries totake advantage of technology maturation and increased market certainty. In addition, cost savingscan be made by increased future infrastructure sharing.8.4. CCUS financial mechanismsAs CCUS is currently at an early stage as an operational industry, the potential financialmechanisms between the high-purity CO2 source industry and CO2-EOR operator are unclear. Thisdiscussion attempts to elucidate some of the potential mechanisms but it is possible that alternativestrategies might emerge in future. Contractual arrangements between the industries are likely to bebased on quantified CO2 delivery. For point-to-point projects with lower technical risks than cluster160based approaches, take-or-pay and send-or-pay mechanisms, which are often used in the energyindustry, seem likely to be appropriate financial mechanisms.Under the ʻtake-or-payʼ structure, the EOR operator is obligated to pay for CO2 based on expectedand agreed volumes, even if this amount is not drawn for the pipeline and used in operations. Theʻsend-or-payʼ mechanism is similar however the responsibility falls on the high-purity CO2 sourceindustry – if they do not send agreed quantities of CO2 they would be liable to pay a penalty. It isalso likely under this system that deliveries of CO2 over and above the agreed quotas would alsotrigger some payment between the entities. This system exposes the industries directly to their ownoperation risks and therefore provides the greatest incentive for the parties to manage these [14].However, it also creates the greatest revenue uncertainty for the entities.Another potential CCUS financial mechanism is a ʻFully Integrated Contractʼ – where all the partnersinvest in a joint venture to own and operate the project and receive the same rate of return on theirinvestment [15]. Under this model each participant will receive the same return regardless ofwhether operational problems stem from their part of the process.It might be more appropriate to pay transport network operators on a more basic model of theamount of CO2 they transport. Contracts in the oil and gas industry are often arranged in this way.The mechanisms highlight the risks borne by each of the entities, which are likely to become morecomplicated as multiple source and sink industries join onto networks. Reaching agreement oncontractual arrangements could prove to be a significant challenge because different entities mayrequire different rates of return. With regards to a demonstration project, the government should takeinto consideration the financial risks involved by each in the applied financial mechanism whenallocating investment funds.8.5. Management of fluctuations and interruptionsA major constraint to the operation of the CCUS chain is the ability to cover fluctuations andinterruptions. If one part of the CCUS chain for whatever reason ceases to function, depending onthe financial mechanism in place, it may need to compensate all members of the chain – this wouldalso apply when regulatory regimes exist that aim to mitigate CO2, e.g., if the CO2 source industrywould be penalised by a regulatory body for not sequestering CO2.These issues are significant for EOR operators, which due to geological uncertainty can be deemedto have the highest technical risk. A potential way to mitigate this problem would be where allelements of the CCUS chain were controlled by a single entity. However, this still would not alleviatethe risk of losses if any part of the chain stopped functioning. It will be difficult to attract investmentfor CCUS unless the government will be able to share some of the financial risks associated topotential technical problems for CO2-EOR.1619 RecommendationsIn summary, the material presented in this study suggests that:•There are four identified viable early opportunities in Shaanxi province, which use high purityCO2 captured from methanol plants to be applied for CO2-EOR in Yanchang Oilfields nearYanan and Changqing Oilfields near Yulin.•Further technical analysis is required on a site-by-site basis to confirm the technical viability ofeach proposed CCUS demonstration -project e.g. geological surveys.•The Chinese Government should continue to support a demonstration project in ShaanxiProvince and coordinate interested industries. National funds should be provided to support thedevelopment of CCUS infrastructure and international funds sought. International cooperationon CCS technologies should be strengthened.•The Ministry of Science and Technology should continue to support research and developmenton CCS. This would help to fill remaining technical gaps and overcome technical barriers to theimplementation of CCUS. A vehicle to achieve further R&D breakthroughs could be theformation of national low carbon research centre to strengthen links between academia andindustry.•The Chinese Government should build a regulatory and policy framework for CCUS, drawingon the experiences of other countries, and consider the issue of management of risks due tothe breakdown of elements in the CCUS chain when allocating funds for projects. This could beused to develop a standardised approach, which could be replicated for future CCUS projects.162REFERENCES[1] CO2Europipe: Towards a transport infrastructure for large-scale CCS in Europe. 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Carbon capture Journal Feb 14, 2011.163CONTACTSABOUT USCentre for Low Carbon FuturesThe Centre for Low Carbon Futures is acollaborative membership organisation that focuseson sustainability for competitive advantage. Foundedby the Universities of Hull, Leeds, Sheffield and York,the Centre brings together multidisciplinary andevidence-based research to both inform policymaking and to demonstrate low carbon innovations.Our research themes are Smart Infrastructure,Energy Systems and the Circular Economy. Ouractivities are focused on the needs of business in boththe demonstration of innovation and the associatedskills development. 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