China's First Million-Ton Low-Concentration CCUS Full-Chain Demonstration Project Starts Construction at Shengli Oilfield
China's largest carbon capture, utilization, and storage (CCUS) initiative targeting low-concentration emissions has officially commenced construction at the Shengli Oilfield in Shandong Province. The project, announced on October 16, 2026, represents the country's first million-ton-scale low-concentration CCUS full-chain demonstration facility, designed to capture carbon dioxide from coal-fired power plant flue gas and inject it directly into aging oil reservoirs for enhanced recovery and permanent geological storage.
The Shengli Oilfield project breaks new ground in both scale and technological integration. Unlike previous CCUS installations that focused on high-concentration industrial sources such as natural gas processing or chemical manufacturing, this facility will process flue gas with CO2 concentrations as low as 12-15 percent, typical of conventional coal-fired power plants. The capture technology employed must therefore achieve high efficiency from dilute gas streams, a technical challenge that has limited the economic viability of power plant carbon capture in previous demonstration projects worldwide.
The project's most innovative feature is its integration of renewable energy directly into the carbon capture process. The facility will be powered entirely by dedicated wind and solar installations, creating what project developers describe as a "green electricity direct supply, low-carbon capture" closed-loop system. This approach addresses one of the primary criticisms of conventional CCUS technology: the energy penalty associated with carbon capture, which can consume 20-30 percent of a power plant's output when using grid electricity generated from fossil fuels.
By coupling the capture facility with dedicated renewable generation, the Shengli project aims to achieve a net-negative carbon intensity for the entire operation, meaning the carbon dioxide captured and stored will exceed the emissions generated by the capture process itself. This represents a significant advancement over earlier CCUS demonstrations, which often struggled to achieve meaningful net carbon reduction when accounting for the energy required to operate capture equipment.
The captured carbon dioxide will be transported via pipeline to the Shengli Oilfield's mature production zones, where it will be injected into depleted reservoirs to displace remaining crude oil through enhanced oil recovery (EOR) processes. The Shengli Oilfield, China's second-largest onshore oil field after Daqing, has been in production since the 1960s and contains substantial remaining oil reserves trapped in complex geological formations that respond favorably to CO2 injection. The dual benefit of increased oil production and permanent carbon storage provides economic justification for the CCUS investment, addressing the cost-recovery challenge that has hindered similar projects in other countries.
The project's full-chain approach encompasses every stage from capture through utilization and storage, including advanced process control systems for optimizing capture efficiency under variable renewable energy input, pipeline monitoring networks for ensuring transport integrity, and reservoir management platforms for maximizing both oil recovery and CO2 storage capacity. The automation requirements are substantial, with the facility requiring coordination between intermittent renewable power supply, continuous chemical processing operations, and variable injection rates based on reservoir conditions and oil production schedules.
For industrial automation suppliers, the Shengli CCUS project demonstrates the emerging convergence of energy transition technologies and traditional oil and gas production systems. The facility will require distributed control systems capable of managing the dynamic interaction between renewable power generation, carbon capture chemistry, and subsurface reservoir behavior. Safety instrumented systems must address the unique hazards of high-pressure CO2 handling while maintaining operational continuity. Advanced process analytics will be essential for optimizing the trade-offs between capture rate, energy consumption, and storage efficiency in real-time.
The project builds on experience gained from the earlier Qilu Petrochemical-Shengli Oilfield million-ton CCUS project, which demonstrated the technical feasibility of large-scale carbon capture and utilization in the region. However, the new facility's focus on low-concentration sources and renewable energy integration represents a significant step forward in addressing the broader applicability of CCUS technology to China's coal-dominated power sector. If successful, the demonstration could provide a template for retrofitting hundreds of coal-fired power plants across the country with carbon capture capability.
The timing of the Shengli project aligns with China's accelerating commitments to carbon neutrality and the growing international focus on carbon management technologies. The country's "dual carbon" goals of peak emissions by 2030 and neutrality by 2060 require deployment of negative emissions technologies at scale, and CCUS is recognized as essential for addressing emissions from hard-to-abate industrial sectors and legacy fossil fuel infrastructure. The Shengli demonstration positions China to evaluate the technical and economic parameters for nationwide CCUS deployment while generating operational data that will inform regulatory frameworks and carbon pricing mechanisms.
International observers note that China's approach to CCUS development emphasizes utilization over pure storage, leveraging the country's extensive mature oil fields to create economic value from captured carbon while achieving permanent geological sequestration. This model contrasts with approaches in Europe and North America, where CCUS projects often focus on offshore saline aquifer storage without the revenue offset provided by enhanced oil production. The Shengli project's success could influence global CCUS deployment strategies by demonstrating the commercial viability of integrated capture-utilization-storage systems.
The automation and control systems required for the Shengli CCUS facility represent a significant market opportunity for suppliers with expertise in process industry automation, renewable energy integration, and oil field production optimization. The project's innovative combination of these domains creates demand for control architectures that can manage the complexity of multi-variable, multi-objective optimization across the entire carbon management value chain. As similar projects are developed in China and internationally, the operational lessons and automation solutions proven at Shengli will likely become standard references for the emerging CCUS industry.
Written by: Maxwell, an industrial automation specialist with over 15 years of experience in process control systems for the energy sector, having worked on carbon capture facility automation and enhanced oil recovery optimization projects across Asia-Pacific and Middle East markets.