Oil Big Boys Explore Lithium Prospects
Oil majors are launching lithium projects fueled by rising demand for electric vehicles across the world, with ExxonMobil alone committing $1 billion to lithium production in the coming years.
US super major ExxonMobil, Occidental Petroleum, Chevron and Norwegian state oil company Equinor recently announced plans to invest in lithium projects.
ExxonMobil is aiming to supply enough of the battery metal to power one million vehicles by 2030 and has committed $1 billion of its $20 billion budget for low-carbon projects through 2027.
ExxonMobil recently purchased $100 million drilling rights on 485 sq. km of lithium brine assets in Arkansas’ smackover formation from Galvanic Energy.
The oil company that has produced some lithium on a pilot scale signed a preliminary agreement in July to send
lithium to South Korea-based SK On- a battery manufacturer that is constructing plants to supply Hyundai and Ford in the US.
In June Occidental Petroleum announced a joint venture scheme with a unit of Warren Buffett’s Berkshire Hathaway to produce battery-grade lithium from the brine of 10 geothermal power plants in California.
Feasibility testing is ongoing. Chevron is said to be eyeing lithium opportunities and is reportedly holding talks with International Battery Metals about licensing brine technology.
Norwegian state oil company Equinor in May said it was considering paying about $133 million for a 45% interest in Standard Lithium’s (TS XV.SLI) projects in Arkansas and Texas.
The lithium company began a commercial-scale demonstration plant in April. The big boys move for lithium exploration is quite strategic, with demand for the metal projected to increase significantly before the end of the decade and the imminent decline of fossil fuels.
Major oil companies with the financial muscle for multi-billion investments are positioning themselves to cash
out on the lithium rush.
Rhidoy Rashid, a senior associate at Energy Aspects- a London based data firm said, “Lithium is relatively abundant, so the resource needed to match rising demand for batteries is there, it just needs to be efficiently extracted. The expertise these companies can bring may also help to ramp up lithium supplies from areas where it was previously uneconomic to extract the metal.”
Oil companies are mainly targeting brine projects that have similar mode of production to crude. Given their vast experiences in subsurface exploration, drilling and commercial processing venturing into direct lithium extraction
makes a whole lot of sense.
The competencies and financial capabilities of the super majors will drive growth in the lithium industry.
“Oil companies offer technology and skills needed to identify, characterize and produce lithium-bearing brines from
deep underground,” observed Terry Braun, president of North American operators for SRK consulting.
“The challenge of economically extracting a marketable lithium product once the brine is at the surface is formidable,” he added.
Lithium brines are often found in depleted oil wells, for instance the Leduc field in Alberta where E3 lithium is developing its $2.5 billion Clearwater project on Canada’s largest resource of the battery metal.
The project between Calgary and Edmonton could produce 32,250 tonnes a year of lithium hydroxide monohydrate for over 50 years, according to a feasibility study.
Direct lithium extraction is gaining traction because it is more efficient. It can produce the metal faster and process brine with lower lithium concentrations. Basically lithium laden water is drained off from the same wells that used to produce oil.
It is then pumped back into the reservoirs after extracting the battery metal. However there are serious concerns about the environmental impact of oil companies’ extracting lithium, comparing the process to fracking which injects liquid underground that could pollute water supplies.
