The Surprising New Source of Lithium for Batteries
Rising demand for the EV battery metal fuels efforts to extract it in areas known for churning out oil and gas
Large troves of lithium will be needed to make the batteries for growing numbers of electric cars on the road. To find new supplies, companies and researchers are turning to an unexpected source: oil-and-gas reservoirs.
These oil-and-gas sites harbor not only hydrocarbons, but also brine that contains metals including sodium, calcium and some lithium. When drillers poke holes into oil-saturated formations, the brine flows back to the surface along with the molecules that end up as fuel, and companies have been prompt to discard the earthy marinade. But now that the EV battery material has become a prized commodity, lithium companies are developing technologies to remove it from this brine—and oil-and-gas companies are also taking a second look.
The process, known as direct lithium extraction, could mark a new era for the industry, researchers and analysts say.
Extraction can be labor-intensive and has yet to be commercialized at scale, but rising demand for lithium is increasing the focus on new methods. “We need to rethink and look at assets that will require modern processes to unlock,” says Robert Mintak, the chief executive of Vancouver-based Standard Lithium.
In Arkansas, now a minor producer of oil and gas, Standard Lithium is running a demonstration plant to extract lithium from oil-field brine. In Canada, the company E3 Lithium is working with an oil-and-gas company to produce the metal from a depleted oil-production field. And in the Permian basin of West Texas and New Mexico, driller Devon Energy is testing techniques with other companies to produce lithium from wastewater it pumps alongside oil and gas.
Demand for lithium batteries is projected to shoot up this decade, with U.S. demand expected to increase by nearly six times by 2030 to reach $52 billion, according to a Boston Consulting Group analysis. Billions of dollars in government subsidies are also bolstering companies’ bets on finding new ways to extract the metal.
Now, most of the world’s lithium supply comes from Australia, Chile and China. They provided about 92% of the 130,000 metric tons of lithium extracted globally last year, according to investment bank Raymond James. Producers crush rocks to extract lithium, or collect it by pumping shallow subterranean brines—which offer much higher concentrations of lithium than oil-field brines—and pouring it into gigantic evaporation ponds. This involves using large amounts of water, and environmental groups say the ponds can contaminate the air and soil.
Tapping the brine in North America’s oil fields with direct lithium extraction is less damaging, companies and researchers say. Because energy companies have drilled millions of oil-and-gas wells and collected subsurface data in the process, lithium prospectors know where to look.
Direct extraction could also speed up lithium production. Concentrating lithium in brine ponds can take up to 18 months and recovers about 50% of the lithium, according to an April report by Goldman Sachs. In direct extraction, brine is sent to a processing unit, where chemicals, a resin or a membrane, among other technologies, are used to capture the lithium ions. The water is then reinjected into the aquifer where it originated. The process takes at most a few days, and recoveries are up to 90%. Analysts say direct-extraction technologies could be applied to lithium-rich shallow brines as well.
The technology presents some challenges. Because each brine is a unique broth of chemicals, collecting lithium through direct extraction will require tailored approaches for each project, says Kevin Murphy, director of metals and mining research at S&P Global Commodity Insights. The lower the concentration of lithium in the brine, the higher the operating costs, as producers need to process more water. The presence of other elements can also interfere with the extraction process, Murphy says.
In Canada’s Alberta province, E3 Lithium aims to coax the metal from the Bashaw district in the depleted Leduc oil field, an area that it estimates contains about 16 million metric tons of lithium—about five times the estimated lithium in Canada’s rock deposits. The company has received Canadian federal grants totaling more than 30 million Canadian dollars (about $22 million). Imperial Oil, an oil producer majority-owned by Exxon Mobil that discovered oil at Leduc, has invested C$6.4 million in E3 Lithium, according to the companies. The partnership grants E3 Lithium access to Imperial Oil’s freehold lands and to its water and reservoir-management savvy.
“We operate like conventional oil,” says E3 Lithium Chief Executive Chris Doornbos.
E3 Lithium, which plans to begin operations at an extraction pilot plant in the third quarter of 2023, hopes to initially produce 20,000 metric tons of lithium hydroxide per year. It aims to pump brine from a depth of 1.5 miles, potentially using existing wells as well as new ones. The liquid will then likely be sent through pipelines to a facility where a sorbent material will capture the lithium and reject impurities to create a concentrated liquid, which then will be further refined into battery-grade material.
The Smackover formation of southern Arkansas is seen as one of the most promising regions in North America to test and deploy the technology. Exxon this year purchased drilling rights to a significant lithium prospect in the region, which it intends to develop, according to people familiar with the matter. The metal’s concentration there can be over 500 milligrams per liter, by some estimates, compared with around 75 milligrams per liter in the Leduc field.
Exxon declined to comment.
Chemical companies in the region have long produced brine from depleted oil fields to collect bromine, another valuable chemical in the saltwater. Now, lithium companies want to get a piece of the action.
Standard Lithium has been operating an industrial-scale plant in the Smackover area since 2020 with German chemical maker Lanxess. Brine, which Lanxess processes to produce bromine, flows into the facility at the rate of about 3,000 gallons a minute. Using the same brine, Standard Lithium expects to produce just under 6,000 metric tons of lithium annually from this plant and targets a production of 50,000 metric tons across the company’s projects in Arkansas, chief executive Mintak says.
Some companies hope the direct-extraction technology will also open the door to producing lithium in the Permian basin of New Mexico and West Texas, the most active oil field in the U.S. Drillers there inject millions of gallons of water down wells to frack shale rock. As this wastewater flows back up along with brine, producers have to dispose of it. The Permian basin produced around 18 million barrels of water a day in 2021, according to investment bank Goldman Sachs. Monetizing the lithium in the saltwater could allow the drillers to offset the cost of having to handle it, executives and analysts say.
Permian producer Devon Energy has invested millions of dollars through venture-capital firms into companies working on alternative energy projects and technologies, including direct lithium extraction, says Trey Lowe, the company’s chief technology officer. Because lithium is so diluted in Permian water, Devon is working with specialized companies to test techniques that concentrate the metal further, and is looking at ways to extract other valuable chemical elements, such as iodine.
Others are more skeptical. Amanda Brock, the chief executive of Aris Water Solutions, a water-management company in the Permian, says that it has looked into producing lithium from wastewater, but that it doesn’t see near-term potential given lithium prices and production costs.
“We would love to find a way to cost-effectively extract the lithium,” she says.