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Permalink Reply by Skip Peel - Mineral Consultant on September 20, 2024 at 13:16

There might be no horizontal drilling and hydraulic fracture stimulation without federal support, technical and financial, for Mitchell Energy's effort to unlock unconventional reservoirs in the Barnett Shale.  The private/public partnership in exploring new technology is crucial for the arc of American energy.  The key contribution of the federal government is often overlooked or down played. 

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Permalink Reply by Skip Peel - Mineral Consultant on September 21, 2024 at 0:45

TerraVolta Resources Selected by U.S. Department of Energy for $225 Million Award Negotiation for Lithium Production Facility in Texarkana Region

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News provided by

TerraVolta Resources  Sep 20, 2024, 09:58 ET

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HOUSTON, Sept. 20, 2024 /PRNewswire/ -- TerraVolta Resources, LLC ("TerraVolta" or the "Company"), a leading U.S. critical minerals exploration and production company, was selected by the U.S. Department of Energy's ("DOE") Office of Manufacturing and Energy Supply Chains for a $225 million award negotiation to support the creation of a more than $1 billion lithium production facility in the Texarkana region that spans Arkansas and Texas.

TerraVolta was selected by the DOE to receive Bipartisan Infrastructure Law funding to boost the domestic production of advanced batteries and battery materials nationwide. The selection of TerraVolta's Project Liberty Owl is one of the largest provisional awards to a U.S. critical minerals project.   

"We're in the midst of a manufacturing revival in the United States as the Biden-Harris Administration's Investing in America agenda continues to breathe new life into communities and local economies across the country," said U.S. Secretary of Energy Jennifer M. Granholm. "By positioning the U.S. at the forefront of advanced battery manufacturing, we are creating high-paying jobs and strengthening our global economic leadership and domestic energy security, all while supporting the clean energy transition."

The DOE's funding will support TerraVolta's plans to design, build, and operate Project Liberty Owl, a commercial-scale lithium production and conversion facility. TerraVolta's facility, which will produce battery-grade lithium from domestic brine resources using direct lithium extraction technology, is initially expected to have a production capacity of at least 25,000 tonnes of lithium carbonate annually–enough lithium to power approximately 500,000 electric vehicles per year.

Earlier this year, TerraVolta completed a successful supply well that further validated the Company's premium resource and industry-leading lithium concentrations.

Jamie Liang, President and CEO, TerraVolta, said, "Over the past 24 months, we have accumulated one of the largest land positions in the Smackover trend and confirmed the highly advantageous resource. Today, we are thrilled to have the U.S. Department of Energy endorse Project Liberty Owl as we begin the design and engineering for this facility in the Texarkana region. With the DOE's support, we will employ American workers to harness domestic lithium resources and supply the U.S. economy's need for EVs, grid-scale batteries, and consumer products."

John Raymond, Chairman of The Energy & Minerals Group (EMG) and TerraVolta, said, "Our investment in TerraVolta is representative of EMG's focus on the forward-facing green commodities essential to successful implementation of global carbon reduction initiatives. We are very appreciative of the DOE's grant in support of TerraVolta and Project Liberty Owl as it is foundational to ensuring the development of a real-world solution to the current gap in the domestic U.S. lithium supply chain."

TerraVolta's Liberty Owl facility is expected to create more than 125 permanent jobs in the Texarkana region. Batteries manufactured using lithium produced at this facility could eliminate more than 2.2 million tonnes of carbon dioxide emissions annually. Construction of Liberty Owl is slated to begin in 2028 with operations in 2029.

Rob Sitterley, President and CEO, AR-TX Regional Economic Development Inc., said, "Today's announcement is a pivotal moment for Texarkana as we energize and expand our economic landscape. We are a region home to companies which are shaping the future. TerraVolta's investment will not only create new jobs and significant local revenue but positions our community at the crossroads of technological innovation and environmental sustainability.  We look forward to seeing their success and continuing AR-TX REDI's efforts to drive the Texarkana region forward."

Based in Houston, Texas, TerraVolta is led by President and CEO, Jamie Liang; Chief Technology Officer, Ross Tomson; and VP, Land and Business Development, Nicholas Muscara. Earlier this year, the Company announced a substantial equity investment from EMG, one of the largest private investors across the natural resources complex globally.

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Permalink Reply by Joe B. Lovelace on September 21, 2024 at 5:27

As this mentions Texarkana could the location of the Project Liberty Owl be in Miller County?  interesting that it is further west than planned Magnolia projects by Exxon and Standard Lithium.

TerraVolta Resources of Houston also said it has been picked for a similar $225 million award negotiation for its “Liberty Owl” project. TerraVolta Resources hasn’t disclosed its planned project location. However, a map posted by the DOE in its press release appeared to indicate a location in Miller County, Arkansas.

Permalink Reply by Skip Peel - Mineral Consultant on September 21, 2024 at 7:55

The last map which shows the lease footprint of the lithium companies comes right up to the Lafayette-Miller County line and does not look as if it has been updated in a while. As leasing is ongoing and seemingly moving west, the “Liberty Owl” project could very well be located in Miller County.

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Permalink Reply by Skip Peel - Mineral Consultant on September 27, 2024 at 2:12

With lithium, Arkansas risks repeating oil boom and bust

Arkansas’ governor says the state is set to “become the lithium capital of America.” Residents, including those who saw oil falter after decades of prosperity, are wary.

Link to full article with images: https://energynews.us/2024/09/27/with-lithium-arkansas-risks-repeat...

In the dusty light of a decades-old lunch counter in Lewisville, Arkansas, Chantell Dunbar-Jones expressed optimism at what the lithium boom coming to this stretch of the state will mean for her hometown. She sees jobs, economic development, and a measure of prosperity returning to a region that needs them. After waving to a gaggle of children crossing the street in honey-colored afternoon sunshine, the city council member assessed the future as best she could. “Not to say that everything’s perfect, but I feel like the positives way outweigh the negative,” she said.

Lewisville sits in the southwest corner of the state, squarely atop the Smackover Formation, a limestone aquifer that stretches from northeast Texas to the Gulf Coast of Florida and has for 100 years spurted oil and natural gas. The petroleum industry boomed here in the 1920s and peaked again in the 1960s before declining to a steady trickle over the decades that followed. But the Smackover has more to give. The brine and bromine pooled 10,000 feet below the surface contains lithium, a critical component in the batteries needed to move beyond fossil fuels.

Exxon Mobil is among at least four companies lining up to draw it from the earth. It opened a test site not far from Lewisville late last year and plans to extract enough of the metal to produce 100,000 electric vehicle batteries by 2026 and 1 million by 2030. Another company, Standard Lithium, believes its leases may hold 1.8 million metric tons of the material and will spend $1.3 billion building a processing facility to handle it all. All of this has Gov. Sarah Huckabee Sanders predicting that her state will become the nation’s leading lithium producer. 

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With so much money to be made, Dunbar-Jones and other public officials find themselves being courted by extraction company executives eager to tell them what all of this could mean for the people and places they lead. They have been hosting town meetings, promising to build lasting, mutually beneficial relationships with the communities and residents of the area. So far, Dunbar-Jones and many others are optimistic. They see a looming renaissance, even as other community members acknowledge the mixed legacies of those who earn their money pulling resources from the ground. Such companies provide livelihoods, but only as long as there is something to extract, and they often leave pollution in their wake. 

The companies eyeing the riches buried beneath the pine forests and bayous promise plenty of jobs and opportunities, and paint themselves as responsible stewards of the environment. But drawing brine to the surface is a water-intensive process, and similar operations in Nevada aren’t expected to create more than a few hundred permanent jobs. It’s high-paying work, but often requires advanced degrees many in this region don’t possess. Looking beyond the employment question, some local residents are wary of the companies looking to lease their land for lithium. It brings to mind memories of the unscrupulous and shady dealings common during the oil boom of a century ago.

For residents of Lewisville, which is majority Black, such concerns are set against a broader history of bigotry and the fact that even as other towns prospered, they have long been the last to benefit from promises of the sort being made these days. Folks throughout the area are quick to note that the wealth that flowed from the oil fields their parents and grandparents worked benefited some more than others, even as they lived with the ecological devastation that industry left behind.

Dunbar-Jones is confident that, if nothing else, concern about their reputation and a need to ensure cordial relations with community leaders will sway lithium companies into supporting local needs. “All I can say is right now it’s up in the air as to what they will do,” she said, “but it seems promising.” 

Lewisville sits just west of Magnolia, El Dorado, and Camden, three cities that outline the “golden triangle” region that prospered after the discovery of oil in 1920. In an area long dependent upon timber, the plantation economy transformed almost instantly as tenant farmers, itinerant prospectors, and small landholders became rich. Within five years, 3,483 wells dotted the land, and Arkansas was producing 73 million barrels annually. 

Although the boom created great wealth, Lewisville remained largely rural, and its residents labored in the fields that made others rich. Still, the oil economy, coupled with the timber industry, brought a rush of saloons, itinerant workers, and hotels to many towns. Restaurants, supermarkets, and other trappings of a middle-class community soon followed, though Lewisville always lagged a bit behind.

That prosperity lasted a bit longer than the oil did. The first wells ran dry by the end of the 1920s, but the Smackover continued producing 20 to 30 million barrels annually until 1967, when it began a steady decline. These days, it offers about 4.4 million a year.

The shops that once served Lewisville and the furniture and feed factories that employed those who didn’t work the fields have long since gone. Jana Crank, who has lived here for 58 years, came of age in the 1960s and remembers prosperous times. She runs a community gallery in what’s left of downtown, where most buildings sport faded paint and cracked windows. “It used to be a TV fix-it shop,” Crank, a retired high school art teacher, said of the space.

As she spoke, a group of friends painted quietly. Canvases showing sunsets, crosses, and landscapes lined the walls. The scenes, bright and cheerful, stood in contrast to Lewisville, where retailers have moved on, the hospital has closed, and the schools have been consolidated to save money. Fewer than 900 people live here, about half as many as during the town’s peak in the 1970s. They tend to be older, with a median household income of around $30,000. “People are just dying out, their children don’t even live in town,” Crank said. “They have nothing to come back for.” 

That could change. Jobs associated with mining rare-earth minerals are highly compensated and highly sought-after, many of them netting as much as $92,000 per year. State Commerce Secretary Hugh McDonald believes the state could provide 15% of the world’s lithium needs, and Sanders has said Arkansas is “moving at breakneck speed to become the lithium capital of America.”

A few steps in that direction already have been taken around Lewisville, the county seat of Lafayette County. It is home to 13 lithium test wells, the most in the region. They’re tucked away behind pine trees, fields of cattle, and, occasionally, homes. The dirt and gravel roads leading to them have been churned to slurry by heavy equipment.

Those who own and work the wells arrived quietly last year, their presence indicated by the increasing number of trucks with plates from nearby Texas and Louisiana, sparking rumors throughout the region. They officially announced themselves to Mayor Ethan Dunbar last fall, in visits to local officials, mostly county leaders, to initiate friendly relations and establish the basis for economic partnerships. Mayor Dunbar and the Lewisville City Council were invited to a public meeting where lithium company executives discussed their plans and took questions.  

The town’s motto is “Building Community Pride,” something Dunbar-Jones, who is the mayor’s sister, takes seriously. She and others have hosted movie nights, community dinners, and, in a particular point of pride, clinics to help people convicted of crimes get their records expunged. Meanwhile, the city council, joined by a number of residents, has come together to nail down just what the lithium boom will mean for the town and to ensure everyone knows what’s in store. 

That’s particularly important, Dunbar-Jones said, because 60% of the town’s residents are Black. “Typically in minority neighborhoods, people are not as aware of what’s going on, because the information just doesn’t trickle down to them the way it does to other people,” she said. “At the meetings with the actual lithium companies, there may be a handful of people of color there versus others. So that lets you know who’s getting that information.”

A representative of Exxon, the only company that responded to a request for comment, said it has strived to build ties with communities throughout the region. “We connect early and often with elected officials, community members and local leaders to have meaningful conversations, provide transparency, and find ways to give back,” the representative said. It has opened a community liaison office in Magnolia and has worked with the city’s Chamber of Commerce to sponsor community events. It also established a $100,000 endowment for Columbia and Lafayette counties to provide grants for “education, public safety, and quality-of-life initiatives.”

Folks in Lewisville would like to see more of that kind of attention. In March, the city, working with the University of Arkansas Hope-Texarkana, hosted a town hall meeting so residents could speak to lithium executives and express concerns. The mayor recalls it drawing a standing room-only crowd that expressed hope that the industry would bring jobs and revenue to town, but also worried about the environmental impact. Folks called on Exxon and other companies to support new housing and establish pathways for young people to work in the industry. 

Venesha Sasser, who at 29 is the chief development officer of the local telephone company, sees the coming boom providing an opportunity to build generational wealth for families and resources, like broadband internet access, for communities. Any company that can invest $4 billion in a lithium operation can surely afford to toss a little back, Sasser said. “We want to make sure that whoever is investing in our community, and who we are investing in, actually means our people good.”

Sasser followed a trajectory common among young Black professionals from the area: She left to pursue an education, then returned to care for loved ones. As she got more involved in the community, she often found herself being treated a little differently, an experience Mayor Dunbar delicately described as bumping up against “old systems.” Lewisville is a majority-Black town in a majority-White county, and as of 2022, had a poverty rate of 23%. Although community leaders say they work well with colleagues in other towns and with county leaders, they also feel that they’ve had to elbow their way into conversations with lithium companies. They worry that the dynamics of the oil days, when Black men worked alongside whites but often in lower-paying, less desirable jobs and most of the money stayed in wealthier cities like El Dorado, will repeat themselves.

“You had people from Magnolia and El Dorado and Spring Hill and other places coming in and doing the work and reaping the benefits, and then when it was gone, they were gone,” said Virginia Henry, a retired school teacher who grew up in Lewisville and lives in Little Rock. Her ex-husband drilled for oil years ago, and the experience left her with a sour taste in her mouth. “I’m thinking it’s going to be pretty much the same,” she said. “They’re going to ease in, they want to do all this work and create all these jobs for somebody and then ease out when it’s done in a few years. Then here we’ll be with soil that can’t grow anything, contaminated water, and a whole bunch of kids with asthma.”

Mayor Dunbar, who is midway through his second term, is trying to balance reservations with optimism. “‘Imagine the possibilities.’ That’s my tagline,” he said, settling into a chair at City Hall. A blackboard behind him outlined his priorities: housing, recreation, education. He hopes support from companies like Tetra Technologies, which is developing a 6,138-acre project not far away, will finance those goals and give people a future that’s more stable than the past, one in which Lewisville’s children can pursue the same opportunities that kids in nearby, better-resourced communities can. 

“Think about Albemarle in Magnolia,” he said, referring to the bromine plant about 30 miles up the road. “Get a job at Albemarle, you stay there 25 years, you earn a decent salary, you’d have a decent retirement. You can live well. Quality of life is good. We are hoping to see the same thing here.” 

Many of the people poised to benefit from the lithium beneath their feet seem ambivalent about climate change. In El Dorado, in a bar called The Mink Eye, an oil refinery worker grimaced at the mention of electric vehicles. The next morning, retired oil workers gathered at Johnny B’s Grill scoffed at the idea of a boom. A waitress admitted that she’d bought stock in lithium companies, but said any faith that the industry will bring renewed prosperity does not necessarily mean folks are on board with the green transition. “These men drive diesels,” she said, pointing toward her customers. Still, she said, any jobs are good jobs.

That attitude pervades the state capitol in Little Rock, where politicians who don’t give much thought to why the energy transition is necessary cheer the state’s emerging role in it. The governor, who has cast doubt on human-caused climate change, has appeared at industry events like the Arkansas Lithium Innovation Summit to proclaim the state “bullish” on its reserves of the element. “We all knew that towns like El Dorado and Smackover were built by oil and gas,” Sanders told the audience. “But who knew that our quiet brine and bromine industry had the potential to change the world.”

Much of the world’s lithium is blasted out of rocks or drawn from brine left to evaporate in vast pools, leaving behind toxic residue. The companies descending on Arkansas plan to use a more sustainable method called direct lithium extraction, or DLE. It seems to be a bit more ecologically friendly and much less water-intensive than the massive pit mines or vast evaporation ponds often found in South America. It essentially pumps water into the aquifer, filters the lithium from the extracted brine, then returns it to the aquifer in what advocates call a largely closed system. Researchers from the University of California, Los Angeles, in a report prepared for the Nature Conservancy, said that “DLE appears to offer the lowest impacts of available extraction technologies.”

Still, the technology is relatively new. According to Yale Environment 360, Arkansas provides a suitable proving ground for the approach because it has abundant water, a large concentration of lithium, and an established network of wells, pipelines, and refineries. But there are concerns about the amount of water required and the waste material left behind, despite repeated assurances from lithium companies that the process is safe and sustainable.

Although DLE doesn’t require as much water as brine evaporation, in which that water is lost, “it is a freshwater consumption source,” Patrick Donnelly, of the Center for Biological Diversity, said in an interview with KUAF radio in Fayetteville, Arkansas. The waste generated by the process is another concern, he said, “in particular, a solid waste stream. It’s impossible for them to extract only the lithium.”  

Locals are well aware of the impact brine can have on the land. Before anyone realized its value, oil and gas producers didn’t worry much about it leaking or spilling onto the ground, literally salting the earth. Some are concerned that the pipelines that will carry brine to refineries might leak, as they did in the oil days. Such fears are compounded by the fact the state Department of Environmental Quality relies on individuals to report problems and doesn’t appear to do much outreach to residents.

There’s also a lot of skepticism about how many jobs the boom may create. So far, Standard Lithium’s plant in El Dorado employs 91 people, said Douglas Zollner, who works with the Arkansas branch of the Nature Conservancy and has toured the facility. No one’s offered any projections on how many people might find work in the budding industry, but a lithium boom in Nevada suggests it may not be all that many. Construction of the Thacker Pass mine, which could produce 80,000 metric tons of lithium annually, is expected to generate 1,500 temporary construction and other jobs — but it will only employ 300 once operational.

Those jobs pay well, but typically require advanced training. Public universities like Arkansas Tech University are revising science and engineering curricula to meet the lithium industry’s needs, hoping to connect students with internships in the field. However, locals worry that disinvestment in schools in rural and largely Black communities will leave those who most need these jobs unable to attain the training necessary to land them.

Just how much money might flow into local communities remains another open question. Fossil fuel companies lease the land they drill and pay landowners royalties of 16.67% of their profit. Any oil pumped from the land also is taxed at 4 to 5% of its market value. This fee, called severance tax, is paid to the counties or towns from which the resource was extracted. 

None of these things apply to lithium. So far, there is no severance tax on the metal, though the state levies a tax of $2.75 for every 1,000 barrels of the brine from which it is extracted. The state Oil and Gas Commission continues haggling over a royalty rate, though it seems unlikely the fee will be as high as those paid on oil and gas leases. When the state sought a double-digit royalty, the industry balked, arguing that extracting and processing lithium is expensive and officials ought to wait until production begins in earnest before deciding what’s fair. 

Companies cannot extract and sell the metal for commercial use until the commission sets a royalty rate, a process expected to drag on for some time. On July 26, the major players in the Arkansas lithium industry filed a joint application seeking a rate of 1.82%. The South Arkansas Mineral Association — which represents the majority of landowners, which is to say, timber companies, oil companies, and other corporate interests — demanded a higher share. 

Small landowners still hope to benefit, and the lack of clarity around royalties hasn’t done much to engender trust among locals wary of the companies looking to lease their land. Some folks, already offered terms, are using online forums to determine if they’re being stiffed. Others fear efforts to wrest land from the few Black families who own property, often passed between generations informally without a deed or title. Such land, called heirs’ property, accounts for more than one-third of Black-owned property in the South, and without the documentation required to prove ownership, land can be subject to court-ordered sales. 

Many in Lewisville say they regularly receive calls and texts from people interested in buying land, and Henry has seen people checking out properties and attending auctions. During a visit to the Lafayette County courthouse archives, I noticed a woman thumbing through mineral rights records. Although she wouldn’t identify herself, she politely explained that she was checking such documents throughout Arkansas, Texas, and Louisiana, bringing to mind the speculators who, during the oil boom, did the same before approaching naive residents who may not know about the riches under their land. 

Beyond the timber companies with holdings in the region, most of the major landowners are white and wealthy, and any spoils, Henry suspects, will simply pass from one affluent family or powerful company to another, with no benefit to people like her. “What land, honey?” she said with a small, sardonic laugh. “That’s a pie in the sky type dream to me.”

Despite the concerns, the hype and fanfare surrounding the possibility of an economic revival remains high. City officials in Lewisville, and the people they lead, are trying to remain open-minded and easygoing even if unanswered questions linger about how many jobs might be coming, how the boom will benefit their town, and what it will mean for the environment.

“You know, it’s kind of frustrating because the questions get asked at these meetings,” Dunbar, the mayor, said. But he feels the lithium companies often meet questions with the same pleasant, if unhelpful, answer of “We can’t talk about it.” They’re always so careful in their responses. “They deliberately did not say anything until they knew what they wanted to do and say, that’s the same with what they want to provide communities,” Dunbar said. 

As for the $100,000 commitment from Exxon, no one’s sure exactly who will receive that money or how allocations will be made. The mayor, discussing that point, showed some frustration. He said he has tried, and will continue to try, to get the companies to put their promises of jobs and support for local infrastructure in writing.

The balance of goodwill that he is trying to maintain between everyone involved is delicate: the lithium companies, whose jobs and support his community desperately needs; the county officials he must work with; the residents of Lewisville; and the mayors he collaborates with on grant applications. These towns are small, and word spreads quickly; relationships are as precious as the riches deep below the ground.

As Dunbar-Jones, the city council member, finished her turkey sandwich in the late afternoon light of the diner, she spoke of her faith in the ties between the people of Lewisville. “It’s hard to get a group of people to work together, period, especially when they don’t know each other,” she said. “But we all know each other.”

Despite her confidence, she knows she’s dealing with relationships in which companies take what they can and leave, where the question of what they owe the communities that enrich them is naive. Her father benefited from his job at Phillips 66, but it couldn’t last forever. When the oil was gone, those who profited from it were, too. From their perspective, she said, it’s a question of “How long am I going to support a community I’m no longer in? It would be unrealistic to think that there will be some long-term benefits from it.” The same is true of lithium, and the companies that will mine it. At some point, they will leave, and take their jobs and their money with them. Dunbar-Jones only hopes they leave Lewisville a little better off once they’ve left.

 

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Permalink Reply by Joe B. Lovelace on September 27, 2024 at 5:07

Great article and a real opportunity for Southwest Arkansas and Northeast Texas.  People vote in this upcoming election for many reasons.  I would examine closely the position of both parties on the funding that has jumpstarted the search for a domestic supply of lithium.

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Permalink Reply by Skip Peel - Mineral Consultant on September 27, 2024 at 6:23

As the price of lithium is depressed, any outcome that slows the adoption of EVs will be a further drag on all the start ups.

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Permalink Reply by Skip Peel - Mineral Consultant on September 30, 2024 at 2:32

Dozens of mineral rights holders file objections to Arkansas' proposed lithium royalties

September 29, 2024 by Ainsley Platt  eldoradonews.com

Inequitable. Faulty premise. Meager. Unconstitutional.

All of these words have been used to describe the application to set lithium extraction royalties in Arkansas by five companies, in addition to the process in which those royalties are determined, by those who are in opposition to a 1.82% royalty that objectors across the board appear to have deemed to be grossly insufficient.

Dozens of additional landowners -- ranging from families to regional banks such as Simmons Bank to massive multimillion dollar companies to the city attorney of Oakland, Calif. -- have filed objections over the past two weeks to the proposal, which was supposed to be considered by the Arkansas Oil and Gas Commission during its September meeting this past week. The application was removed from the docket Sept. 20 after the applicants requested and were granted a delay in order to address multiple challenges to the legality of the application.

At least 74 individual landowners and businesses have objected to the royalty, either directly or through an attorney.

And as it turns out, some of the objecting mineral rights owners have received higher royalty offers for lithium -- and they said at least some of those offers came from one of the five co-applicants for the royalty. Those companies are Albemarle, Standard Lithium, Lanxess, Tetra and Exxon-affiliate Saltwerx.

Andrew Blackburn -- a mineral manager for Argent Mineral Management, a company that manages mineral rights nationwide including in southwest Arkansas -- said that one of his company's clients had received an offer of a brine royalty for 6.25% by one of the co-applicants for a lease in Cass County, Texas, which is underlain by the same lithium-rich brine aquifer under southwest Arkansas, although he declined to identify which one as he did not want to damage relations with the company.

"Right now, it feels like the industry is taking the approach of, 'Hey, trust us with this number' rather than being transparent," Blackburn said. "This 'Hey, trust us' approach leads us only to distrust.

"It's disappointing how the industry is trying to push this through without really providing a basis for it."

Weyerhaeuser, a timberland company that owns 1.2 million acres of timberland in Arkansas, wrote in a letter signed by its senior director of natural gas, oil and CCS, Phillip Blower, that formally objects to the royalty proposal that "Weyerhaeuser has received offers (for leases in Arkansas and Cass County, Texas) ranging anywhere from 3% to 10% cost free, including an offer from one of the Co-Applicants to this proceeding that falls in that range."

"We understand operators of these projects and facilities must be profitable," Blower continued in the letter. "However, it is apparent from where we sit that these Co-Applicants are attempting to take advantage of what they perceive to be a regulated system to maximize their own profits at the expense of the mineral owners."

The application outlining the five companies' proposed royalty structure speaks in depth about how the royalty reflects in part the costs of operating a potential extraction project, with the applicants arguing that because of the "enormous investment" and "significant capital and cost" the applicants will take on in order to process the extracted lithium, the value of the brine and unextracted lithium that the royalty rate pays for is of "minimal value."

Blower rebutted this in his letter.

"By allowing the Co-Applicants to recover their costs from the mineral owner and not make that owner an equal proportionate owner in any project is unfair on its face, especially under the Co-Applicants proposal wherein basically everything they do is considered a trade secret and not subject to review by the mineral owners," Blower wrote.

Blower continued, disputing multiple assertions made by the applicants. He raised Weyerhaeuser's objections to the 1.82% proposal since, he wrote, Standard Lithium had an agreement with another of the applicants, Tetra, to pay them a 2.5% royalty. Blower questioned why Tetra "deserves a higher royalty than the mineral owners from the same land and free from the cost of development that they are asking landowners to be burdened with?"

"We know that (Arkansas Oil and Gas Commission) works diligently to determine fair and appropriate compensation in cases such as this, and we believe a proposal of 1.82% royalty, with allowances for further deductions is unreasonably low and by no means equitable for all parties," the company said in a written statement through a spokesperson when contacted by the Arkansas Democrat-Gazette.

PotlatchDeltic, another timberland company with a significant Arkansas footprint, also submitted a written objection, signed by CEO Eric Cremers, which said that the proposed royalty "unfairly rewards the developers" at the expense of others. Cremers wrote that the company believed that a fair royalty rate was "crucial" for the sustainability and growth of a successful lithium industry.

And similar to Weyerhaeuser and Argent Mineral Management's client, PotlatchDeltic was in "active discussions with other lithium brine developers who have offered royalty rates over five times greater than what was proposed in this most recent application."

Like Blower, Cremers took issue with multiple aspects of the application. He said the citation by the applicants of a 17-year-old Arkansas Oil and Gas Commission decision to justify its 1.82% royalty "should not be applicable and is not appropriate for determining current royalty rates." Similar to many other objectors, he pointed out the high projected returns estimated in the preliminary and definitive feasibility studies conducted by Standard Lithium as additional evidence that "the economic benefits ... are not shared fairly with the landowner."

In particular, Cremers pushed back against the applicants' assertion that the royalty should reflect the "minimal value" of lithium before it is processed.

"We vehemently disagree with this idea, and a comparison to lumber manufacturing (of which we have considerable experience) helps explain why," Cremers wrote. "By themselves, logs have little value (just like lithium brine). It is the manufacturing process that turns the logs into valuable wood products. Today, over 60% of the cost to make lumber is from the cost of those logs."

"Despite logs having minimal value on their own, wood products manufacturers like us pay considerable sums of money for them to produce something more valuable, such as lumber," Cremers continued. "Yet, even with this very high input cost, we continue to invest in our business ... The bottom line is that the Developers can afford to pay more for the lithium brine raw mineral," compensating mineral rights owners fairly while still earning "respectable" returns.

PotlatchDeltic declined to comment further on its objection when contacted by the Democrat-Gazette.

Elizabeth Anderson, executive director of the Farmers Bank Foundation and a member of the family that owns the bank, expressed dismay over a royalty rate that she called "a slap in the face."

"My main concern is just that we're not stuck with a rate for eternity, and that we go in with negotiable rates," Anderson said, echoing many other objectors who also want rates that can increase or decrease depending on how profitable the extraction operation is. "It's extremely low on something that is extremely valuable."

Right now, the price of lithium is in a slump. But Anderson said that it will eventually come back up again, and "then you have royalty owners still stuck at the 1.82%" despite much higher profitability.

In the meantime, however, Anderson said it might be time for the state to revisit the Arkansas Brine Act, which sets out the requirements from brine royalties, because of its age and the changes that have occurred since it was first passed into law.

Other mineral rights owners, such as Lexi Reid and Sara Robinson-Medina, have found themselves struggling to understand the complicated mineral leasing landscape in Arkansas. Both inherited mineral rights in Columbia County from deceased family members and both have expressed frustration that they are stuck in leases that they know next to nothing about. Robinson-Medina doesn't even have copies of the lease, despite having received checks -- never totaling more than $6 -- from Lanxess and its predecessor, Great Lakes Chemical, on multiple occasions.

"Everything is leaning towards (the applicants) and in their favor," Robinson-Medina said. "We want our fair share."

Reid is in a slightly different situation. Her father was a geologist, and therefore knew what he needed to know to properly manage the family's leases. After he died, Reid said she was left with reams of paperwork that dated back decades, and very little idea of what to do next.

Reid's great-great grandfather "took a lot of time in writing his wills and sending all of this stuff to his family to make sure that everybody's gonna be OK. I don't believe that when he passed away, he thought, you know, in a hundred years his family farm would only be giving his family $250," she said.

Reid now lives in Colorado, but she stills owns about 10 acres of land in Columbia County. She filed her objection expressing frustration with what she already sees as a very low royalty that pays her $250 a year for her brine, while asking for a more "realistic payment by this company who makes multi million dollars per year on our resources," she wrote in her objection.

In an interview, Reid said that she primarily wants to make informed decisions. Currently, she doesn't feel like she can do that with how little information there is about how the applicants calculated the royalty. She said she doesn't know much about the laws or regulations that govern brine leases and payments in Arkansas either, and only recently discovered that she still owned the 10 acres of land itself and not just the underlying mineral rights.

"I'm just a little baby landowner that doesn't, you know, have a whole lot of say in the world," Reid said. "I just want to make sure I'm not getting screwed over. ... It's our minerals, it's our land."

Anderson, Blackburn, and many other objectors in letters to the commission emphasized that they enthusiastically support growing an industry for lithium in southwest Arkansas, with Anderson saying that she "wants this to happen more than anything." But Anderson also pointed to the recent announcement for $225 million in federal funding for Standard Lithium to build out its operations in the state.

"They're basically coming to Arkansas for free, but they don't want to pay Arkansans," Anderson said.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on September 30, 2024 at 3:46

At least 74 individual landowners and businesses have objected to the royalty, either directly or through an attorney.

I would strongly advise all GHS.com members who own mineral rights in S AR to join the 74 individuals and file objection to the royalty framework proposed by the Big Five.  You can do so personally or through an attorney.  The behind the scenes pressure being exerted by the companies and their bought politicians is tremendous.

• ▶ Reply

Permalink Reply by Shawn Bianca on October 1, 2024 at 7:03

Thank you for keeping everyone informed about the lithium situation in Arkansas. I, along with several family members, inherited minerals in Miller county as well as land and minerals in Cass County, Texas, and North Caddo Parish, Louisiana, so these decisions may impact all of our holdings in the area. We have had leases sent to us over the past few months and most of us have declined the insulting offers. I do not live in Arkansas, so I have no idea to whom I should file an objection to the royalty framework suggested by the lithium companies. I've tried to find information on South Arkansas Minerals Association, but have been unsuccessful. Many news articles refer to the association, but I cannot find a website or physical address. I would appreciate any information you can provide about joining the 74 individuals noted in the article above.

Once again, thank you for all you do for the land/mineral owners!

Shawn

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on October 1, 2024 at 7:41

You're welcome, Shawn.  I suggest that you send a letter to the Arkansas Oil & Gas Commission.  Here is a link to their website that contains contact information.  It would be helpful to include a mention of the fact that leases with royalties considerably higher than what the Big 5 are proposing are being offered in SW AR and E TX including by some of the Big 5.  I appreciate your willingness to weigh in on the issue.

https://www.aogc.state.ar.us/

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on October 2, 2024 at 0:50

Arkansas Energy & Environment, Oil & Gas Commission

5301 Northshore Drive, North Little Rock, AR 72118

 

The September Arkansas Oil and Gas Commission hearing scheduled to hear an Application filed by Albemarle Corporation, Saltwerx LLC, SWA Lithium LLC, LANXESS Corporation, and TETRA Technologies, Inc. (“Applicants”) in Docket No. 050-2024-09 was continued at the request of the Applicants. The Commission Hearing to hear this Application will be at a Special Commission Hearing scheduled for November 4, 2024. In this matter, the Applicants are seeking a Commission Order approving the method for fairly and equitably accounting to brine mineral interest owners for the anticipated profitable extraction of lithium ions from the Smackover Limestone Brine produced from lands in Columbia, Lafayette, Miller, and Union Counties.

Answers to Frequently Asked Questions

Why did I receive a letter regarding a hearing on September 24, 2024 and for a re-scheduled hearing on November 4, 2024 on Docket No. 050-2024-09?

The Applicants submitted a notice of hearing to the known mineral interest owners in these counties who may be affected by any Order issued by the Commission on this docketed matter. If you received a letter, you are a known mineral interest owner who may be affected. You are being given notice so that you can attend any hearing in this matter or otherwise participate if you choose to do so.

What is this hearing about?

Pursuant to Ark. Code Ann. § 15-76-315(c), in addition to any other amounts due and owing, the producers of any unit shall account separately and on a fair and equitable basis to each owner in the unit for all substances which are found by the Commission to be profitably extracted from brine by a producer and which were not extracted by a producer on January 1, 1979. Applicants assert that they anticipate the ability to profitably extract lithium from brine in units located in Columbia, Lafayette, Miller and Union Counties, and have requested that the Commission determine how the Applicants will account on a fair and equitable basis to all affected mineral interest owners for the profitable extraction of lithium ions from brine. During the hearing, the Applicants will ask the Commission to set a fair and equitable royalty rate.

Interested parties who object to the proposed interest rate can state their objections.

Where will the November 4, 2024 hearing be held?

El Dorado Conference Center, 311 South West Avenue, El Dorado, Arkansas.

Do I have to attend the hearing?

No. Attendance and participation in the hearing is completely voluntary.

How can I participate in the hearing?

Mineral interest owners may submit comments or objections to the Commission by email at:

objections@aogc.state.ar.us or they may personally attend the hearing and present their comment or objection at the hearing.

I cannot come to the hearing. Is there any way to view the live hearing?

The Arkansas Oil and Gas Commission has provided the following live stream link for the general public to view the live hearing:

https://www.youtube.com/@arkansasdepartmentofenergy6731

 

Link to AR O&G Commission Lithium Page:  https://www.aogc.state.ar.us/lithium/default.aspx

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