As the Smackover (SMK) Lithium (Li) play picks up steam we need to acknowledge that from regulatory and legal standpoints, there will be significant differences between the play in South Arkansas and in East Texas.  Very soon we expect to know more about royalty provisions and regulatory guidelines.  From past experience with dissimilarities between Texas and Louisiana mineral laws and regulatory statutes governing the Haynesville Shale, we hope to limit confusion and make it easier to access the information that will be pertinent to land and mineral owners.

In order to help members and quests to the website and to avoid confusion, we will start two new discussions, one for Texas and one for Arkansas.  There is an abundance of information in the original SMK Lithium discussion threads and members may want to click on them and then save them to their computer bookmarks/favorites to be able to access them in the future as they will eventually rotate off the main page.  After 24 hours, comments in those discussions will be closed but the replies will remain available in the website archive.   Archived discussions are available by using the search box in the upper right corner of all website pages.

GoHaynesvilleShale.com was one of the first resources for mineral owners to learn basics, share information and generally provide a place where mineral owners could become more informed managers of their mineral assets in the age of the Internet.  The website is pleased to continue to provide those services to those who will benefit from the SMK Lithium Play.  Please keep in mind two things.  You are a key part of the on the ground intelligence network by letting your friends and neighbors know about GoHaynesvilleShale.com and encouraging them to participate in site discussions.  And since GoHaynesvilleShale.com is free for all to use, please consider a donation to help keep the website online.

https://gohaynesvilleshale.com/donate

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Discovery of lithium, other chemicals could mean ‘economic boon’ for Shreveport area

Link to full article:

https://www.shreveportbossieradvocate.com/business/north-louisiana-...

"There's something new every week or so," Shreveport-based mineral consultant Skip Peel said. He is referring to the discovery of the chemical lithium in oil field brine water in south Arkansas, northeast Texas and possibly north Louisiana.

Lithium is the element crucial in the production of batteries in smartphones and electric vehicles and is the chemical the world is now chasing. At least one published industry report says that the Smackover Formation that extends into north Louisiana, the geological formation in which lithium has been discovered, may contain enough of the chemical to power 50 million EVs.

"There's a lot of speculators, a lot of investors out there," Peel said. "This is a huge deal with so many question marks at this time. We don't know where we'll end up. I just want the land and mineral owners to get a fair shake." Some of the questions to be answered deal with how lithium royalties in Arkansas, Texas, and Louisiana will be determined, and what they will be.

Arkansas may take a step forward at the Arkansas Oil and Gas Commission hearing in El Dorado, Ark. on April 23. In Docket #083-2023-10 the Lanxess Corp. and Standard Lithium are asking the commission to set a lithium royalty rate for one existing brine unit in the state. 

There is a distinct possibility that Arkansas may not decide that day, says Daniel Pilkington, an attorney with the oil and gas commission. "The matter was originally set for December, but the operator didn't provide enough information to make a decision," he told The Shreveport-Bossier City Advocate. Without the needed information, the commission may withhold a decision again.

Peel said when Arkansas' oil and gas commission does make a ruling, he expects that it will handle the royalties for lithium in the same way they handle bromine, another chemical found in the brine. With bromine, the commission sets the royalty rate.

Peel says the land and mineral owners in Texas he works with are hoping for a different royalty structure, one in which they will be able to play a role in the negotiations. "Everybody in Texas wants a lease that's more like an oil and gas lease; the ability to negotiate, not be stuck with the state telling you 'Here is the price for something,'" Peel said.

In Louisiana, state Sen. Stewart Cathey, R-Monroe, has filed Senate Bill 285. Cathey is seeking to give authority to the Office of Conservation to establish units (a particular set of acres) for brine production, and to add brine to the substances currently regulated by the state's mineral code.

At present, there has been no evidence that lithium has been found in the north Louisiana portion of the Smackover Formation, but lithium or no, there is something else that could add to the overall confusion. The Lithos Group, a Canadian company involved in lithium production, says there is the possibility other valuable chemicals and minerals are present in the brine, such as: rubidium, cesium, gallium, and platinum group metals, all of which are used in the computer, transportation, and energy industries. Those chemicals are in addition to sodium, potassium, magnesium, and calcium already known to be present in oil field brine.

"There's still so much that's so much that's unknown if you're a landowner hoping to get a lease," Peel said, "and there's a lot to negotiate other than what comes up out of the ground."

He says brine wells will need to be larger and the substance is very caustic, extremely hard on steel pipes, casings, and fittings. Spills can also create significant environmental damage. "It can keep a piece of property from being worth anything for decades," Peel warned.

"I'm also passing on to the attorneys I work with how to word clauses to defend landowners in court. You don't want to jump the gun too quickly and you want to protect yourself."

Whether lithium or other materials are found in local brine, Peel believes the lithium already discovered in Arkansas and Texas could be an economic boon to north Louisiana. He suspects, at the least, more flights at Shreveport Regional Airport, more work for experienced oil and gas workers, and possibly more local manufacturing opportunities for the different infrastructure needed for lithium extraction.  "The economic impact could be felt widely," Peel said. 

Discovery of lithium, other chemicals could mean ‘economic boon’ for Shreveport area

Link to full article:

https://www.shreveportbossieradvocate.com/business/north-louisiana-...

"There's something new every week or so," Shreveport-based mineral consultant Skip Peel said. He is referring to the discovery of the chemical lithium in oil field brine water in south Arkansas, northeast Texas and possibly north Louisiana.

Lithium is the element crucial in the production of batteries in smartphones and electric vehicles and is the chemical the world is now chasing. At least one published industry report says that the Smackover Formation that extends into north Louisiana, the geological formation in which lithium has been discovered, may contain enough of the chemical to power 50 million EVs.

"There's a lot of speculators, a lot of investors out there," Peel said. "This is a huge deal with so many question marks at this time. We don't know where we'll end up. I just want the land and mineral owners to get a fair shake." Some of the questions to be answered deal with how lithium royalties in Arkansas, Texas, and Louisiana will be determined, and what they will be.

Arkansas may take a step forward at the Arkansas Oil and Gas Commission hearing in El Dorado, Ark. on April 23. In Docket #083-2023-10 the Lanxess Corp. and Standard Lithium are asking the commission to set a lithium royalty rate for one existing brine unit in the state. 

There is a distinct possibility that Arkansas may not decide that day, says Daniel Pilkington, an attorney with the oil and gas commission. "The matter was originally set for December, but the operator didn't provide enough information to make a decision," he told The Shreveport-Bossier City Advocate. Without the needed information, the commission may withhold a decision again.

Peel said when Arkansas' oil and gas commission does make a ruling, he expects that it will handle the royalties for lithium in the same way they handle bromine, another chemical found in the brine. With bromine, the commission sets the royalty rate.

Peel says the land and mineral owners in Texas he works with are hoping for a different royalty structure, one in which they will be able to play a role in the negotiations. "Everybody in Texas wants a lease that's more like an oil and gas lease; the ability to negotiate, not be stuck with the state telling you 'Here is the price for something,'" Peel said.

In Louisiana, state Sen. Stewart Cathey, R-Monroe, has filed Senate Bill 285. Cathey is seeking to give authority to the Office of Conservation to establish units (a particular set of acres) for brine production, and to add brine to the substances currently regulated by the state's mineral code.

At present, there has been no evidence that lithium has been found in the north Louisiana portion of the Smackover Formation, but lithium or no, there is something else that could add to the overall confusion. The Lithos Group, a Canadian company involved in lithium production, says there is the possibility other valuable chemicals and minerals are present in the brine, such as: rubidium, cesium, gallium, and platinum group metals, all of which are used in the computer, transportation, and energy industries. Those chemicals are in addition to sodium, potassium, magnesium, and calcium already known to be present in oil field brine.

"There's still so much that's so much that's unknown if you're a landowner hoping to get a lease," Peel said, "and there's a lot to negotiate other than what comes up out of the ground."

He says brine wells will need to be larger and the substance is very caustic, extremely hard on steel pipes, casings, and fittings. Spills can also create significant environmental damage. "It can keep a piece of property from being worth anything for decades," Peel warned.

"I'm also passing on to the attorneys I work with how to word clauses to defend landowners in court. You don't want to jump the gun too quickly and you want to protect yourself."

Whether lithium or other materials are found in local brine, Peel believes the lithium already discovered in Arkansas and Texas could be an economic boon to north Louisiana. He suspects, at the least, more flights at Shreveport Regional Airport, more work for experienced oil and gas workers, and possibly more local manufacturing opportunities for the different infrastructure needed for lithium extraction.  "The economic impact could be felt widely," Peel said. 

I read the transcript from the Arkansas Oil & Gas Commission hearing on lithium royalty.  Here are some excerpts from my notes.

Standard Lithium's demonstration plant uses the brine from the Lanxess plant after it has been stripped of bromine.  Therefore Standard Lithium has no supply wells, re-injection wells and very little pipeline infrastructure.

One barrel of SMK brine at the Lanxess/Standard Lithium locations (42 gallons) contains 20# of sodium, 11# of calcium, 2# of bromine and 1 oz. of lithium.  The brine also contains magnesium and potassium.

Standard Lithium projects that a stand alone production facility would cost $365M and have a useful lifespan of about 25 years.  The concentration of lithium from the supply wells declines over time.  A supply well will cost about $5M to drill and complete.

DLE uses a resin-based filtration system.  SMK brine is 10X saltier than sea water.  Pipelines for the brine will be fiberglass.

Standard Lithium Installs Commercial DLE Column at Demonstration Plant

PRESS RELEASE GlobeNewswire  Mar. 13, 2024

 Emphasis added is my own.

 Link to full article with photos:  https://markets.businessinsider.com/news/stocks/standard-lithium-in...

EL DORADO, Ark., March 13, 2024 (GLOBE NEWSWIRE) -- Standard Lithium Ltd. (“Standard Lithium” or the “Company”) (TSXV:SLI) (NYSE American:SLI) (FRA:S5L), a leading near-commercial lithium development company, is pleased to announce that it has successfully installed a commercial-scale Direct Lithium Extraction (“DLE”) column at its Demonstration Plant near El Dorado, Arkansas. The column is a LiPRO™ Lithium Selective Sorption (“LSS”) unit, supplied by Koch Technology Solutions, LLC (“KTS”).

The column has been installed and integrated with the Company’s existing Demonstration Plant to test and derisk the design for commercial applications of the LiPRO™ LSS technology. It is the same size and design as those that the Company intends to use (in multiple trains) in its commercial applications for the Phase 1A and South West Arkansas projects (as described in the Company’s recent Definitive Feasibility Study for the Phase 1A project and Preliminary Feasibility Study for the South West Arkansas project).

The commercial-scale LiPRO™ LSS column is currently being filled with Koch Engineered Solutions proprietary lithium-selective sorption with commissioning expected later this month. Extensive performance testing of the commercial-scale DLE technology will be performed over the following months under the supervision of Standard Lithium and KTS technical specialists.

Standard Lithium’s Director, President & COO, Dr. Andy Robinson commented, “this is an important derisking milestone for Standard Lithium and our partners. Our team has been successfully running the LiPRO™ LSS technology since October 2022, and we have already successfully completed scale-ups of the DLE equipment at the Demonstration Plant; this is our final stage of derisking the technology. The data gathered from this commercial-scale unit will provide crucial validation and derisking information for our ongoing project finance processes, as well as FEED and DFS studies for the South West Arkansas Project (see news release dated 24 January 2024). We’re very grateful for our partners Koch Technology Solutions and LANXESS who have helped to make this final derisking step possible.”

Standard Lithium's Demonstration Plant is the only large-scale, continuously operating DLE plant in North America. Initially commissioned in May 2020, the Plant has processed over 16.4 million gallons (62 million litres) of Smackover brine.

“The long-term operation of our Demo Plant has been crucial in replicating and understanding the real-world dynamic conditions of continuous commercial-scale operations,” said Dr. Robinson. “With our partner Koch Technology Solutions, we have been able to tailor and optimise the multi-step flowsheet that will allow the Plant to be scaled for commercial production. The knowledge we have on-hand from over four years of operations, combined with an optimised flowsheet and now a commercial-scale DLE column, puts us in a strong position as we continue to advance our projects.”

Recent technical highlights of the Demo Plant and the existing LiPRO™ LSS (DLE) column are provided below.

Key Findings:

  • Lithium Recovery Efficiency: As a recent weekly snapshot demonstrates (early March 2024), the LiPRO™ LSS (DLE) process achieved an average weekly lithium recovery of 95.9% from the continuous incoming brine flow.
  • Element Rejection Rate: During the same period, the DLE process rejected, on average, over 99.3% of the key contaminants sodium, calcium, magnesium and potassium from the brine (i.e. less than 0.7% of those contaminants made it through the DLE into the first lithium chloride solution); and over 94.2% of boron was rejected.
  • Operational Cycles: The LiPRO™ LSS (DLE) process has completed over 8,585 operational cycles.
  • The LiPRO™ LSS column has been operating with negligible degradation or loss of the sorbent media, and brine pre-treatment has been optimized to allow for foulant-free operation of the DLE step.
  • Brine Processed: As of the end of December 2023 (per Arkansas Oil and Gas Commission reporting), the Demo Plant had processed 16,418,408 gallons (62,143,674 litres) of Smackover brine, produced directly from the formation and reinjected continuously back into the same formation.

Dr. Robinson added: “One of the fundamental findings of the Demonstration Plant is the necessity of long-duration, on-site continuous processing of real brine. Our Demo Plant handles real Smackover brine directly from the resource, whereas in traditional small-scale, short-term off-site batch processes, brine is isolated, transported and often undergoes physical and chemical changes before testing. With the commercial-scale LSS column, we can continuously test real brine from the Smackover at a commercial level.”

About Standard Lithium Ltd.

Standard Lithium is a leading near-commercial lithium development company focused on the sustainable development of a portfolio of lithium-brine bearing properties in the United States. The Company prioritizes brine projects characterized by high-grade resources, robust infrastructure, skilled labor, and streamlined permitting. The Company aims to achieve sustainable, commercial-scale lithium production via the application of a scalable and fully-integrated Direct Lithium Extraction (“DLE”) and purification process. The Company’s signature projects, the Phase 1A Project and the South West Arkansas Project, are located on the Smackover Formation in southern Arkansas, a region with a longstanding and established brine processing industry. The Company has also identified a number of highly prospective lithium brine project areas in the Smackover Formation in East Texas and began an extensive brine leasing program in the key project areas. In addition, the Company has an interest in certain mineral leases located in the Mojave Desert in San Bernardino County, California.

Standard Lithium trades on both the TSX Venture Exchange and the NYSE American under the symbol “SLI”; and on the Frankfurt Stock Exchange under the symbol “S5L”. Please visit the Company’s website at www.standardlithium.com.

Qualified Person

Marek Dworzanowski, EUR ING, CEng, HonFSAIMM, FIMMM, a qualified person as defined by National Instrument 43-101, and a Consulting Metallurgical Engineer who is independent of the Company, has reviewed and approved the relevant scientific and technical information in this news release.

Twitter: @standardlithium
LinkedIn: https://www.linkedin.com/company/standard-lithium/

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. This news release may contain certain “Forward-Looking Statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. When used in this news release, the words “anticipate”, “believe”, “estimate”, “expect”, “target, “plan”, “forecast”, “may”, “schedule” and other similar words or expressions identify forward-looking statements or information. These forward-looking statements or information may relate to intended development timelines, future prices of commodities, accuracy of mineral or resource exploration activity, reserves or resources, regulatory or government requirements or approvals, the reliability of third party information, continued access to mineral properties or infrastructure, fluctuations in the market for lithium and its derivatives, changes in exploration costs and government regulation in Canada and the United States, and other factors or information. Such statements represent the Company’s current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social risks, contingencies and uncertainties. Many factors, both known and unknown, could cause results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements. The Company does not intend, and does not assume any obligation, to update these forward-looking statements or information to reflect changes in assumptions or changes in circumstances or any other events affecting such statements and information other than as required by applicable laws, rules and regulations.

Brine Lessor Beware!

Although DLE is possibly the safest, most environmentally friendly means to source lithium, the risks are not zero.  You need good lease language to protect your rights and your property.

Lithium well experienced a ‘blowout’ in Green River

Water spurted from well tower on Friday; unclear if it reached the river.

 By Sophia Fisher | The Times-Independent    | March 13, 2024  sltrib.com

A lithium well just outside Green River spurted substantial amounts of water on the afternoon of March 8, according to several eyewitness accounts.

It is unclear whether or not the water pouring from the well’s infrastructure breached the Green River less than a half mile from the operation, or whether it was in any way contaminated.

“You could see that there was water gushing out of the [tower] base, maybe six or 10 feet off the ground,” said Green River resident Kenny Fallon Jr., who drove to the site Friday.

“It didn’t seem very controlled,” he said.

Anson Resources, the parent company of well operator Blackstone Minerals, did not immediately respond to a request for comment on Monday.

A spokesperson for the Utah Department of Environmental Quality, Ashley Sumner, said the same day that her office is looking into the incident but doesn’t “have any information to share at this time.”

Several Green River residents reported water flowing from the well tower at Blackstone Minerals’ lithium operation, which lies less than half a mile east of the Green River, a major tributary of the Colorado River, and just north of Interstate 70.

Fallon Jr. said he didn’t see any evidence the water had breached Brown’s Wash, an adjacent streambed that leads to the Green River.

He did see some water flowing in the wash upstream of the well operation, as well as water bubbling out of the ground downstream.

“This was definitely pressurized water that was coming up,” Fallon Jr. said.

Christine Sheeter, another Green River resident, said she observed “large puddles of water” around the well site.

“There were bulldozers that were moving soil to manage the water flow,” Sheeter said, seemingly to divert it away from the wash. Still, she said the water breached what appeared to be settling ponds.

“Whatever amount of water first came out must’ve been a lot because it came through this dike,” she said.

Returning Saturday, Sheeter said she saw trucks removing the water.

She said that on Friday she spoke with an anonymous employee who said the operation hit a carbon dioxide bubble or layer that caused a “blowout.”

Fallon Jr. said he spoke with another employee who guessed they had hit river water because the drill operation was still shallow.

“If they’d gotten to brine, the water would be red,” Fallon Jr. recalled the employee saying.

Per Blackstone Minerals’ draft injection permit with the Utah Division of Water Quality, the company is drilling thousands of feet below the Earth’s surface into a layer of brine, which is then pumped aboveground so lithium can be extracted through a novel, largely untested process called direct lithium extraction.

After that processing, the brine is reinjected 6,000 feet underground — the subject of the permit.

Blackstone is a subsidiary of Anson Resources, the Australian company pursuing lithium and uranium extraction around both Green River and Moab.

The Great Basin Water Network and Living Rivers-Colorado Riverkeeper, two environmental nonprofits, released a statement panning the blowout, saying it “affirms doubts about the company’s ability to tap deep lithium brines.”

“There are so many red flags that are flagrantly waving with this project,” said Kyle Roerink, the executive director of the water network organization. “This foreign company cannot be trusted to steward the Green River and the Colorado River.”

Soon after the “blowout,” Blackstone announced an open house at 6 p.m. March 13. The evening of March 12, it was changed to a presentation and question-and-answer session at the same time at Green River City Hall.

 

Is Lithium headed for a commodity bubble?  Will a surge in production create downward price pressure?  Will DLE prove to be the lowest cost production method?

Why the EV Industry Can Count on Relatively Cheaper Lithium

Prices are expected to rise this year, but likely will remain well below their 2022 peak.

By Kwasi Ampofo  March 15, 2024 bloomberg.com

Price Relief Should Stick

The cure for high prices is higher prices. But the cure for low prices is not always lower prices.

Consider the price of lithium, the indispensable battery metal that’s showing signs of recovery after reaching a rock bottom of $13,200 per metric ton at the end of February, the lowest in three years. Prices have risen by 12% since.

The allure of higher prices attracted a wave of new producers, from Zimbabwe to China, in 2022. Their coming online has coincided with a slowdown in the demand for the battery metal, leading to a market surplus. In 2023, the demand for lithium carbonate from battery producers was 617,000 tons. Producers, on the other hand, churned out 705,000 tons of the metal over the same period.

Prices are likely to rise this year, but are expected to remain far from their 2022 peak.

Three things will drive the marginal recovery.

First, the astronomical rise in prices meant that historically unviable sources of lithium, such as lepidolites, became commercially viable. Lepidolite, a type of lithium ore, contributed about 5% of mined supply in 2023, according to BNEF analysis.

This year, its growth is at the risk of a slowdown. Lepidolite has a higher cash cost due to the more complicated nature of extracting lithium from the ore. Lepidolite producers are already occupying the upper end of the cost curve.

Secondly, supply risks in China could emerge in the wake of the environment ministry’s warning to the sector late last month about lax environmental enforcement in Qinghai, the country’s lithium hub. The crackdown on waste-management practices in the province’s brine operations already has unnerved the market, Bloomberg News reported. Stricter environmental enforcement on producers could lower anticipated supply of lithium from the region this year.

Thirdly, the fall in battery-metal prices has led to a corresponding drop in the price of electric vehicles, due to cheaper batteries. Some automakers, including Tesla and BYD, have passed on these cost savings to consumers to drive up sales. This should lead to demand growth for lithium, which will help narrow the surplus gap and offer support to recovering prices.

Lithium-Ion Batteries Set to Get Cheaper

Prices expected to keep falling after inflation-induced blip in 2022

Despite these interventions narrowing the surplus gap in 2024, the market won’t return to its severe deficit recorded in 2022 anytime soon, due to the prospects of upcoming technologies such as the direct lithium extraction, or DLE.

DLE aims to extract lithium from brine more efficiently. Last year, about 48% of lithium supply came from brine resources, which are located in Chile, Argentina and Bolivia.

The evaporation method typically used on brine relies on solar evaporation to concentrate the lithium. The process could take up to two years, with a recovery rate of 40% to 60%.

Direct lithium extraction technology promises to solve the low yield and long production time problems, with many DLE technologies claiming a 90% recovery rate and two weeks of lead time to produce the lithium concentrates.

Most DLE projects are currently in the pilot phase, however companies such as Albemarle and Arcadium Lithium are hoping to commercialize their technologies late this year and in 2025.

An improvement in lithium recoveries and shorter processing time will increase supply in a market already in surplus, thereby prolonging the long-term recovery of prices.

Exxon video on brine processing for DLE.

Sneak preview: our new lithium business

exxonmobil.com

Key takeaways:

  • New video highlights our lithium plan in Arkansas
  • We'll look to tap brine deep underground, produce lithium above ground
  • Less environmental impact than current methods

https://corporate.exxonmobil.com/what-we-do/delivering-industrial-s...

Want to visualize what our new lithium business might look like?

Check out this two-minute animated video about our plan in southwest Arkansas. 

This video “debuted” at the recent Lithium Innovation Summit in Little Rock. We’re sharing it to help promote a broader understanding of how we plan to deliver more lithium for electric vehicles, with less environmental impact than current methods.

Some of this work is already underway. We can work fast because the skills and technologies needed to produce lithium from deep brines (like those in Arkansas) are very similar to ones we’ve honed over decades in our oil and gas business. Production is targeted to begin in 2027.

Animations in this video are for illustration purposes only.

America's lithium laws fail to keep pace with rapid development

By Ernest Scheyder March 25, 2024  reuters.com

 

March 25 (Reuters) - Washington's drive to make the United States a major global lithium producer is being held back by a confusing mix of state regulations that are deterring developers and hampering efforts to break China's control of the critical minerals sector.

Across Texas, Louisiana and other mineral-rich states, it's unclear who owns the millions of metric tons of lithium locked in salty brines underneath U.S. soils, how the battery metal should be valued by regulators and who ultimately should pay to process it into a form usable by manufacturers.

 

These legal ambiguities are the latest impediment - alongside technical challenges and sagging commodity prices - to America's plans to produce more of its own lithium and wean the country off foreign supplies, according to interviews with regulators from seven U.S. states, legal experts, politicians, landowners, investors, royalty firms, industry executives and consultants.

U.S. federal officials in Washington are largely powerless to force states to change regulations, leaving the Biden administration's aggressive electrification targets beholden to the pace at which local officials update outdated statutes.

 

Global lithium demand is expected to outpace supply by 500,000 metric tons annually by 2030. Unless the United States boosts its own production, the country's manufacturers will find themselves reliant on China and others for supply as the end of the decade approaches, analysts warn.

 

The Texas legislature, for example, last year approved a law - supported by Standard Lithium and Chevron - that instructed the state's oilfield regulator to craft regulations for lithium extraction from brines. But the regulator, known as the Railroad Commission of Texas, told Reuters is has no timeline for when it will finish that task.

 

"I don't even know where to start in terms of working with the local authorities to get brine mineral rights in Texas. It's confusing," said Brady Murphy, CEO of Tetra Technologies, which aims to produce lithium with partner Exxon Mobil.

 

The Railroad Commission of Texas told Reuters it plans to release its rules for public comment once they are formulated, and then the three commissioners will vote on them.

 

While the 1972 U.S. Clean Water Act gives Washington regulatory power over water extraction and reinjection across the country, state officials have autonomy to govern other parts of the process.

 

Tetra, which also produces chemicals for water treatment and recycling, has tested more than 200 brine samples from Texas, but so far has opted not to do business in the Lone Star State due to legal uncertainty, Murphy said.

Koch Industries-backed Standard Lithium said last October it had drilled a Texas brine well with lithium concentrations nearly as high as those found in parts of Chile, which has the world's largest lithium reserves. But Standard can't touch that lithium until regulations are set.

"We're taking a measured approach to Texas," said Robert Mintak, Standard's CEO.

REGULATORY RISKS

In Oklahoma, which has several brine deposits, the Oklahoma Corporation Commission - which oversees oil and gas development - said it has no jurisdiction over lithium production and royalties, and referred comment to the state's Department of Mines, which said it also does not oversee lithium.

 

In Utah, the state legislature and governor approved a bill last year aimed at preventing water levels from dropping in the lithium-rich Great Salt Lake. That led Compass Minerals to abandon plans last month to produce lithium for Ford in the imperiled lake and disband its entire lithium team, saying "regulatory risks have increased significantly around this project."

 

And in Louisiana, the lack of state guidelines is fueling concerns from legal experts that producers could trespass on neighboring land when they reinject brine after filtering out lithium. Reinjection is a key step to preserve underground water table levels.

 

"There'll likely need to be a court fight about whether they have the right to do that," said Keith Hall, director of the Louisiana State University's Mineral Law Institute.

 

The Louisiana Department of Energy and Natural Resources told Reuters it does not have existing statutes related to lithium.

 

The path is even murkier for water that is extracted alongside crude oil. Oil companies for decades have paid to dispose of that produced water, which contains lithium that could be sold for a profit.

 

With lithium demand now on the rise, landowners, oil producers, and companies that oversee water disposal are tussling over ownership.

 

A Texas state appeals court last year ruled that COG Operating controls such water that it extracts alongside crude oil, but the ruling only applied to that specific case. And not all oilfield leases include clauses for who owns other minerals extracted alongside oil, sparking questions as to whether lithium is covered by existing leases or if companies need to negotiate new contracts with landowners.

 

"That is going to have a chilling effect on capital investments until it's resolved," said Jamie Rhymes, an attorney specializing in minerals contracts at the Liskow & Lewis law firm.

ARKANSAS

Legal experts told Reuters that it's unclear how lithium will be valued for royalty payouts given the cost for equipment to filter the battery metal from brine, which unlike oil typically has no market value itself.

 

In Arkansas, where Tetra, Exxon, Albemarle and Standard Lithium hope to produce the battery metal within a few years, state officials have been debating a royalty structure to compensate landowners since 2018.

 

Shane Khoury, who oversees the body that will set the royalty rate in his role as secretary of the Arkansas Department of Energy and Environment, said the state may charge different rates depending how much lithium is in a brine deposit.

 

Albemarle, the world's largest lithium producer with operations in the United States, Chile, Australia, China and elsewhere, plans to open a pilot facility in Arkansas by the end of the year and said it has chosen not to - for now - submit a royalty proposal while it watches Standard's royalty review process.

 

"We're waiting to see how (the Arkansas royalty situation) evolves," said Netha Johnson, the Albemarle executive overseeing the company's Arkansas lithium project. "There's a couple of fundamental differences between the way that brine royalties could be calculated."

 

Exxon also has not submitted a royalty proposal despite spending more than $100 million in Arkansas and on a Houston test facility as part of an aggressive move into lithium, but said it hopes the state's royalty will be uniform across the state.

 

California, which has giant lithium reserves in its Salton Sea region east of Los Angeles, last year imposed a flat-rate tax for each metric ton of lithium. The move has pushed back development of projects slated to supply General Motors and Stellantis. California's governor and legislators have defended the tax as a necessary way to ensure all residents benefit from the energy transition.

 

Nevada, which has the only commercial U.S. lithium operation - a small mine operated by Albemarle - has taxed minerals for more than 100 years, but at a rate based on each facility's revenue.

 

Industry analysts expect regulations to be eventually set in various states, but predicting when is anyone's guess.

 

"The uncertainty is the scariest part," said the owner of lithium-rich acreage across several states who declined to be named so as not to offend regulators. "How do you develop these projects and muster financial support without a regulatory structure in place?"

Assessing the environmental impact of direct lithium extraction in south Arkansas

By Jack Travis  Published March 27, 2024 kuaf.com Ozarks at Large

South Arkansas is no stranger to a boom.

Towns like El Dorado and Magnolia in Union and Columbia counties sit upon an underground geological structure known as the Smackover Formation. Companies have mined natural resources here for over 100 years. Drilling in the early 1920s tapped a petroleum reservoir, which resulted in an oil boom, drawing thousands to the state in search of their fortunes.

And though the oil boom has since run dry, experts say a saltwater, or brine, aquifer under the Smackover Formation may contain enough lithium to produce batteries for 50 million electric vehicles.

"Whenever I found out that they had found lithium in the brine in south Arkansas, I was like 'Oh My God, this is gonna be great.'"

That’s Brian Umberson- a Fayetteville native. He’s a technological consultant in high-tech manufacturing and biotech diagnostics. Umberson’s been following the lithium industry’s development in south Arkansas for months and said there’s an opportunity for environmentally responsible lithium extraction. But first, some background:

"The smackover formation is unique," Umberson said. "It has a high-quality brine with very strong lithium loads. What is so great about this is that the Arkansas bromine industry has been one of the leaders in the world in creating bromine."

During that original oil boom near El Dorado in the 1920s, miners considered the underground saltwater they were finding, better known as brine, to be useless. That is until a few decades later when chemists from the Arkansas Geological Commission (now the Arkansas Geological Survey) discovered Smackover brine contained high levels of bromine.

Bromine is a toxic chemical commonly used in fire retardants, car tires and pesticide sprays.

Chemical manufacturing companies like the Albemarle Corporation and Lanxess soon set up shop, drilling brine wells into the earth’s crust. Then, in July 2022, an Oklahoma-based, privately held exploration company called Galvanic Energy released a report validating that one of the largest lithium brine wells in North America sat within their 120,000-acre mining prospect on the Smackover Formation.

"And you got all these existing wells," Umberson said. "So what's really interesting about it is that I was intrigued by hearing what Tetra and Standard Lithium and the other companies were wanting to do."

Standard Lithium is a specialty chemical company focusing on lithium production, specifically in south Arkansas’ brine wells. They set up a partnership with bromine producer Lanxess.

"They're pumping the brine out and then extracting the bromine from that brine that they've pumped out of the ground," Umberson said. "When they get through it, they turn around and immediately pump that back into the ground. And it's an extremely good process for south Arkansas because it's not like they're pumping a tremendous amount of material out of the ground, causing pressurization issues or whatever. So what happens is this is a very quick process. They just pump it out, extract it, and pump it right back in. Standard Lithium or Exxon will be basically getting with these companies or drilling their own wells. Standard Lithium is getting access to that brine after the bromine has been extracted by Lanxess. They then extract the lithium from that, and then turn around and give it back to Lanxess so they can re-inject it."

Umberson said this new process, dubbed Direct Lithium Extraction (or DLE), will benefit south Arkansas and the lithium industry as a whole because of its high lithium recovery rates and minimal environmental impact.

Low environmental detriment will be new territory for the industry, as lithium production is known for its disastrous mining practices. Traditionally, the metal is collected in one of two ways: Either through strip mines, which leave expansive scars in landscapes, or neon-colored evaporation ponds, which take up to 18 months and billions of gallons of water to produce small amounts of lithium while leaving behind clouds of toxic dust that wreak havoc on local populations. The bulk of lithium mines operate in Australia, South America, and China.

To learn more about lithium mines in other parts of the world, I reached out to the Center of Biological Diversity’s Great Basin director, Patrick Donnelly. He operates in Nevada, not too far from the Silver Peaks Lithium Mines, an evaporation pond and the U.S.’s only operational lithium mine.

He said that while DLE around the Smackover Formation seems promising, only time will tell how cautious we should be.

"It is not neutral," Donnelly said. "I mean, there is no such thing as a free lunch. And there are impacts from DLE. Some of the impacts we've heard about include freshwater use, like it's not just Brian they're going to be using, they're also going to be using freshwater to actually produce the lithium. And we're not talking about an insubstantial amount of freshwater. Now, it's not as much as being evaporated off in the brine evaporation projects, but it is a freshwater consumption source. The other major impact that we've been thinking about is waste streams, in particular, a solid waste stream. It's impossible for them to extract only the lithium. They're gonna pick up other minerals while they're doing that. And then to get rid of those other minerals requires having wastes you know, salts in particular. And so there's a question of what you're going to do with all the salts, the waste stream that's generated?" 

Donnelly said that DLE is still in the early stages of utilization, so any environmental impact is theoretical. In fact, Standard Lithium only validated the process last November. The company is currently operating one DLE plant near El Dorado for demonstration purposes.

However, Standard Lithium is not the only energy company aiming to capitalize on Smackover brine. In November 2023, ExxonMobil acquired the rights to Galvanized Energy’s Smackover prospect for $100 million and will begin drilling wells, with plans to begin production by 2027.

Donnelly said there are still questions hydrologists should investigate as Standard Lithium uses old wells and ExxonMobil drills new ones for their DLE plants.

"Like what is the interaction between the brine aquifer and the surface water? That's a key question," he said. "What is the interaction between the brine aquifer and these freshwater aquifers? Certainly, there are other aquifers than just the Smackover Formation because I would assume people in Arkansas some of them have domestic wells and get their water from aquifers. And so they are tapping into freshwater aquifers. And so a big question that you and everyone else are going to have to ask is, what is the communication between the freshwater aquifer and the Smackover Formation aquifer? And then, in turn, what is the connection between that groundwater and surface water and your rivers and creeks and lakes and wetlands? Again, it's all so different there because there's so much water in question that those connections may not be obvious the way they are in the desert."

Umberson and Donnelly say further independent research must be done on DLE and its long-term impacts. As I researched this story, most of the few comprehensive reports I could find on Direct Lithium Extraction in the United States were from organizations that stand to profit from increased lithium production like investment banking company Goldman Sachs.

Donnelly said that to truly protect natural landscapes and the communities of people who live near extraction plants, the federal government must step in to provide guidance through legislation.

"We are in favor of electric vehicles and battery storage as a part of the transition off of fossil fuels," Donnelly said. "And so we implicitly support lithium production, and we support EVs. We have to support lithium to some degree. And so we are sort of actively searching for where is lithium production in the United States that is not going to harm communities and the environment. Because right now we have people in South America, we have indigenous communities; they're saying, your cell phone, the one I'm talking to you on right now, is screwing over my community. It's destroying our water supply, it's destroying habitat for flamingos and wading birds. You know, it's having an impact right now as we speak. We just don't see it because it's in South America."

Donnelly said that while he fights unethical mining operations, he still hopes to find an equilibrium between harm and production. Out of the 83 proposed mines in Nevada, he’s only battling against four.

"So there's 79 we're not fighting, right? And that's because we really want to find a place where we can find less harmful lithium production. And so ultimately, we don't have an energy policy in this country."

Dick Cheney wrote the last federal energy policy almost 20 years ago, in 2005.

"And so, you know, the climate crisis, like, we have the Department of Energy doling out billions and billions and billions of dollars into lithium and batteries right now. But there's no real plan. It's just throwing a bunch of money into the market and hoping electric vehicles materialize. So what we need is leadership from the administration to look at the whole country and say, Where does it make sense to produce this lithium? And where is too harmful? And what are these impacts going to be? You know, I think there's a responsibility of the federal government to take action on that, and not just leave it to folks in Arkansas and regulators in Arkansas to determine whether or not this is a good thing. Right. Because ultimately, you know, I imagine I don't know much about Arkansas, but I imagine folks in rural areas in Arkansas don't have a ton of political power. And, you know, it's just as likely that their interests could be rolled over by the mining industry. If there's not a broader look at how we're going to produce this lithium."

We are still a ways from seeing Arkansas lithium. Umberson said the companies setting up in south Arkansas aim to start production in 2-3 years. Last week, ExxonMobil published an animated video on its website detailing the Direct Lithium Extraction process, doubling down on a promise of eventually producing enough lithium for 1 million EVs every year.

Standard Lithium: The Ridiculous Potential Of Texas

Apr. 03, 2024  Austin Craig  seekingalpha.co

 

The following is an excerpt from the article.  To view it in full with graphics, use this link:  https://seekingalpha.com/article/4681812-standard-lithium-ridiculou...

Summary

  • Standard Lithium has intriguing lithium properties in Arkansas and Texas.
  • LAC just received a $2.26 billion dollar loan from the US Government. SLI could be next.
  • Powerhouse Exxon acquired a property for $100 million directly across from Standard Lithium.
  • The Texas Lithium property is a gem, with lithium brine grades that average 644 mg/l.

Lithium's Demise is Premature

Reading the headlines, one might glean that lithium batteries are kaput and were just a fad. While some companies are indeed slowing down concerning EV timelines, others like Tesla (TSLA) are working on producing a $25,000 automobile. The reality though, is capital is still flowing into large EV production facilities from car makers, battery production facilities, and lithium mining projects. Not to mention the Federal government just moved a step closer to giving Lithium Americas (LAC) a $2.26 billion dollar loan. Hence, investors might be wise to take notice and follow the money.

While many excellent lithium companies exist in both Argentina and Nevada, today let's consider a rather unique lithium play in Arkansas, namely Standard Lithium (NYSE:SLI).

This should interest you as powerhouse Exxon (XOM) just purchased mineral rights next door to SLI for a mere $100 million. Again, Lithium Americas just snagged an utterly mindboggling amount of government funding at a mere $2.26 billion. The nay-sayers can murmur about lithium's demise all they like, but the harsh reality is the U.S. government is waking from its slumber regarding critical elements independence from China and are moving forward. A $2.26 billion loan to LAC does wonders to show other lithium companies and investors the path to production, whilst giving weight to validating clay-based lithium extraction. Digressions aside, let us begin exploring Standard Lithium.

Locking In Supply Of Lithium

Some time ago news of General Motors (GM) investing in Lithium Americas arrived. This effectively locked out all other carmakers from LAC. The importance of this and the impact cannot be easily put into words. It changes the entire ecosystem. It is a call to an economic supply war among car makers. Some car producers will realize this; they will adapt and invest in lithium companies or secure off-take agreements. Others will ignore this competitive advantage that rivals will enjoy and instead suffer the consequences of being at the mercy of lithium market prices.

Before this development, the automotive makers all avoided entering into direct investments, but GM just started a hot economic fight. Car makers could be forced to marry into projects to secure supply and the associated discounted prices.

Remember, mines on average take 10+ years to go from exploration to pulling pay dirt out of the ground. Yet, Standard Lithium has a few unique advantages that could ramp things up. They are not located on BLM land. Hence, they do not need permission from the BLM. Also, they are co-located on a pre-existing industrial operation which could speed up timelines when it comes to permitting issues.

The Standard Lithium Projects

The Standard Lithium plan is simple: Take a phased approach and build out a commercial plant to prove that the KOCH-SLI joint venture DLE extraction technology works. Then keep expanding.

Standard Lithium has four projects. Two are located in Arkansas (The first is a three stage Lanxess project and the second project is called the "South-West Arkansas Project"). Then you have the Texas Lithium project and lastly the California project called "Bristol Lake".

For this article, we will be concentrating on Arkansas and Texas, as California seems rather dormant. Let's look at the projects. First, an overview of the Smackover formation that SLI plans on operating in. As you can see in the graphic below the Smackover formation in gray extends from Texas to Florida. Standard Lithium's focus is Arkansas and Texas (for now) but they could expand inside the Smackover formation. Let's look at Arkansas first.

Looking at Arkansas, we can see the first phase is the multi-stage "Lanexx 1A project" as seen below on the right. This project has three phases with phase 1 targeting production in 2026. The South West Arkansas project on the left of the graphic is the second main project.

The SLI Lanxess project will be constructed in three phases. This reduces capex costs but more importantly the intent is to prove to the market that the KOCH-SLI DLE technology works at commercial scale. During phase 1 the project will weigh in at a Capex cost of $365 million to build the plant; the output of lithium will be 5,400 tonnes per year per the DFS. Opex cost per ton comes in at $6,810. SLI's after tax NPV is $550 million at an 8% discount rate and lithium selling price at $30,000 over the mine life. Lithium grade is 217 mg/l. Now 217 mg/l is not incredible, but SLI will be tapping into the back end of an existing operation. Thus, no wells have to be drilled which lowers expenses and speeds up permitting as it will be co-located on a preexisting bromine operation. Below we can see the pre-existing Lanxess operation along with the SLI pilot plant in red.

A lithium grade of 217 mg/l is decent enough to get the ball rolling. For comparison Albemarle's (ALB) Silver Peak operation sports grades of 123 mg/l while the Salton Sea has grades of 204 mg/l.

While the lithium output of SLI is not tremendous at 5,400 tonnes, nor is the project costs compared to some of the larger projects. Even with some inflation we might estimate the project cost has grown to $400 million. Still peanuts compared to LAC's Thacker Pass capex of $2.93 billion for 40,000 tonnes of output (phase 1). Granted this is not an apples-to-apples comparison. Each project has a different mine life, a different medium they are working with, etc. The point is if you want to dip your toe into a massive project you can do it in phases with SLI. This allows you to test the waters at a smaller level. Once the project is proven at scale you go for the prize which is Texas but first, let's take a closer at the 2nd main project of Standard Lithium.

The South West Arkansas Lithium Project

As we can see in the below graphic, the lithium grades continue to improve the further we move from the Lanxess project (217 mg/l lithium) and travel eastward. As we near the second project we start to encounter lithium grades that average of 437 mg/l.

The key takeaway to remember is Standard Lithium has plenty of expansion plans in Arkansas that total to 48,600 to 53,600 tonnes of lithium if they build out all of the current plans for Arkansas. Note the key words -- current plans. The Smackover formation is quite large and ripe for expansion given some longer time frames. Note all the pre-existing wells in lower Mississippi to Florida.

New expansions in the Smackover could happen but let's look at Standard Lithium's gem, the Texas project. They say things are bigger in Texas. Lithium grades of lithium certainly are.

Texas Is The Lithium Gem

So why go through all the trouble to build out Arkansas? Well, again, it is to prove the KOCH-SLI DLE process works at a larger commercial scale. Remember the Lanxess project sports 217 mg/l and South West Arkansas has 437 mg/l but then enter the East Texas project at 644 mg/l. That is the highest brine grade in North America according to SLI and Standard places the potential project size at 100,000+ tonnes per year.

 

The SLI Texas Project (SLI)

This high grade of lithium in Texas should translate into lower capital and lower operating expenses. The NPV (net present value) of this Texas property could be impressive. However, we will have to wait for a study to confirm that. Yet, Texas is the gem of the projects. Additionally, Texas has bromine (that ALB mines in Arkansas) along with potash. These could be very attractive to ALB as they are already producing Bromine in Arkansas.

 

Local Lithium Demand

Tesla is building out a lithium refinery on the Texas gulf coast (noted by the red X in the graphic below) to feed its car production facility in Texas. This car plant will require lithium and with the close geographic proximity to SLI it stands to reason that Tesla could buy lithium from SLI. Do note all of the potential lithium demand below.

Exxon Joins the Lithium Fray

One final thing to ponder is the energy powerhouse Exxon acquired a rather large block of mineral rights (120,000 acres/187.5 square miles or 485.6 square k/m) for $100 million smack next to Standard Lithium. In the graphic below it is on the bottom right in a darker blue listed as the Galvanic property. Also take note that Albemarle is next door too. Two massive companies each next door could prove to be interesting.

Given the excellent water, transportation, and energy infrastructure (along with lithium mg/l values) I was not too terribly surprised that Exxon moved quickly. It is a very nice confirmation of Standards project potential when a giant moves in next store. Exxon has plans to drill the property and they are currently hiring for DLE lithium positions with first production targeted at 2027.

 

 

 

 

 

 

 

 

 

 

 

Additionally, Standard and Exxon also have Arkansas state Governor support from Sarah Sanders:

“South Arkansas is our state’s all-around energy capital, producing oil, natural gas, and now, thanks to investments like ExxonMobil’s and their combination of skills and scale, lithium,” said Arkansas Governor Sarah Huckabee Sanders. “My administration supports an all-of-the-above energy strategy that guarantees good, high-paying jobs for Arkansas – and we’ll continue to cut taxes and slash red tape to make that happen.”

Risk

Standard is a penny stock and has limited capital ($21.5 million CDN as of December 31, 2023). Granted, KOCH is in bed with the company having acquired a little over 7% of the stock some time back. Yet capital is not infinite. They will require a partner or partnerships to push this from story to reality. However, with today's news that Lithium Americas received $2.26 billion from the U.S. government to develop its lithium mine "Thacker Pass" in Nevada, this bodes well that Standard Lithium could also receive a loan that would allow them to fund most of the projects. Yet again, the company has limited capital. They have a burn rate and Mr. Murphy is always on the prowl. For investors, opportunity cost is also a factor.

To invest in Standard Lithium, you could be in for a very long wait that might take several years, if not more, to fully pan out. I think the risk to reward is worth the wait, but this requires an investor mentality as opposed to a trader mentality of chasing whatever is the hotness of the week.

Conclusion

For the patient investor, who is not risk adverse and willing to conduct due diligence, I view SLI as an intriguing value play. The size of the resource is large. Ample infrastructure exists to include water, rail, and power. Exxon moving next door validates the land, and lastly, Lithium Americas receiving a $2.26 billion loan for a lithium mine shows investors the way from concept to building out a project. The Texas project has very good grades of lithium and Arkansas is pretty good as well. At a buck and change I am buying, and I can afford to wait for these seeds to germinate and grow.

New lithium well coming to Lafayette County

magnoliareporter.com  4/10/2024

One drilling permit was issued last week by the Arkansas Oil and Gas Commission.

SWA Lithium LLC of El Dorado is the operator and Reliance Well Service is the contractor fo the F&G Investments No. 1, 1,009 feet FNL and 558 feet FWL in Section 25-16S-24W, a wildcat location in Lafayette County.

Permit depth is to 8,800 feet in the Smackover Zone.

Work will start July 15.

Pantera Minerals Expands Lithium Project Acreage

TipRanks.com  4/17/2024

Pantera Minerals Ltd. (AU:PFE) has released an update.

Pantera Minerals Ltd. has expanded its Smackover Brine Project by leasing an additional 1,500 acres, increasing its holdings to over 18,570 acres, as it nears its goal of 20,000 acres. This growth leverages the region’s robust infrastructure and skilled workforce, with the company planning to re-enter wells for testing in Q2 2024. The expansion is set amid neighboring Exxon Mobil’s and Standard Lithium’s advancements in lithium brine projects, underscoring the area’s potential for lithium extraction.

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