E&Ps Explore Potential of Lithium Extraction

Copyright © 2023 Energy Intelligence Group Thu, Mar 9, 2023

Author Caroline Evans, Houston

A number of shale operators are exploring the potential of extracting lithium and other critical minerals from produced water in an effort to capitalize on the energy transition and demonstrate long-term relevance to wary investors.

“It's something we are spending time with E&P companies looking at,” said Erik Belz, head of private equity at activist investor Engine No. 1. “And it is encouraging to see these companies look at their own operations and say, ‘Okay, what can we squeeze out of this?’ Lithium in flowback water is a is a creative way of looking at it.”

Lithium demand is expected to skyrocket in the coming years to supply the fast-growing market for batteries. Meanwhile, oil and gas operators have seen investors flee their sector over the years due to sluggish returns and fossil fuels’ “dirty” reputation.

While E&Ps are slowly luring investors back with hefty cash returns and plans to decarbonize, Belz said the narrative needs to shift to focus on how traditional natural resource assets can play a role in the energy transition.

“If you want to have any sort of impact on near-term sustainability goals … then you have to operate traditional natural resources more sustainably,” he said on the sidelines of the CERAWeek by S&P Global conference in Houston. “You’re starting to see capital allocators think about that, which is early but positive.”

Core Competence

Among the players looking into lithium extraction from water is Occidental Petroleum. CEO Vicki Hollub said this week the company was looking into “some possible lithium projects” that would extract the critical mineral from geothermal water.

“In our oil and gas business and in our chemicals business, we handle a lot of brine water,” she said. “And so handling brine water to extract lithium is not outside our core competence, it’s actually another key competency of ours.”

Oxy has been an investor in developing that technology: Its low-carbon ventures arm several years ago formed a joint venture with All-American Lithium called TerraLithium, which received affirmation for 28 patents in 2021.

Other players see the potential to extract other elements considered key to the energy transition from brine.

“We're looking at all different things that come out of the water,” Pioneer Natural Resources COO Rich Dealy told Energy Intelligence. “Obviously there could be lithium in it, but there's ammonia, there's lots of things. So we're looking at all those things to see what makes the most sense longer-term. But we're in the infancy, we need the desalination technology to get there first.”

To be sure, technologies are still developing. On the geothermal side, at least, a host of hurdles need to be cleared, including high capex, unknown returns and a protracted permitting timeline. But using geothermal in mature oil and gas basins and adding lithium extraction can mitigate the risks, according to Hermann Lebit, founder of technology developer Alma Energy, because it can cut costs by repurposing existing assets and using existing data and proven workflows.

“These basins have enormous potential,” Lebit said at the conference. “They have a lot of expertise and know-how in these basins. We can use a lot of synergies out of the hydrocarbon industry, we can build on it. And we can build on the very skilled workforce, which can actually execute on our projects.”

Further Afield

Mining brine for lithium is also gaining ground in Canada. The Alberta provincial government recently rolled out legislation to boost brine-hosted minerals. The bill calls for the release of new geological data and establishes the Alberta Energy Regulator as the main regulatory agency governing brine-hosted minerals.

“We're seeing an incredibly high level of interest,” Rick Christiaanse, CEO of Invest Alberta, told Energy Intelligence. “That is partially because we've had so much oil development that this stuff is out there. So the challenge is, how do you create technology to actually refine the lithium out of there?”