Natural Gas, Oil Players Eyeing Lithium to Build ESG Cred

By Matthew Veazey  June 8, 2022

More than a new source of revenue, extracting lithium from produced water could allow natural gas and oil industry players to achieve environmental, social, and governance (ESG) goals, informed sources told NGI.

The level of interest in lithium extraction produced water, aka brines, among exploration and production companies, oilfield services firms and others is “growing,” said Lium Research partner Joseph Triepke.

“Three to five years ago, almost no one was talking seriously about it,” he said. “In the past 12-24 months, conversations have become more serious and it has been a hot topic at events we host through the Oilfield Water Connection” industry event. 

Although “surging lithium prices” have driven interest in direct lithium extraction from produced water, Triepke said ESG factors “and the idea of net zero waste streams, specifically turning waste to value” have sparked curiosity as well.

“If industry can create value from an oil and gas byproduct, not only do its returns improve but industry can also demonstrate sustainability,” he said. 

Moreover, he called lithium extraction “a great hedge for oil producers for the energy transition and the rise of” electric vehicles.

Lithium extraction from concentrated, salty brines would also give oil and gas companies an economic incentive to treat produced water rather than store it underground in injection wells, said B3 Insight’s Commercial Product Manager Patrick Patton.

“Serendipitously, it would burnish their ESG credentials while creating an additional revenue stream not tied to oil and gas commodity prices,” he said.

An Evolving ‘Animal’

B3 Insight’s Technical Product and Content manager Kylie Wright said oil and gas companies would also directly support the energy transition by providing lithium and other key elements needed for technologies at the heart of the shift.

“Additionally, it would sort of achieve a ‘use the whole animal’ approach to resource development,” she said.

She explained that companies, already bringing produced water or brine to the surface to produce oil and gas, “could also provide some valuable resources from the water in the process of treating the water to a cleaner standard.”

Mineral extraction from produced water streams could also provide revenue “to advance water treatment and recover much more water from the oil and gas field than is used,” said B3 Insight’s CEO Kelly Bennett.

“For example, if it allows the recovery of 50% of water from produced water, leaving the other 50% in a concentrated produced water stream for mining, that water may be able to go to agriculture or in other places, to environmental uses,” he said. “That is a big deal. It also helps the oil and gas industry drive a significant waste-to-value chain that directly contributes to the energy transition.”

Patton said that government tax incentives for recycling produced water for beneficial use or mineral extraction could improve project economics, spurring more industry activity in those areas.

Sources also told NGI that additional research and development on the lithium extraction front are needed, partially to better understand the effects of the process.

“Advancing science, testing, and safety standards for natural occurring, potentially hazardous constituents in produced water is critical,” Bennett said. “Without this, there remains an incredible amount of liability that falls solely on oil and gas companies for downstream use of recovered water.”

Wright added that lithium extraction from produced water “likely…only works at large scale with a company that is vertically integrated and controls the entire supply chain.”

The supply chain issue raises a key ESG reporting consideration: traceability.

Using data collected at various stages from the mine to the end user, UK-based software company Circulor traces emissions, worker safety, waste management, and other metrics on its technology platform to “create a shadow of that material,” Strategy Manager Jess Green told NGI.

Although Circulor tracks various raw materials, in the case of lithium the company is working with firms such as Vulcan Energy Resources and Rock Tech Lithium to boost transparency and support compliance in the lithium battery supply chain.

“You can’t change what you don’t know,” Green said. “You need to know what’s going on in your supply chain.”

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