ExxonMobil said Monday it plans to establish a facility in Arkansas to produce lithium, an important raw material for electric vehicles, posing one of the biggest challenges to the company’s oil business.
This announcement comes just one month after Exxon announced that it would spend $60 billion to buy Pioneer Natural Resources, and this announcement indicates that the big oil company intends to hedge its big bets on traditional fossil fuels through at least some investments in the necessary forms of clean energy. To fight climate change.
This announcement does not represent a fundamental shift in the company’s strategy, but it is an acknowledgment that battery-powered vehicles will increasingly compete with gasoline- and diesel-powered cars and trucks. It could also open the door for southern Arkansas to emerge as a major source of lithium. Most of the metal today comes from Australia and South America, and much of it is processed in China.
“Electricity will be a key component of the energy transition, and we bring experience closely related to lithium production,” Dan Ammann, ExxonMobil’s president of low carbon solutions and a former top executive at General Motors, said in an interview. . . “We see an opportunity to deploy that would be very profitable.”
He said the project “will enable the continued reduction of transportation-related emissions.”
Exxon announced that it will begin lithium production in 2027, with the aim of producing enough of the metal to power more than a million electric cars annually by 2030. The company did not say how much it would invest in the project, but Mr. Exxon said the company would invest in the project. Aman said the company is willing to spend “hundreds of millions” as a start and will look for “more opportunities” to expand lithium production.
Lithium, a key ingredient in lithium-ion batteries, has become the prize in a global race between American companies and companies in China, Russia and elsewhere. The United States produces only a small amount of lithium, although mining companies hope to produce more, including in California, Nevada and North Carolina.
Exxon executives say the company’s expertise in geology, drilling, hydraulic fracturing and chemical production will allow it to economically extract lithium from the saltwater and mineral soup known as “smackover solution” underground in Arkansas. Exxon added that thousands of depleted oil wells drilled over the past century could eventually be rehabilitated to produce lithium.
In recent years, Exxon has doubled its oil and natural gas production in the Permian Basin, which straddles Texas and New Mexico, and in deep waters off Guyana. Arkansas fits into its plans to focus its production closer to home and away from the Middle East and Russia, where Western oil companies have previously tried and largely failed to create sustainable businesses.
Some other oil companies such as BP, Eni and Equinor have invested in other forms of energy such as solar, nuclear and wind, but Exxon has sought to increase its investments in fossil fuels as it tries to step up efforts to capture and bury carbon emissions from industry and energy. Hydrogen production as a clean fuel.
In Arkansas, Exxon plans to use a process known as “direct lithium extraction,” a new technology that uses solvents or membranes and filters to produce lithium from brine. Engineers and executives promoting the method say it is superior to open-pit mines or evaporation ponds because it is faster and wastes less water. But no one has succeeded in proving that this approach can produce enough lithium for millions of cars or stationary batteries.
Exxon, which bought the rights to drill 120,000 acres in Arkansas this year, said it would pump the remaining saltwater underground, turning the lithium it extracted into battery material nearby. China dominates the difficult work of converting lithium found in the ground into the concentrate needed by battery factories.
Some energy experts doubt that direct extraction will succeed on a large scale, and have said that Exxon’s efforts may not significantly increase lithium supplies. Mr. Aman said he is confident the technology will work.
Some environmentalists have expressed lukewarm praise for Exxon’s lithium efforts.
“It’s a very small fraction of what Exxon does, and most of what it does is terrible,” said Dan Baker, director of the Safe Climate Transportation Campaign at the Center for Biological Diversity. “But we need lithium, and it is better for it to come from a spoiled industrial site where oil has been drilled than from somewhere pure.”
The Inflation Reduction Act, signed by President Biden last year, helped spur efforts to produce lithium, battery manufacturing and electric vehicle assembly with generous tax breaks and other incentives.
However, little new lithium production has been produced in the United States in recent years, and experts suggest that establishing mines and processing plants here could take many years. Some companies have been working for years to produce lithium from brine under the Salton Sea in California.
“It’s helpful, but it won’t be enough to get important minerals away from China,” said Benny Freeman, a professor of chemical engineering at the University of Texas at Austin and an activist in lithium research. “But that, plus the Salton Sea, is a good start.”
Mining experts said Exxon has the expertise to find lithium but may need outside help to separate the metal through filtration or purification from salty liquids.
Exxon has held discussions with Tesla, Ford Motor Company and other car companies to supply lithium. Other oil companies, including Chevron and Occidental, have said they are looking to invest in lithium mining.
In a way, Exxon’s new lithium venture is a return to its past. In the 1970s, an Exxon chemist played a pioneering role in developing the lithium-ion battery. Exxon even started manufacturing batteries in 1976, but gave up after concluding that the market for batteries was too small.
The price of lithium has fallen in recent months as new supplies become available in various countries and the growth rate of electric vehicles slows in China, Europe and the United States. But many energy experts expect a shortage of the metal by the end of the decade, which could push prices higher.
