Oil and gas majors are increasingly interested in entering the lithium market to diversify their holdings beyond fossil fuels. Companies like ExxonMobil, Schlumberger, Occidental Petroleum, and Equinor are exploring ways to leverage their expertise in underground fluid processing to extract lithium from unconventional brine resources. This move comes as the demand for lithium, a critical component in electric car batteries, is expected to skyrocket with the transition to clean energy.
Brian Menell, CEO of mining investment fund TechMet, notes that oil companies are naturally drawn to lithium brines because of their skills in subsurface pumping and fluids management. Unlike other clean energy projects like charging networks and wind farms, where oil companies have limited expertise, they can apply their existing capabilities to process lithium from brines.
This push into lithium by oil majors is important for automakers who rely on a stable, large-scale supply of lithium to electrify their vehicles. Currently, many automakers depend on small mining companies, which may not be able to meet the increasing demand for lithium as more countries ban the sales of petrol and diesel cars.
However, the oil companies’ involvement in the lithium market thus far has been speculative. They have primarily invested in lithium resources, taken minority stakes in lithium companies, and licensed extraction technology. ExxonMobil, for example, recently acquired oilfield brines containing lithium in Arkansas. Equinor has taken a stake in Lithium de France, while Occidental jointly owns TerraLithium.
The future growth of lithium production relies heavily on the development of direct lithium extraction (DLE) technology, which selectively extracts lithium from brines using membranes, filters, or beads. This technology has the potential to revolutionize the lithium industry by significantly reducing extraction time and improving recovery rates. Oil majors could potentially extract lithium from wastewater at oilfields and geothermal energy projects if DLE proves commercially viable.
Despite the transferability of oil companies’ skills to the lithium sector, there are challenges to overcome. Obtaining approval for battery-grade materials from automakers and the relatively small size of the lithium market may limit the profitability of these ventures. However, industry experts predict that DLE could contribute 15 to 20 percent of lithium supply by 2030.
Some companies are considering mergers and acquisitions or greenfield projects to establish a stronger presence in the lithium market. Additionally, oil companies are interested in extracting lithium from geothermal brines, aligning with their investments in renewable energy. Vulcan Energy Resources, for example, is developing a geothermal lithium project in Germany’s Rhine Valley and is in talks with oil and gas companies for partnership opportunities.
Overall, the entry of oil and gas majors into the lithium sector could provide stability and scalability to the lithium market, ensuring a sufficient supply for the booming electric vehicle industry and the broader energy transition.
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