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ExxonMobil plans to start producing lithium in 2027 in a significant strategic pivot, as the largest western oil producer bets it will probably use its experience in drilling and processing to turn out to be a number one participant within the battery metallic.
The firm stated on Monday it had begun work to extract lithium from underground brines within the southern US state of Arkansas, the place it has acquired the rights to 120,000 acres of land within the Smackover formation.
“We think we’re going to build a profitable and high=growth business for the long term here. So it’s a big deal,” stated Dan Amman, head of Exxon’s low-carbon options enterprise, including that the undertaking constructed on the corporate’s “existing knowhow”.
“We’re drilling wells 10,000 feet underground into these saltwater reservoirs. That’s obviously directly in our wheelhouse and capability skillset,” Amman stated in an interview with the Financial Times.
The transfer comes because the vitality transition drives a surge in demand for the battery metallic. The International Energy Agency has predicted consumption may improve by an element of greater than 40 between 2020 and 2040, on the again of fast progress in the usage of lithium-ion batteries wanted for electrical autos and vitality storage.
Exxon — which has confronted criticism that its low-carbon spend is dwarfed by its outlay on future oil and gasoline manufacturing — didn’t say precisely how a lot it could put money into the brand new enterprise, which will likely be branded Mobil Lithium. Amman stated the funding would “ramp up into the billions over time”.
Last month the corporate introduced a $60bn deal to purchase Pioneer Natural Resources, the largest oil producer in Texas, in a transfer analysts described as a doubling down on fossil fuels.
Exxon’s shift into lithium is the primary by an oil supermajor. Koch Industries, Occidental Petroleum and Norway’s Equinor have been exploring a transfer into the battery metallic.
The firm is betting that its experience in drilling, pumping and processing oil and gasoline will give it a aggressive benefit in lithium produced from salty brines.
While European oil majors together with BP and Shell have developed sizeable wind and photo voltaic companies, Exxon and US rival Chevron have resisted calls to maneuver into renewables, arguing they lack core capabilities within the space.
Instead, any clear vitality spending they’ve made has been centered on applied sciences extra carefully associated to their conventional companies.
“We have, since the very beginning, stayed focused on what I’d say is the molecule side of the equation — in carbon capture and hydrogen and biofuels,” Exxon chief government Darren Woods advised analysts lately.
“Lithium — and production of lithium from brine water — is . . . really an extension of a lot of the current capabilities that we have in our upstream.”
The returns on lithium tasks are additionally increased than renewables and extra in keeping with oil and gasoline.
Most lithium as we speak is extracted both by mining and crushing ore-bearing rocks — largely in Australia — or by pumping brine out of underground reservoirs and utilizing large ponds to separate out the lithium by way of evaporation — largely in South America.
Exxon plans to make use of a novel methodology referred to as direct lithium extraction, or DLE, by which it can drill into deep saltwater reservoirs, pump out brines and use chemical processes to separate out the lithium earlier than reinjecting the water underground.
Goldman Sachs has stated DLE may have a revolutionary affect on lithium manufacturing comparable with the US shale increase, rushing up the method from months to days with vastly improved restoration charges versus conventional brine extraction. But it stays unproven at scale.
Exxon stated it deliberate to start industrial output by 2027 and improve manufacturing to provide sufficient lithium for 1mn electrical autos — or about 100,000 tonnes of lithium carbonate equal — a 12 months by 2030.
Amman stated the corporate supposed to compete with the world’s largest gamers on scale. “We see this as a big opportunity. We wouldn’t go into it unless we intended to play a major role in it.”
Additional reporting by Harry Dempsey in Singapore