Exxon to begin producing lithium to feed surging battery demand
Biggest western oil producer to extract the metal from Arkansas starting in 2027 for use in EVs and energy storage
ExxonMobil plans to begin producing lithium in 2027 in a major strategic pivot, as the biggest western oil producer bets it can use its expertise in drilling and processing to become a leading player in the battery metal.
The company said on Monday it had begun work to extract lithium from underground brines in the southern US state of Arkansas, where it has acquired the rights to 120,000 acres of land in the Smackover formation.
“This landmark project applies decades of ExxonMobil expertise to unlock vast supplies of North American lithium,” said Dan Amman, head of Exxon’s low carbon solutions business.
The move comes as the energy transition drives a surge in demand for the battery metal. The International Energy Agency has predicted consumption could increase by a factor of more than 40 between 2020 and 2040, on the back of rapid growth in the use of lithium-ion batteries needed for electric vehicles and energy storage.
Exxon — which has faced criticism that its low carbon spend is dwarfed by its outlay on future oil and gas production — did not say how much it would invest in the new business, which will be branded Mobil Lithium.
Last month the company announced a $60bn deal to buy Pioneer Natural Resources, the biggest oil producer in Texas, in a move analysts described as a doubling down on fossil fuels.
Exxon’s shift into lithium is the first by an oil supermajor. Koch Industries, Occidental Petroleum and Norway’s Equinor have been exploring a move into the battery metal.
The company is betting that its expertise in drilling, pumping and processing oil and gas will give it a competitive advantage in lithium produced from salty brines.
While European oil majors including BP and Shell have developed sizeable wind and solar businesses, Exxon and US rival Chevron have resisted calls to move into renewables, arguing they lack core capabilities in the area.
Instead, any clean energy spending they have made has been focused on technologies more closely related to their core businesses.
“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 executive Darren Woods told analysts recently.
“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 projects are also higher than renewables and more in line with oil and gas.
Most lithium today is extracted either by mining and crushing ore-bearing rocks — largely in Australia — or by pumping brine out of underground reservoirs and using huge ponds to separate out the lithium through evaporation — largely in South America.
Exxon plans to use a novel method known as direct lithium extraction, or DLE, in which it will drill into deep saltwater reservoirs, pump out brines, and use chemical processes to separate out the lithium before reinjecting the water underground.
Goldman Sachs has said DLE could have a revolutionary impact on lithium production comparable with the impact of novel shale extraction techniques on US oil production, speeding up the process from months to days with vastly improved recovery rates versus traditional brine extraction. But it remains unproven at scale.
Exxon said it planned to begin commercial output by 2027 and increase production to supply enough lithium for 1mn electric vehicles a year by 2030.
