Exxon Mobil Corp. said Nov. 13 it launched a lithium drilling campaign in Arkansas’ resource-rich Smackover region, aiming to start producing the key ingredient for electric vehicles (EVs) by 2027.

The move comes as the energy company, most known for its oil production and chemicals business, works to establish itself as a leading supplier for EVs by 2030.

“This landmark project applies decades of Exxon Mobil expertise to unlock vast supplies of North American lithium with far fewer environmental impacts than traditional mining operations,” said Dan Ammann, president of Exxon Mobil Low Carbon Solutions, in a news release.

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Lithium is expected to play a key role in the global energy transition, including in the U.S. as the country embarks on a mission to boost domestic supplies of lithium and reduce its dependence on foreign countries. The U.S. imported more than 75% of its lithium from Argentina and Chile between 2017 and 2020, according to information from the U.S. Geological Survey. 

With federal tax incentives in place, thanks to the Inflation Reduction Act and the Bipartisan Infrastructure Law, the U.S. is encouraging companies to expand domestic extraction and processing of lithium and other critical materials needed to boost the manufacturing of batteries in the U.S.

The International Energy Agency forecasts lithium demand will surge by as much as 40 times by 2040, having already tripled between 2017 and 2022.

Exxon Mobil plans to lean on its conventional oil and gas drilling expertise, drilling about 10,000 ft underground to access lithium-rich saltwater. It will then use a process called direct lithium extraction (DLE) to separate lithium from the saltwater, which will be reinjected to the reservoir. The extracted lithium will be converted onsite into battery-grade material, the company said.

The method produces fewer emissions and require less land than the traditional method of extracting lithium via hard rock mining. It also doesn’t require as much land as lithium brine extraction in evaporation ponds, where brine sits for several months or years as the sun evaporates most of the liquid content, ultimately leaving behind lithium and other metals. The brine, with its higher concentration of lithium, is then pumped to a facility for processing.

Currently, the U.S. is home to only one brine operation in Nevada. Albemarle produces lithium carbonate from brine near Silver Peak, Nevada.

With DLE, which takes hours instead of months, brine is pumped to a processing unit where lithium is extracted using adsorption, resin or a membrane. DLE is considered a proven technology, having being used by U.S.-based Livent to produce lithium in Argentina.

“DLE has gained increasing momentum in the Smackover due to multiple limitations on the ability to evaporate brine reservoirs,” TD Cowen analysts said in a note. However, the analysts pointed out the technology has limited commerciality outside of Livent’s operations in Argentina.

“[Exxon's] participation in the space suggests leveraging proprietary techniques around water and solids management to economically produce lithium at scale,” the analysts said. “Projects tend to be bespoke to each reservoir and have ranged in capital intensity from $30-50k/tonne of LCE capacity.”

Exxon Mobil has been bolstering its presence in the space with acquisitions.

The company acquired drilling rights for 120,000 gross acres in southern Arkansas for lithium brine production from Galvanic Energy. An Exxon subsidiary, Saltwerx LLC, signed a memorandum of understanding with services company Tetra Technologies Inc. to develop Smackover acreage for potential lithium production, Reuters reported.

Exxon Mobil, which will brand its product offer as Mobil Lithium, said it aims to produce enough lithium to meet the needs of more than 1 million EVs per year by 2030.

TD Cowen estimates about $2 billion in capex will be required to provide 50,000 tonnes, which could generate $800 million in cash.

“This project is a win-win-win,” Ammann added. “It’s a perfect example of how Exxon Mobil can enhance North American energy security, expand supplies of a critical industrial material and enable the continued reduction of emissions associated with transportation, which is essential to meeting society’s net-zero goals.”

Exxon Mobil is not the only company targeting lithium via DLE in the Smackover. Canada-based Standard Lithium is also aiming to start commercial production of lithium in 2027. Standard recently said it was exercising an option agreement with Tetra Technologies that gives Standard Lithium brine production rights on about 27,000 net acres of brine leases in Arkansas for a 10-year period.

A preliminary feasibility study for Standard Lithium’s project indicated up to 35,000 tonnes per annum (mtpa) of battery-quality lithium hydroxide could be produced over the asset’s 20-year operating life. Production of 30,000 mtpa could yield a pre-tax net present value of $4.5 billion and an IRR of 41%, the company said.