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Exclusive: Exxon aimsto begin lithium production by 2026 in Arkansas

By Ernest Scheyder

November12, 2023

Nov11 (Reuters) - Exxon Mobil (XOM.N) is set to unveil its long-awaited lithium strategy on Monday with an announcement that it aims to start production of the electric vehicle (EV) battery metal in Arkansas by 2026, according to a source with direct knowledge of the oil major's plans.

Exxon's expansioninto the sector comes as emerging technologies aim to boost global productionof the ultralight metal by filtering it from salty brine deposits found across the globe and supplying it to battery makers eager for fresh sources

Exxon,which invented the lithium-ion battery in the 1970s but stepped away from thetechnology, plans to begin producing at least 10,000 metric tons per year oflithium in Arkansas by 2026 with partner Tetra Technologies (TTI.N) in what has been labeled "Project Evergreen," according to the source.

That initialproduction would be roughly equivalent to the amount needed to produce 100,000EV batteries

Reutersreported thisyear that Exxon had agreed to develop more than 6,100 lithium-rich acres in Arkansas with Tetra, which produces chemicals for water treatment and recycling.

Exxon has beendrilling wells in Arkansas this year to study the vast Smackover Formation, ageological formation stretching from Florida to Texas that teems with lithium-and bromine-rich brine. The company has also been testing unprovendirect lithium extraction (DLE) technology that will be crucial for commercial operations, according to the source, who was not authorized to speak publicly

An Exxon spokesperson declined tocomment. A representative for Tetra was not immediately available to comment.

For Exxon and other oil companies,lithium production offers the prospect of selling a new product with relativelylittle added cost. Darren Woods, Exxon CEO since 2017, told investors duringa call on Oct. 4 that the lithium sector was "fairly promising."

He also said: "We see anopportunity to really leverage the things that we're pretty good at."

Exxon, like other fossil fuelproducers, has faced pressure to reduce carbon emissions from operations.Reuters reported this year that Exxon shareholder Engine No. 1 had pressured the company to deploy DLE.

Exxon is not expected to publiclyannounce which DLE technology it has chosen, according to the source. Thecompany has a long-standing pattern of not disclosing some vendors.

Reuters reported this year that Exxonand Chevron (CVX.N) held talks with International Battery Metals (IBAT.CD) and EnergySource Minerals about licensing DLE technology.

OTHER ACREAGE

Separate from its Tetra partnership,Exxon also controls more than 100,000 acres in Arkansas from which it plans tobegin lithium production by 2027, according to the source.

Exxon acquired that acreage this yearfrom privately held Galvanic Energy, Reuters reported.

It was not clear whether Exxon plansto expand lithium operations outside Arkansas. Like all oil producers, Exxonextracts water containing traces of lithium as part of fossil fuel production.That could help the oil industry morph into the world's largest lithiumsupplier, if DLE technologies can be commercialized.

Exxon, like Albemarle (ALB.N), Standard Lithium (SLI.V) and others aiming to produce the battery metal in Arkansas, face a key regulatory roadblock. The southern U.S. state, just north of Louisiana, has a royalty structure for bromine, which Albemarle has long produced there, but not for lithium, which could delay development in the short term.

The Arkansas Oil and Gas Commission,which overseas lithium operations in the state, has said it plans to holdhearings on the matter.

Exxonplans to send at least six representatives to the Benchmark Minerals conferencenext week in Los Angeles, according to an attendance list seen by Reuters. It wouldmark the company's first attendance at the major critical minerals conference.