Exxon begins producing lithium to meet increasing battery demand

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ExxonMobil plans to begin producing lithium in 2027, marking a major strategic turning point as the largest Western oil producer bets it can leverage its drilling and processing expertise to become a leading player in the field to become battery metal.

The company said Monday that it has begun extracting lithium from underground brines in the southern US state of Arkansas, where it has acquired rights to 120,000 acres of land in the Smackover Formation.

“We believe that we will build a profitable and high-growth business here in the long term. So it’s a big deal,” said Dan Amman, head of Exxon’s low-carbon solutions business, adding that the project builds on the company’s “existing expertise.”

“We drill wells 10,000 feet underground into these saltwater reservoirs. That obviously depends directly on our wheelhouse and our capabilities,” Amman said in an interview with the Financial Times.

The move comes as the energy transition leads to an increase in demand for the battery metal. The International Energy Agency has predicted that consumption could increase more than 40-fold between 2020 and 2040 as the use of lithium-ion batteries for electric vehicles and energy storage expands rapidly.

Exxon – which has faced criticism that its spending on carbon emissions is dwarfed by its spending on future oil and gas production – has not said exactly how much it would invest in the new venture will be called Mobil Lithium. Amman said the investment “will grow into billions of dollars over time.”

Last month, the company announced a $60 billion deal to buy Pioneer Natural Resources, the largest oil producer in Texas. Analysts described this move as a doubling down on fossil fuels.

Exxon’s switch to lithium is the first by an oil giant. Koch Industries, Occidental Petroleum and the Norwegian company Equinor are considering entering 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 producing lithium from brines.

While European oil majors such as BP and Shell have built significant wind and solar businesses, Exxon and U.S. rival Chevron have resisted calls to move into renewable energy, saying they lack core competencies in the field.

Instead, any clean energy spending they have made has been focused on technologies more closely linked to their traditional businesses.

“From the beginning, we focused on the molecular side of the equation – on carbon capture as well as hydrogen and biofuels,” Exxon CEO Darren Woods recently told analysts.

“Lithium – and the production of lithium from brine water – is…” . . really an extension of many of the current capabilities we have in our upstream.”

Returns from lithium projects are also higher than renewable energy and more in line with oil and gas.

Today, most lithium is extracted either by mining and crushing ore-bearing rock – mainly in Australia – or by pumping brine from underground deposits and using huge ponds to separate the lithium through evaporation – mainly in South America.

Exxon plans to use a novel method called Direct Lithium Extraction (DLE), in which the company drills into deep saltwater reservoirs, pumps out brines and uses chemical processes to separate the lithium before injecting the water back underground.

According to Goldman Sachs, DLE could have a revolutionary impact on lithium production comparable to the shale boom in the US, shortening the process from months to days and significantly improving recovery rates compared to traditional brine extraction. But it remains unproven at scale.

Exxon said it plans to begin commercial production by 2027 and ramp up production to supply enough lithium for 1 million electric vehicles – or about 100,000 tonnes of lithium carbonate equivalent – per year by 2030.

Amman said the company intends to compete on a large scale with the world’s largest players. “We see this as a great opportunity. We wouldn’t be getting involved in this if we didn’t intend to play an important role in it.”

Additional reporting by Harry Dempsey in Singapore

Olly Dawes

Olly Dawes is a Nytimas U.S. News Reporter based in London. His focus is on U.S. politics and the environment. He has covered climate change extensively, as well as healthcare and crime. Olly Dawes joined Nytimas in 2023 from the Daily Express and previously worked for Chemist and Druggist and the Jewish Chronicle. He is a graduate of Cambridge University. Languages: English. You can get in touch with me by emailing: ollydawes@nytimas.com.

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