Occidental Petroleum’s move into the lithium extraction space highlights the increasing interest among oil and gas companies in diversifying into critical minerals, particularly in response to the growing demand for lithium-ion batteries.
Key takeaways include:
Oxy’s Lithium Strategy
- Arkansas Expansion: Occidental has secured leases in Arkansas, marking its entry into the Smackover formation, known for brines with high lithium concentrations.
- Salton Sea Partnership: Oxy’s existing TerraLithium subsidiary is collaborating with Berkshire Hathaway Energy in California to develop a direct lithium extraction (DLE) pilot plant, leveraging brines from geothermal energy production.
- Future Synergies: Berkshire Hathaway Energy has the option to partner with Oxy on Arkansas developments, expanding their collaboration beyond California if the projects prove viable.
Industry Expertise
- Brine Handling Skills: Oxy leverages its oil and gas expertise, particularly its experience in managing large volumes of fluids and brines, to advance DLE technology development.
- Clean Lithium Production: The company aims to produce cleaner lithium for US battery manufacturing, potentially reducing reliance on international imports.
Competitive Landscape
- Peers in Lithium:
- Exxon Mobil: Plans to begin commercial lithium production in Arkansas by 2027.
- Equinor: Invested $160 million in lithium leases across Arkansas and Texas, with early engineering work underway for an extraction plant.
- DLE Focus: Approximately $200 million has been invested in DLE assets, primarily targeting Arkansas and eastern Texas due to favorable brine lithium concentrations.
Future Opportunities
- Licensing Potential: Oxy may explore licensing its DLE technology globally, capitalizing on interest from countries with lithium-rich brines.
- Global Interest: Major international energy firms, including Saudi Aramco and Gazpromneft, are exploring DLE opportunities, though most remain in early exploratory stages.
Implications
- Diversification: The move represents a strategic pivot for oil and gas firms, aligning with global decarbonization trends and the rising demand for battery materials.
- US Battery Supply Chain: These efforts could strengthen the domestic lithium supply chain, supporting the energy transition and reducing geopolitical reliance on imported materials.
Occidental’s dual focus on operational expertise and strategic partnerships positions it as a significant player in the emerging DLE market.
