Oil and gas giant Exxon Mobil Corporation (NYSE: XOM) has initiated its first phase of production in southwest Arkansas and aims to become a leading lithium producer by 2030.
Early this year, the company acquired 120,000 gross acres of the Smackover Formation which –according to some reports– has enough lithium to produce batteries for 50 million EVs. The area also hosts bromine and has been a source of oil since 1922.
Exxon said on Monday it already started drilling its first wells to access lithium-rich saltwater from reservoirs at 10,000 feet underground. The company says it used direct lithium extraction technology to separate the lithium from the saltwater, which is then converted onsite to battery-grade material.
The company will brand the product as Mobil Lithium and will partner with Tetra Technologies, according to Reuters. By domestically sourcing lithium, the company aims to reduce dependence on external suppliers and enhance regional energy resilience.
Exxon says that by 2030, it will provide lithium for over one million electric vehicles per year. TD Cowen analysts said this would require approximately US$2 billion in expenditures to provide 50,000 tonnes and generate around $800 million in cash. However, the company didn’t specify the costs of operations nor when the lithium operations would become profitable.
“This project is a win-win-win,” president of ExxonMobil Low Carbon Solutions Dan Ammann said in a statement.
“It’s a perfect example of how ExxonMobil 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.”
The demand for lithium is expected to quadruple in seven years
Exxon said it will collaborate with local and state officials to facilitate the successful scale-up of Arkansas’ emerging lithium industry.
“South Arkansas is our state’s all-around energy capital, producing oil, natural gas, and now thanks to investments like ExxonMobil’s and their combination of skills and scale, lithium,” said Arkansas Governor Sarah Huckabee Sanders.
“My administration supports an all-of-the-above energy strategy that guarantees good, high-paying jobs for Arkansans – and we’ll continue to cut taxes and slash red tape to make that happen.”
Last year, the company’s Canadian subsidiary Imperial Oil Limited (TSE: IMO) ( NYSE American: IMO) announced that it would collaborate with E3 Lithium (TSXV: ETMC, OTCQX: EEMMF) to explore the redevelopment of the Leduc oil field.
According to the Statista Research Department in 2030, the global demand for lithium is expected to surpass 2.4 million metric tons of lithium carbonate equivalent which is double the demand forecast for 2025. Increases in battery demand for electric vehicles will be a strong driver of lithium consumption in the next decade, with demand expected to reach 3.8 million tons by 2035.