The oil and gas giant has reportedly acquired the rights to an Arkansas brine project for US100M, but will the industry see further O&G investment?

It has been reported that American oil and gas giant ExxonMobil has bought the rights to a 120,000-acre property in Arkansas containing an estimated 4.0Mt LCE (Lithium Carbonate Equivalent) lithium resource. The rights were acquired from lithium prospector Galvanic Energy, which has reported that the Smackover resource grade ranges from 290-520mg/L, with ExxonMobil reportedly paying US$100M for the resource.

This move is the latest in a small but growing trend of oil and gas companies investing in upstream lithium project development, with oilfield services giant Schlumberger developing a Direct Lithium Extraction (DLE) pilot plant. However, other examples of direct lithium project development by oil and gas companies are few. Instead, oil and gas companies have sought to focus on the downstream sector - Shell, BP, Chevron, and others have all made investments in the battery space.

Given their expertise, it is not surprising that their project investment targets have been oilfield brines such as the Arkansas Smackover resource, requiring DLE technology to extract and produce lithium chemicals. However, examples of successfully implemented DLE technology in lithium projects are few. Recently, large-scale investments in new lithium projects have typically come from the automotive and battery sector as these companies seek to secure lithium supplies for electric vehicle demand targets. However, these have tended to favour mineral projects or established brine producers.

Could this latest investment by ExxonMobil be the beginning of further investments by O&G companies in the upstream sector and represent a new area of funding available to lithium projects? The most likely scenario is that, where they invest in lithium projects, O&G companies will remain focused on those projects hoping to utilise DLE in their flowsheets, representing a small proportion of overall projects in development.