Billed by The Wall Street Journal as an exclusive, the story in the May 22 edition outlined developments that could have huge implications for south Arkansas, an area that has struggled for decades. Though it was strangely underplayed in the Arkansas media, those in the energy sector know the impact of Exxon Mobil's decision to move into those pine woods.
"Exxon Joins Hunt for Lithium in Bet on EV Boom," the headline read.
Benoit Morenne and Collin Eaton wrote: "Exxon Mobil is bracing for a future far less dependent on gasoline by drilling for something other than oil: lithium. The Texas oil giant recently purchased drilling rights to a sizable chunk of Arkansas land from which it aims to produce the mineral, a key ingredient in batteries for electric cars, cellphones and laptops, according to people familiar with the matter.
"Lithium is far removed from the fossil-fuel business, which has powered Exxon's profits for more than a century, and signals the company's assessment that demand for internal combustion engines could soon peak, the people said. Exxon bought 120,000 gross acres in the Smackover formation of southern Arkansas from an exploration company called Galvanic Energy, according to some of the people."
Exxon paid more than $100 million. That's not a large amount for a company of its size, but it's enough to alert the rest of the energy industry that Arkansas could be the next big thing. Might we be on the verge of the 21st century equivalent of the 1920s south Arkansas oil boom? Might El Dorado, Magnolia and Camden (already benefiting from a rapid expansion of defense-industry jobs) see population gains during the next decade?
Smaller companies are already exploring the use of underground brine in the Smackover formation to produce battery-standard lithium. For instance, Standard Lithium, a Canadian company that now has offices in downtown El Dorado, has received large investments from Koch Industries of Wichita, Kan., and its subsidiaries.
During a visit to El Dorado last year, I asked someone well-versed in the energy industry if he thought efforts to extract lithium from south Arkansas brine would prove successful.
He replied: "It has a good shot at succeeding, or else you wouldn't see people such as the Koch family getting involved."
Last month, Standard Lithium officials announced that the company has signed a joint development agreement with Koch Technology Solutions. The companies will share data as extraction processes are developed.
According to a news release: "The agreement will further enhance Standard Lithium's position to build the first U.S. commercial lithium project in several decades and begin to meet the surging demand for lithium."
Standard Lithium has done work in south Arkansas in cooperation with Lanxess, which operates a bromine-processing facility at El Dorado. The entry into the market of an industry giant such as Exxon could take things to the next level. It's as if the fledgling Envirotech electric vehicle assembly plant at Osceola had suddenly been eclipsed by a General Motors facility.
"The new venture doesn't amount to a significant strategic shift for Exxon, which has said it is confident that oil and gas will be needed for decades," The Journal reported. "But Exxon is looking to gain a foothold in a region believed to contain vast lithium reserves, both to produce the mineral and to test the viability of extraction technologies.
"Exxon could begin drilling on the prospect in the coming months, people familiar with the matter said, and could expand its operations if it proves profitable. Galvanic said last year that a third-party consultant it hired estimated the prospect could have 4 million tons of lithium carbonate equivalent, enough to power 50 million EVs."
The newspaper describes Smackover brine as "a rich broth of saltwater and minerals that has long been known to contain relatively high concentrations of lithium. But new technologies have recently made it possible to extract the metal from the brine in warehouse-size facilities."
In the story played on the front page of the newspaper's Business & Finance section, Morenne and Eaton wrote: "Extracting lithium from brine involves drilling for, piping and processing liquids, processes in which oil-and-gas companies have long developed expertise, making them well suited to produce the mineral.
"The U.S. once was the world's largest lithium producer, but its output has plummeted, and it is now dependent on other nations such as China for its supply of the mineral. Producing lithium from regions such as Arkansas could help the U.S. meet its domestic needs as well as compete globally, analysts said."
Exxon has projected that the world's fleet of EVs could grow to as many as 420 million by 2040, up from 3 million in 2017.
Senior Editor Rex Nelson's column appears regularly in the Arkansas Democrat-Gazette. He's also the author of the Southern Fried blog at rexnelsonsouthernfried.com.