Energy
Monday, November 13th, 2023 5:46 pm EDT
Key Points
- Exxon’s Lithium Production Ambitions: Exxon Mobil has unveiled plans to become a leading producer of lithium for electric vehicle (EV) batteries. The oil giant has purchased 120,000 acres in southern Arkansas known as the Smackover Formation, a geological site rich in lithium. Exxon aims to commence battery-grade lithium production at this site by 2027 with the goal of supplying enough of the mineral to support the annual manufacture of 1 million electric vehicles by 2030.
- Strategic Shift Amid Climate Pressures: Exxon’s move into lithium production signals a strategic shift in response to the increasing pressure on major oil companies to address climate change. While competitors like Shell and BP have been focusing on renewables such as wind and solar, Exxon is investing $17 billion through 2027 to reduce emissions. This investment is specifically directed toward carbon capture, hydrogen, and biofuels. Exxon views the ramp-up of domestic lithium production as crucial for the energy transition, aiming to lead in this space with a favorable environmental footprint.
- Addressing U.S. Reliance on Lithium Imports: The U.S. currently heavily relies on lithium imports from Argentina and Chile, despite having substantial lithium deposits domestically. Exxon’s initiative seeks to address this dependence by deploying drilling techniques from oil and gas extraction to access lithium-rich saltwater reservoirs in Arkansas, located 10,000 feet below ground. The company plans to separate lithium from saltwater onsite and turn it into battery-grade material. This move aligns with the anticipated surge in demand for lithium batteries, projected to grow sixfold in the U.S. by 2030 as the nation shifts towards electric vehicles. Currently, electric vehicles constitute just 1% of the U.S. vehicle fleet, but sales grew by 50% in the third quarter of 2023 compared to the same period last year.
Exxon Mobil has unveiled plans to become a major player in lithium production for electric vehicle (EV) batteries, marking a strategic shift towards renewable energy. The company acquired 120,000 acres of the lithium-rich Smackover Formation in southern Arkansas earlier this year. The drilling operation aims to commence battery-grade lithium production by 2027, with the goal of supporting the manufacturing of 1 million EVs annually by 2030. Exxon is actively engaging with potential customers, including EV and battery manufacturers, in ongoing discussions.
This initiative is part of Exxon’s broader $17 billion investment through 2027 to reduce emissions, focusing on carbon capture, hydrogen, and biofuels. While other major oil companies like Shell and BP are emphasizing renewable energy sources such as wind and solar, Exxon is positioning itself as a significant player in lithium production, viewing it as a pivotal element in the energy transition.
Dan Ammann, the president of Exxon’s low carbon solutions business, emphasized the importance of ramping up domestic lithium production for the U.S. energy transition. The company sees lithium as a long-term investment with substantial growth potential, particularly as the U.S. accelerates its shift to electric vehicles.
Exxon’s strategy is to secure an early and leading position in domestic lithium production while maintaining a favorable environmental footprint, setting a standard for sustainable practices. The move is a response to the U.S.’ heavy reliance on lithium imports from Argentina and Chile, despite possessing substantial lithium deposits domestically. Currently, the U.S. has only one commercial-scale lithium production operation, located in Nevada.
The demand for lithium batteries in the U.S. is projected to surge sixfold by 2030, driven by the accelerating adoption of electric vehicles. Despite a 50% growth in electric vehicle sales in the third quarter of the current year compared to the same period last year, EVs still constitute only 1% of the overall U.S. vehicle fleet. Exxon aims to contribute to the long-term growth of the EV market and lithium demand, anticipating sustained high growth in the sector.
Exxon is applying drilling techniques traditionally used in oil and gas extraction to access lithium-rich saltwater reservoirs located approximately 10,000 feet below ground. The extracted lithium is then processed onsite into battery-grade material. Interestingly, Exxon had previously invented the lithium battery in the 1970s, but at that time, the company did not pursue the technology. Now, it seems poised to play a pivotal role in the lithium supply chain for EVs, marking a significant step in its commitment to addressing climate change and transitioning towards a low-carbon future.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/11/13/exxon-to-produce-lithium-for-electric-vehicles-in-arkansas.html
