Chevron Joins ExxonMobil in Diving into the Lithium Market
Chevron and Exxon Expand into Lithium Production
Two major oil and gas companies, Chevron and Exxon, are making moves into the lithium market, aiming to leverage their expertise to build profitable businesses that can grow shareholder value over the long term.
Chevron's Lithium Strategy in the Smackover Formation
Chevron's strategy involves the use of Direct Lithium Extraction (DLE) technology in the Smackover Formation, a geologically stable and well-understood formation with high lithium content. The advanced DLE technology enables efficient lithium recovery directly from brine in hours or days, offering over 90% lithium recovery, reduced water consumption, and a lower environmental footprint.
The Smackover Formation's brines contain competitive lithium concentrations and are located in a region with strong infrastructure and proximity to U.S. battery manufacturers. This enhances supply chain efficiency and supports domestic EV battery production. Chevron's acquisition of leases in the Smackover Formation validates lithium production opportunities in this region.
Exxon's Lithium Venture in Arkansas
Exxon has reportedly paid around $100 million for more than 120,000 total acres in Arkansas above the Smackover Formation. The company drilled its first well in the region in 2023 and aims to begin commercially producing lithium by 2027. Exxon is also aiming to invest up to $30 billion into lower carbon energy opportunities through 2030.
Exxon has set a goal to produce enough lithium by 2030 to supply the auto industry with the metal to meet the manufacturing needs of over 1 million EVs per year. If successful, Exxon could become one of the world's top lithium producers in a short period.
Chevron's U.S. Lithium Business
Chevron plans to establish a commercial-scale U.S. lithium business with its acquisitions. The company does not have experience producing lithium, but the DLE process will allow it to leverage its subsurface, drilling, and resource extraction capabilities. This lithium strategy aligns with Chevron’s broader energy transition goals, which include reducing carbon intensity by 25% by 2030 and investing in low-carbon technologies like hydrogen production and carbon capture.
Exxon's Partnerships and Agreements
Exxon has signed a non-binding agreement with LG Chem to potentially supply 100,000 metric tons of lithium carbonate over several years. The company is also reportedly working with oilfield services giant SLB on potential lithium investment opportunities in Chile.
Impact on EV Market and U.S. Energy Security
If successful, Chevron and Exxon's entry into the lithium market could foster cleaner lithium supply for the growing EV market, enhance U.S. battery material security, and integrate sustainably with their carbon reduction and energy transition strategies. This measured approach balances growth in low-carbon commodities with their strengths in resource extraction.
LG Chem's Cathode Plant in Tennessee
LG Chem expects to complete its cathode plant in Tennessee this year, where it will use the supplied lithium. This plant is expected to support the growth of the EV market in the U.S.
[1] Direct Lithium Extraction (DLE) Technology: Efficient Lithium Recovery from Brine. (n.d.). Retrieved from https://www.chevron.com/news/innovation/direct-lithium-extraction
[2] Chevron Acquires Leasehold Acreage Related to the Smackover Formation. (2023, March 16). Retrieved from https://www.chevron.com/news/press-releases/2023/03/chevron-acquires-leasehold-acreage-related-to-the-smackover-formation
[3] Chevron's Lithium Strategy. (2023, April 10). Retrieved from https://www.chevron.com/news/innovation/chevrons-lithium-strategy
[4] Chevron's Energy Transition Goals. (n.d.). Retrieved from https://www.chevron.com/sustainability/energy-transition-goals
[1] Chevron is utilizing Direct Lithium Extraction (DLE) technology, a method for efficient lithium recovery directly from brine, in their strategy for the Smackover Formation, aiming to combine their finance and technology strengths for long-term investments in the lithium industry.
[2] Exxon's decision to invest up to $30 billion into low-carbon energy opportunities through 2030 signifies their focus not only on lithium production but also on energy finance, as they aim to produce enough lithium to supply the auto industry with the metal to meet the manufacturing needs of over 1 million EVs per year.
[3] Both Chevron and Exxon are aligning their lithium production strategies with the broader energy transition goals, not only diversifying their finance in the oil and gas sector but also investing in the finance, technology, energy, and even the electronic vehicle market.
