Oil giant Equinor to tap lithium deep underground after US project buy-in

Norwegian oil major Equinor has reached an agreement with Canada-based Standard Lithium to acquire a 45% stake in US lithium production projects located in Southwest Arkansas and East Texas.

Equinor will initially include a $30m payment to compensate Standard Lithium for past expenses and a $60m investment, including the oil company's 45% equity share and a $33m "carry" of Standard Lithium's share of the costs on the two projects.

The deal could see Equinor pay an additional $70m if a final investment decision is taken, according to the company's statement on the matter today (Wednesday).

Standard Lithium will retaining operatorship of both projects, with Equinor providing support "with core competencies such as subsurface and project execution capabilities".

“Sustainably produced lithium can be an enabler in the energy transition, and we believe it can become an attractive business," said Morten Halleraker, senior vice president for new business and investments in technology, digital and innovation at Equinor.

"This investment is an option with limited upfront financial commitment. We can utilise core technologies from oil and gas in a complementary partnership to mature these projects towards a possible final investment decision.”

Equinor's interested is focussed on production from subsurface reservoirs using direct lithium extraction (DLE) technologies that are emerging as a production method with a lower environmental footprint than traditional methods.

DLE is a method of producing lithium from lithium-rich saltwater typically from deep underground reservoirs which cannot be used for drinking or agriculture purposes

Lithium is separated from other brine constituents, like sodium, calcium and magnesium, by bringing the brine into contact with a medium designed to selectively attract the lithium

DLE can extract lithium from brines located deep underground, with residual brine reinjected back into the subsurface through a second well.

DLE technologies can produce a high grade lithium concentrate that can be converted into battery grade lithium chemicals using conventional processing technologies.

Standard Lithium chief Andy Robinson added: “We’re at a crucial stage in our company’s growth and this partnership with Equinor will be fundamental to the continued de-risking and execution of these important projects.

"One thing that we have observed in the lithium world over the past decade is that strong, mutually-aligned partnerships are the key to successful project execution and operation, and we believe we have aligned with the right partner to take SLI and the lithium industry in Arkansas and Texas to the next level.”

President Joe Biden's has included subsidies for critical minerals within the framework of his administration's incentives for clean tech investments covering, among other things, batteries for electric vehicles and grid scale storage.

The supermajor got interested in alternative energies around the time of the 1973 oil shock, but later sold off its lithium-ion patent in the early 1980s.

Last year, ExxonMobil obtained rights over 120,000 acres of lithium-bearing areas of the Smackover formation, in Arkansas.

Occidental Petroleum and oilfield services giant Slb are among the other oil sector companies now looking to apply their expertise in the drilling, lifting, processing and reinjecting underground fluids to the growing industry of DLE.

In 2021, Equinor Ventures invested in Lithium de France which is developing DLE and geothermal projects in France.