Companies such as Exxon Mobil plan to extract lithium from brine water to help power electric vehicles.
Ark.—Slipping a handgun into his belt, the mayor of this small town hopped out
of his 1995 Ford pickup and went in search of further evidence of a new energy
other side of a freshly painted gate, Mayor Parnell Vann pointed out a squat
blue spire of valves, bolts and pressure gauges attached to a long-dormant
well—a telltale sign someone means to bring it back to life. On the
thick-wooded back roads, crisscrossing fields where oil drillers gave up long
ago, Vann found two more similar wells that day.
days, companies in the area aren’t looking to find more oil—they are instead
prospecting for lithium, a metal that is increasingly prized around the world
as an essential ingredient in electric-vehicle batteries.
U.S. is to ease its dependence for lithium on other countries such as China, it
may need this quiet corner of southwest Arkansas to lead the way.
Mobil XOM 1.76%increase; green up pointing triangle, a new player in the hunt
for U.S. lithium, is planning to build one of the world’s largest lithium
processing facilities not far from Magnolia, with a capacity to produce 75,000
to 100,000 metric tons of lithium a year, according to people familiar with the
scale, it would equate to about 15% of all finished lithium produced globally
last year, according to one analyst.
Street Journal reported in May that Exxon purchased 120,000 gross acres in the
area for a price tag of more than $100 million. A consultant for the seller had
estimated the prospect could have the equivalent of 4 million tons of lithium
carbonate equivalent, enough to power 50 million EVs.
giant project could be built in stages, with modular trains constructed
together or in separate locations near its future lithium production sites in
South Arkansas, people familiar with the matter said.
the project forward, Exxon will have to profitably scale up the technology used
to siphon lithium from brine, which for years has been an elusive goal across
companies including Standard Lithium SLI -3.85%decrease; red down pointing
triangle and Tetra Technologies TTI 1.45%increase; green up pointing triangle
are planning to build capacity in the area.
attraction is what is known as the Smackover formation, a geologic trend that
runs from Texas to Florida and is rich with saltwater brine, which once
bedeviled companies drilling for oil. That brine also contains small amounts of
lithium, and the companies are increasingly optimistic they can scale up
technologies to extract it.
companies’ efforts to shore up domestic supplies have run into hurdles in
recent years. But companies drilling for lithium say their extraction methods
are cleaner than traditional mining, and face fewer regulatory risks.
interview at a lithium demonstration plant near El Dorado, Ark., Standard
Lithium Chief Executive Robert Mintak said the Smackover could become as
significant to domestic lithium production as the Permian Basin of West Texas
and New Mexico has been for U.S. oil output.
economics will be better, though,” Mintak said. “And the resource will last
longer. There’s a more favorable environment for where the product is going
[compared with oil].”
Technologies, a company that is planning to extract the chemical bromine from
brine in the region, is studying the feasibility of building a plant that would
add thousands of tons of lithium extraction capacity, and recently drilled its
second test well near Magnolia. “It’s going to be a pretty big boom in
Southwest Arkansas,” said Brady Murphy, Tetra’s CEO.
are expensive bets. Mintak estimated it currently costs about $1.5 billion to
build 25,000 metric tons of capacity, after inflation boosted the prices of
Standard Lithium, backed by Koch Industries, is studying the feasibility of
building the first commercial U.S. lithium extraction facility, with a capacity
of 6,000 metric tons a year. It wants to begin construction in early 2024.
also proposed building a 30,000-ton plant just west of Magnolia, where Mintak
said the concentration of lithium is about twice as high as its current
location. Construction could potentially begin in the next few years.
together, the three companies’ projects would require around 6,000 jobs and
north of 1,600 trucks by 2028, according to a person familiar with the
influx of workers and trucks could give Magnolia and nearby counties an
economic shot in the arm after years of decline. But the prospect is also
concerning, Mayor Vann said, because the town of 12,000 is facing a shortage of
new houses, and many of the region’s limited roads, water and sewage systems
are unprepared. The town is home to a state college, Southern Arkansas
University, but its surrounding areas are largely rural.
is listening right now,” he said. “But when it blows up, it’s going to be too
Magnolia, named for a tree that blooms once or twice a year, a bright two-story
mural depicts oil field workers clutching rig equipment and twisting valves,
recalling the period when the region was a thriving community hub of oil field
activity. That all changed after the 1980s oil bust, and a series of mill
closures and company departures in the years since.
about dried up to nothing,” said Valarie Clark, a judge in nearby Lafayette
economic winds are shifting again.
Stephens Country Store in Magnolia, manager Edie Mobbs said at least three
companies in the past couple of years have asked whether they can buy the
mineral rights on 80 acres she and her husband own. She has so far decided not
to sell, just in case they want to lease the land.
wondering if it’s not because somebody knows something we don’t know,” she
worry the city’s potential growth could bring crime and drug abuse. Magnolia’s
City Council, led by Vann, recently passed an ordinance to install an
entertainment district near the town’s main square, which would allow
restaurant patrons to carry open containers of alcohol from one venue to
Seabaugh, senior pastor at Magnolia’s Central Baptist Church, said those
activities should be kept away from the town’s large churches, just off the
square. A few hundred voters agreed, signing a petition aimed at putting the
issue up for a ballot vote.
said area residents have a tendency to feel left behind or passed over.
breeds a cynicism and a desperation,” he said. “Which is what I think is
typified in the entertainment district. This is a desperation move.”
Williams, an owner of Murphy’s Jewelers in Magnolia, is in favor of the
entertainment district because he believes it would bring more foot traffic to
the town square. And the city needs a way to attract incoming workers, he said.
said he can recall one company decades ago that gave up on pumping oil from his
family’s land because of the large amounts of saltwater bubbling from the
earth. That same saltwater is now an asset.
amazing how things can turn in 40 years,” he said.
believes it can leverage its engineering prowess to become a low-cost domestic
supplier of lithium, and has had discussions with battery and EV manufacturers,
people familiar with the matter said. The company would also benefit from
green-energy subsidies included in the Inflation Reduction Act, which allows
for tax credits of 10% of the cost of producing lithium.
which is generally bullish about the future of oil and natural gas, is also
preparing for a future less dependent on gasoline. Last year, it projected
light-duty vehicle demand for internal combustion engine fuels could peak by
2025, while EVs, hybrids and vehicles powered by fuel cells could grow to more
than 50% of new car sales by 2050.
anyone in Magnolia would ever be caught dead in one. For all the town buzz
about lithium, local officials, shopkeepers and others said they couldn’t see
themselves driving an EV.
don’t appeal to me whatsoever,” said Columbia County Judge Doug Fields. But
Fields noted Magnolia is poised to get its first EV charging stations soon,
just outside of town square.
mind them parking there,” he said with a laugh.