​A new breed of wildcatters is chasing lithium in watered-out oil plays

Lithium production in Bolivia. Alberta explorers are looking to enter the market by tapping the lithium in brine from watered-out oil weeks. Image: Creative Commons

In 1953, pioneers hit the jackpot when they discovered the Sturgeon Lake oilfield near Valleyview in northwestern Alberta. But today, Sturgeon only has eight producing wells left of 150 that once drained the field. It produces only 180 bbls/d with an agonizing 3,340 bbls/d of wastewater—brine that needs to be treated and re-injected at a cost that can go as high as half the cost of a barrel of oil.

However, a new wave of mavericks is developing technologies to mine this oilfield wastewater for lithium, the new-era energy metal used for electric car batteries. This could radically change Alberta’s oilpatch by cutting one of its biggest operational expenses and creating a new revenue stream by selling one of the hottest commodities in the world.

Roy Eccles, operations manager of APEX Geosciences, studied the province’s potential for lithium with the Alberta Geological Survey and found the best reserves of lithium are in the Devonian formations.

“Sturgeon is only in one pool. Now imagine how many Devonian pools are out there... The response is hundreds” Eccles says, adding that Alberta still needs to develop a reliable extraction technology before it can process its rich lithium reserves. This is a challenge as refining lithium from oilfield brines hasn’t been tried anywhere else before.

If successful, Alberta could become one of the world’s top lithium producers. Apex concluded that the Sturgeon Lake oilfield alone has more than 385,000 tonnes of pure lithium, which could place Alberta fifth among the world’s biggest reserves.

Vancouver-based junior mining company MGX Minerals owns the mineral rights to oilfields near Fox Creek, Alta., which hold the highest reported levels of lithium in brine in the province—140 milligrams/litre, double the rate at Sturgeon Lake of 68 milligrams/litre.

“We have in Alberta the oilsands of lithium,” says Jared Lazerson, president and chief executive officer of MGX.

The world currently uses 160,000 tonnes/year of lithium carbonate equivalent (LCE), but forecasters expect electrified cars will use 270,000 tonnes of lithium alone by 2025 thanks to rapidly decreasing battery prices. While oil prices were bursting, LCE prices rose stratospherically to US$22,000/tonne in China’s tight spot market this year.

New ventures like MGX look to fill the growing supply gap. Lazerson hopes to build and operate a lithium pilot plant within 18 months to refine 20,000 bbls/d of brine. His company has identified 16 wells that produce more than 17,000 bbls/d of brine to feed its operations.

MGX is negotiating with six oil companies to acquire wells. “These declining fields could become very profitable if you add lithium into the equation,” says Lazerson.

Lazerson says Alberta has what it takes to be a leader in lithium production: plentiful infrastructure, geological expertise and cheap natural gas. Lithium producers could also cut capital and operating expenditures by working alongside oil companies. “Nothing compares to Alberta. It has the ideal mix of infrastructure,” Lazerson says.

Traditionally, lithium has been produced in the Andean region of South America by drying brines in the driest deserts in the world—an inefficient process that takes massive areas of land and a long time and has a recovery rate of 40–50 per cent.

MGX claims its technology will cut the refining period from 18 months to one day with a recovery rate between 80 and 90 per cent. Its method uses existing chemical processes but combines them in a new way. The plant design is led by Cementation AG, which has worked with Suncor, Rio Tinto and Intrepid Potash and is a subsidiary of Johannesburg-based global conglomerate Murray & Roberts.

The break-even point for MGX is at a lithium price of more than US$10,000/tonne using brine with a lithium concentration more than 100 milligrams/litre. To maximize its gains, the company plans to also sell by-products such as sodium chloride and potassium chloride to regional costumers. If successful, MGX plans to increase its refining capacity to 100,000 bbls/d.

“The technology is in its infancy, but in the future we expect to produce lithium at lower prices and lower concentrations,” says Lazerson.

The Lamar Corporation, led by Larry Mark, a former Shell Canada vice-president of marketing and transportation, was contracted by MGX to aid in the development of its lithium project. Mark says lithium is today what natural gas was in the 1930s.

“Back then, natural gas was considered waste and all of it was flared until the government identified it as a key resource…. Lithium brine is one of those stories from oil waste into product,” he says.

MGX is working with depleted oilfields, but in the future, lithium extraction could be integrated into the operations of producing oilfields. “Companies are producing brine water at a considerable cost. Put a lithium company in the middle, and it will be a win-win situation,” says Mark, who held executive roles at Shell for 30 years.

“We are in love with this model,” says Lazerson He then explains that working alongside oil companies creates a mining model that doesn’t require investing billions of dollars on a mine that can take decades to develop, thus cutting costs, time, and operational and exploration risks.

No one has yet calculated the full potential of Alberta’s lithium reserves, but oil companies could play a key role in doing so.

“Nobody has been looking out for lithium, so nobody knows how much is out there,” says Lazerson, who envisions oil companies will be sampling their brine waters as they drill for new oil projects.

“This could become a big part of oil operations in certain areas, but it would require a paradigm shift,” he says.

Another company in the Alberta’s nascent lithium industry is Vancouver-based junior miner Canadian International Minerals (CIM), which owns the mineral rights to the Sturgeon oilfield. Michael Schuss, president and chief executive officer of CIM, says his company is spending $500,000 on metallurgical studies and designing a pilot plant over the next four months.

Many companies have overlooked Alberta’s potential as they have only researched extraction technology within the public domain, he points out.

“Not everything in this world is available in Google,” says Schuss. He continues to say that much of the chemical extraction technology available is buried in proprietary databases and undisclosed patents.

CIM will be using recently opened patents from lithium giant FMC Technologies for its plant. Schuss described its process as sipping molecules. This will be done through a chemical screen that will filter out the lithium ions—which are the smallest of the metals in the periodical table—to leave the heavier elements like bromine and potassium behind.

Schuss explains that CIM’s process is a tweak of the technology Great Lakes Chemical uses in the world’s largest bromine plant in Arkansas, where the company has been processing brine from local oilfields since 1961. FMC has also used a similar selective absorption method in Argentina since 1998, proving the technology is commercially viable.

“Alberta has a competitive advantage as the lithium brine to be absorbed needs to be between 80 and 100 degrees,” says Schuss, pointing out that brine comes out from oil wells at the required temperature, thus cutting costs. Plus the province has plentiful cheap gas to keep the brine warm as it is being refined.

CIM is developing its project with John Burba, the former chief executive officer of lithium venture Simbol Materials and a lithium pioneer with more than 35 years of experience with Dow Chemical, FMC and Great Lakes Chemical.

Simbol Materials developed a successful proprietary process capable of producing low-cost, high-purity lithium products from brines that were previously believed to be too high in contaminants to be economically processed from geothermal brines in California.

“The sky is the limit when it comes to producing lithium if you can extract it economically,” says Eccles, adding that producing lithium would create a stronghold for Alberta in the green energy revolution.

If Alberta becomes a successful lithium producer, this could open the door to new industries such as battery manufacturing. Eccles adds there is no reason why Alberta at that point couldn’t be the home of a mega battery factory like the one Tesla is building in Nevada, which will bring the Silver State over $100 billion in economic activity.

“This is a politically sexy story, and the Government of Alberta should be on this,” he concludes.

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