Major oil companies like Exxon Mobil are exploring the possibility of breaking out into the lithium market as electric vehicle (EV) demand increases.
- Gas profits slumped in the second quarter, leaving Wall Street analysts’ expectations unmet and shares narrowly declining,
- During its second-quarter earnings call on July 28, Exxon Mobil CEO Darren Woods noted that the company is “actively exploring” the lithium market as a place for expansion.
- While Wood says, “We’re still early in evaluating the opportunity,” The Wall Street Journal claimed recently that Exxon is investing in a large Lithium processing plant in Magnolia, Arkansas.
Why It’s News
Exxon Mobil is not the first oil company to explore the possibility of refining lithium, but it marks one of the largest potential entries into the market if it does so. Chevron CEO Mike Wirth recently told Axios that it is looking into lithium as well, with Pioneer Natural Resources similarly evaluating possibilities.
Many U.S. oil companies largely see the extraction and processing methods of lithium as a natural expansion of their skillsets, which has positioned these companies well to take the lead in producing a steady lithium supply, especially while oil and gas demand gradually plummets over the coming decades. “It requires a good understanding of the subsurface, requires a good understanding of reservoir management, requires drilling and injections,” says Woods.
Backing Up A Bit
Lithium is a key resource in producing EV batteries. With production and sales of EVs skyrocketing thanks to directives from the Biden administration to phase out gas-powered vehicle production by 2035, every major automaker is scrambling to mass-produce new lines of cleaner vehicles.
While these resources are not near depletion, creating a steady supply chain with consistent access to these materials is difficult and has slowed down progress for companies like Ford and Tesla as they attempt to ramp up new vehicle production. Securing a steady lithium supply is necessary to produce enough EVs for the entire global economy.
As we previously reported, several companies have arisen that recycle lithium-ion batteries to reuse the material in new EV batteries, helping reduce global demand.