Oil is… forever. But green energy is the new thing. BP and Shell, the two British oil giants, have long invested in solar and wind farms, though many of their rivals remain loyal to drilling. Investors also reward stability.
Example, ExxonMobil, for example, has so far remained loyal to black gold. Its share price has risen 50% in the past five years, compared with a 10% drop for Shell and a 13% drop for BP.
But something seems to be changing for the American oil company. That’s all. Instead of acting on RES, it indirectly bets on the energy transition, using lithium as a vehicle, the “white gold” of the 21st century.
A significant portion of its $20 billion in low-carbon investments between 2022 and 2027 will go to lithium, project manager Dan Holton told the Economist.
On June 25, ExxonMobil signed a preliminary lithium supply agreement with sk On, a South Korean company whose lithium-ion batteries will power electric cars from Ford and Hyundai.
Previously, in November, it had announced that it was conducting the first lithium drilling in Arkansas.
By 2030, the company hopes to produce enough lithium supply 1 million electric vehicles (EVs) per year. CEO Darren Woods, sees lithium as a “high yield” opportunity.
And other Woods “colleagues” agree. In June, Occidental Petroleum formed a lithium joint venture with bhe Renewables, a subsidiary of Berkshire Hathaway.
A month earlier, Norwegian state oil company Equinor announced a partnership with US mining company Standard
Even global oil giants Saudi Aramco and the UAE’s Adnoc have shown interest.
The excitement is reasonable
Big Oil’s enthusiasm for lithium makes sense. Demand for the material is expected to increase as more electric cars are manufactured.
Unlike managing the unknown activities of solar and wind energyAfter all, oil companies already have the know-how which is useful in lithium mining, in contrast to the unknown activities required to produce solar and wind energy.
They know about mining
Mining the white metal requires pumping brine underground. This requires careful reservoir mapping and precision drilling – skills that oilmen have acquired over decades of extracting crude oil underground.
Even the mining permit approvals required are roughly the same as those required for oil and natural gas, in contrast to the even more tedious bureaucracy associated with mining ore deposits.
The refining of the extracted metal is also similar to that of black gold.
Smart mining technologies, but not for “traditionalists”
In addition, ExxonMobil, Occidental and Equinor hope to profit from smart technologies to separate lithium ions directly from brine, which require less land, water and time than the current method, in which brine is collected from huge salt flats. They are also less polluting.
Traditional mining companies, however, in turn, do not plan such openings, as the cost of using new technologies is at least a third higher. than Goldman Sachs’ estimates for salt pan use.
The risk of hashura
High valuations for lithium producers and large swings in the price of the metal are another impediment. Rio Tinto completed the purchase of a lithium “field” in Argentina worth US$825 million in 2022. The following year, research and evaluation spending doubled, from less than $200 million to nearly $400 million.
Is there a real “commitment”?
But Big Oil has the profits and the balance sheets to undertake capital-intensive ventures. But does it have the willpower?
A quarter of a century before its merger with Mobil in 1999, Exxon became interested in battery technology when the 1973 Arab oil embargo forced the world to consider alternatives to fossil fuels.
One of its leading researchers at the time was Stanley Whittingham, who shared the 2019 Nobel Prize in Chemistry with two other lithium-ion battery pioneers. He left Exxon in 1984. That’s when the company abandoned that type of research.
naftemporiki.gr