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Lithium partners want state order to operate pilot plant in Union County

Monday, October 22, 2018

The future of lithium production in South Arkansas will be considered Tuesday during a meeting of the Arkansas Oil and Gas Commission.

Commissioners will take up a request for an order approving the deployment of a lithium production pilot plant in Union County.

The commission meets at 9 a.m. at its West Hillsboro headquarters in El Dorado.

Under consideration is a joint application from Great Lakes Chemical Corporation and Arkansas Lithium Corporation to operate the pilot plant. The plant will test the commercial viability of extracting lithium from tail brine produced from the Smackover Formation beneath Union County.

Great Lakes is a subsidiary of Lanxess Corporation and has produced bromine and other chemicals from Union County brine leases since the 1960s. Arkansas Lithium Corporation is a new subsidiary of Standard Lithium Ltd., a Vancouver, British Columbia company which is experimenting with a process to produce lithium from brine.

The goal is to produce battery-grade lithium carbonate. Lithium batteries are used in practically all battery-powered electronic devices, from cell phones to electric vehicles.

A letter supporting the application, written by Fayetteville attorney R. Christopher Lawson, notes that the commission established what is known as the “South Plant Brine Unit” in 1995. Great Lakes Chemical was designated as the operator of the “South Unit” for the production of brine.

“The South Unit has continuously produced brine in paying quantities from the commencement of operations pursuant to the South Unit Order through the present date,” the letter said.

Commissioners approved another order in 2016 to expand acreage in the South Unit as part of a development plan.

State law requires brine producers to make royalty payments to brine owners for additional substances extracted from brine.

Great Lakes and Arkansas Lithium have an agreement to test the “commercial viability of the extraction of lithium from tail brine produced by GLCC in South Arkansas,” the application said. The agreement “authorizes the design, deployment and operation of the pilot plant with the following sequential components to be undertaken by (Arkansas Lithium): Engineering design, permitting, off-sit fabrication and testing, on-site preparation, tapping into tail brine lines and hook-up to services, mobilization and installation, commissioning, continuous testing and completion of a pilot testing report,” Lawson’s letter said.

The letter said that Standard Lithium has been working for more than a year to develop lithium extraction and crystallization technologies. A “mini-pilot plant” has been be operation to demonstrate that lithium can be extracted from Smackover Formation brine and converted into substantially purified lithium chloride solution, with an overall lithium extraction efficiency of more than 90 percent.

Arkansas Lithium expects to have its full-scale pilot plant in operation early next year. The pilot plant will process 50 gallons of tail brine a minute, or approximately 1,700 barrels a day, for an 18-month testing period.

The letter said the “extraction of lithium from tail brine constitutes the removal of an ‘additional substance’” under state law. “However, the limited testing and perfection of extraction technologies during the testing period will not constitute the profitable extraction of a substance giving rise to an obligation to pay royalties to brine owners during the pilot stage. No lithium produced during the testing period will be marketed or sold to third parties,” the letter said.

“Data derived during the pilot stage will be used to develop a proposed royalty rate that is fair and equitable to brine owners at the time the extraction of lithium becomes commercially viable. Once this data is properly assimilated following the testing period, if (the companies) determine that it is feasible to go forward with the commercial extraction of tail brine, they will return to the commission with a separate application to establish an additional royalty rate attributable to brine which is processed for the profitable extraction of lithium,” the letter said.