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Technical and commercial feasibility of extracting lithium from oilfield produced water

11 January 2022

Oilfield produced water has long been known to contain valuable minerals and metals. The water is plentiful, with over 200 billion barrels being produced annually, yet is currently treated as a by-product which is either reinjected deep underground via disposal wells or treated and disposed of at the surface after oil separation at the wellhead.

Extracting lithium from oilfield produced water (known as petrolithium), using direct lithium extraction (DLE) technologies, could potentially be faster and more environmentally friendly than solar evaporation and less expensive than conventional hard-rock mining for lithium production. Therefore, as a currently undeveloped way of producing lithium, there is oil and gas industry interest in petrolithium for both financial return and for a foothold in one of the key metals required for the energy transition.

Conventional evaporation and DLE process for lithium extraction

A recent study from WSS Energy investigated the current technical and commercial feasibility of lithium extraction from oilfield produced water. As part of the research programme, discussions with 43 relevant industry professionals from North America, the EU, the UK, Australia, Asia Pacific and the Middle East took place to consolidate the current development landscape on petrolithium and its future prospects.

Lack of data and information (especially outside of the USA and Canada) on petrolithium resource is hindering development
  • Lithium is not routinely tested for during produced water sampling, and the potential value is often not known.

  • Existing data is old, incomplete and of poor quality. Market quantification to support investment is therefore challenging, however the theoretical geological models for lithium aggregation are understood.

  • Almost all oil and gas operators are interested in petrolithium as a concept, but very few are conducting comprehensive produced water testing to determine viability. More effort in produced water testing and data sharing is needed.

Operators recognise that petrolithium could have both commercial and ESG benefits
  • Petrolithium revenue could offset produced water treatment/disposal costs, if NORM and other by-products can be efficiently disposed of, or selective extraction processes used.

  • Including produced water re-use in a petrolithium business case may achieve both ESG and commercial objectives. Petrolithium will however remain associated with the E&P industry, hence institutional financing will be challenging.

  • Petrolithium will have a more ESG compliant supply chain than salar brines and hard-rock mining.

  • Oil and gas operator interest in petrolithium is cyclical and linked to the oil price, as development funding and operator capacity will not be present unless E&P operations are sustainably profitable.

  • National oil companies and operators in production sharing agreements will be more robustly positioned than independents, with national oil companies having a strong recognition of the potential role of petrolithium in national development and country-level ESG.

Petrolithium is unlikely to be attractive until DLE technology has been proven  
  • Petrolithium resource tend to be between 80-150ppm lithium concentration compared to the higher concentrations seen in geothermal and salar brines.

  • Petrolithium is therefore a lower lithium concentration/volume subset of the DLE market, and hence unattractive when commercially compared to other sources.

  • Financing for all DLE projects is challenging, even for non-petrolithium resources with higher concentrations/volumes. Lithium price cycles drive investor interest in early-stage companies which does not push through to financing for commercial operations.  

  • Some DLE companies have already discontinued petrolithium development to concentrate on salar brine or geothermal extraction. A commercial breakeven of between 150-200ppm lithium is estimated.

 ... but it's the overlapping Venn diagrams of the right [petrolithium] resource in the right jurisdiction, with the right infrastructure already there, the right partners with access to the right financing and with the right technology to make them work, and when those things don't overlap then you're always fighting!

Current DLE technologies are at TRL 5 or below, with an active early-stage technology development landscape. There is no clear universal best technology
  • Technology selection will depend on lithium concentration, produced water volumes and the presence of other compounds in the produced water. This is specific to each reservoir so there is no one-size-fits-all solution.

  • Integrating renewable technologies will be attractive to reduce GHGs and to increase recovery efficiency, and renewables may be an enabler for many location-specific projects.

  • The role of technology integrators will be key, as early-stage companies lack engineering capability and know-how.

  • Early-stage companies are generally well capitalised for lab and pilot tests, but are all facing challenges in financing commercial plants, where a CAPEX requirement of $300MM is likely.

“It’s not a question of technology gaps, it’s about getting finance for the plants. It’s essentially a water treatment process, so the technology is there – for each site the approach will be a bit different – but the technology is ready” 

Regulators are generally open to petrolithium as a concept, particularly when water re-use is a secondary benefit
  • As petrolithium is at an early stage, the regulatory environment is from oil and gas operations and has not yet been developed.

  • The role of petrolithium in produced water re-use, achieving national objectives and in the energy transition is recognised by regulators. These factors will have to be integrated into any commercial development.

  • Produced water ownership, with lithium developers viewing it as an asset with operators and regulators traditionally viewing it as a waste stream, will complicate commercial and regulatory discussions.

Petrolithium compares unfavourably with other lithium resources
  • Hard rock mining is now cost competitive with salar brine production, with both having established and accepted financing processes in place.

  • DLE from geothermal is novel but has an attractive Power Purchase Agreement + lithium production business case with a far better ESG profile than petrolithium.

  • Petrolithium depends on long-term E&P operations to achieve ROI, but the future quantity, concentration and availability of produced water is hard to reliably quantify.

  • Petrolithium developers face additional risk as produced water volumes are linked to E&P activity, and hence to the oil price.

Petrolithium as an industrial sector is unlikely to present a compelling commercial business case, but in some specific cases may be attractive
  • There are no petrolithium projects worldwide which have progressed further than field trials, although companies such as MGX Minerals have attempted in the past

  • Petrolithium can achieve ESG goals and create new value chains which reduce the cost of E&P operations. Any business case must consider the full range of wider benefits rather than the underlying commercial return.

  • Sites with sufficient high-quality resource, cheap energy and a high PW management cost exist, but each site will have specific technical and commercial considerations which will require a bespoke development approach.

  • Market entry based on deep aquifer / geothermal lithium followed by petrolithium development is most likely, once technologies and resources have been proven.

WSS Energy is developing a database of global petrolithium activity to integrate activity between financiers, resource owners, and the supply chain. If you are considering petrolithium, either as a resource owner or technology developer, then please get in touch to discuss your project.

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