Standard Lithium signage at offices on East Elm Street in downtown El Dorado. (John Sykes/Arkansas Advocate 02/28/2023)

Editor’s note: This is the second of two parts examining the promise and possible environmental peril of lithium extraction in Southwest Arkansas. You can find the first part here.

Just about an hour west of El Dorado, where Standard Lithium debuted its demonstration plant, lies the foundation of the company’s “South West Arkansas (SWA) Project.” It’s a little more difficult to see the existing infrastructure it will use in coming years — but that’s mostly owing to the fact it exists largely on paper. 

In 2017, the Vancouver-based company announced it had acquired exploratory rights on 30,000 acres of brine leases west of Magnolia owned by Tetra Technologies, a Texas-based energy company. Much of those rights — 802 brine leases and eight deeds — lie at the heart of what Standard Lithium has planned.  

The only brine being produced in the area is the byproduct of normal oil and gas operations. Standard Lithium hopes to change that in the years to come. The company notes in its preliminary economic assessment that 2,041 exploration and production wells have been drilled in the general area.

Over the course of the next decade, per its agreement with Tetra, Standard Lithium will have the right to produce lithium from this brine. Once the groundwork for the SWA Project is completed, the company hopes to produce 30,000 tons of battery-quality lithium hydroxide monohydrate per year, supporting the operation with a processing facility, a network of 23 brine supply wells, 24 brine reinjection wells, and 24 miles of underground fiberglass pipe.

Demand for lithium, a key component in electric vehicle batteries and other applications, is expected to “grow by a factor of 5 to 10 in the next decade,” according to the U.S. Department of Energy, and Standard Lithium expects to play a big role in that growth.

The company’s approach differs from the typical lithium mining operation. It uses a “green” proprietary method to extract lithium from the brine byproduct of bromine production — a process the company’s CEO contrasts with the “Fred Flintstone” approach of operations such as Nevada’s Thacker Pass open-pit mine that relies on sulfuric acid.

 

Near El Dorado, Standard Lithium relies on brine produced at a Lanxess specialty chemicals facility, where it installed its demonstration plant and where it plans to construct other processing facilities. Near Magnolia, it will rely on Tetra’s existing brine leases to supply another planned processing facility. 

 

Remaining hurdles

While many of the hurdles have been cleared, thanks to the rights that Tetra holds, there are still at least two additional challenges the project faces: The first is the question of royalties. Although brine law is a complex beast, the matter of the royalty rate assessment, which will determine the rate that Standard Lithium will owe for lithium brine (“additional substances”), is a question the Arkansas Oil and Gas Commission will have to answer.

The other challenge concerns regulatory permits. Before Standard Lithium is able to begin construction on infrastructure for the SWA Project, it  will need a range of permits that require review and approval from the Arkansas Department of Energy and Environment, the Division of Environmental Quality, the Arkansas Oil and Gas Commission, and potentially, the Environmental Protection Agency. One of these ten permits, the Underground Injection Control (UIC) permit, is expected to take more than two years to secure approval. 

Despite a rigorous application process for these permits, the company will likely not be required by federal law to conduct environmental studies. That is, unless the project involves a federal loan, federal land, or a federal permit, which would trigger the National Environmental Policy Act (NEPA).

In its preliminary economic assessment for the South West Arkansas Project, Standard Lithium notes the possibility that “if federal funds are used on this project, an Environmental Assessment (EA), wetland delineation, floodplain study and a cultural resource study would be required.” In contrast, the company’s preliminary economic assessment for the Lanxess demonstration project noted that it didn’t expect to trigger NEPA. The brief mentions of NEPA in both documents pose questions for those familiar with the long and continuing history of environmental issues connected to the bromine industry and brine.

“[An environmental assessment] is a way to look out there and see, ‘What problems will we encounter down the line?’” says Kym Meyer, senior attorney with the Southern Environmental Law Center. “Are there threatened or endangered species? Are there issues with streams? Are there issues with air quality? The point of NEPA is to kind of look before you leap — to get all your ducks in a row so that you don’t encounter problems down the line.”

A recent report from The Nature Conservancy entitled “Potential Lithium Extraction in the United States: Environmental, Economic, and Policy Implications” gives some sense of what sort of environment might be affected. In a section dedicated to Arkansas’ lithium prospects, the authors note that the Tetra project site “includes mapped wetlands and intact habitat, Protected Lands, and lands contained within [The Nature Conservancy’s] Resilient and Connected Network (RCN) … [and] at least 293 species and/or natural communities/features have been recorded at the Project Site, including 19 with a special status.”

The same report emphasizes the environmental benefit of direct lithium extraction, saying that, for those instances where existing infrastructure is available, “there is the possibility that no additional land would need to be disturbed to extract lithium.” The question that remains is how much new infrastructure will be required. Although there are many wells in the Tetra project site, Tetra notes in its Inferred Resource Technical Report, that although drilling a new well might run $1.5 million, “re-opening of existing wells would be less expensive but may also involve superfluous costs associated with maintenance of historically old wells.” 

Weighing the risks

That’s not to say that companies won’t conduct their own environmental assessments. As Tetra notes in its technical report, “Lafayette and Columbia counties are interested in renewable energy, and it is recommended that Tetra talk with community leaders and provide educational sessions to the public.” As such, the Texas firm says that it plans to conduct “community consultation and environmental work.” The difference, however, between voluntary assessment and a mandatory one seems to be a matter of scope. Of a total $10.4 million estimated cost for its “two-phased work program,”  Tetra plans to spend $40,000 on its community consultation and environmental work. 

By contrast, the Thacker Pass “Flintstone” mine in Nevada, whose mineral claims are staked and recorded with the federal Bureau of Land Management, produced a 196-page Environmental Impact Statement at a cost of nearly $9 million.

Asked about NEPA, the use of new versus old wells on the Smackover Formation site, and the reputation of Lanxess/Great Lakes Chemical Corporation, Standard Lithium CEO Robert Mintak issued a brief statement. The company, he said, is “focused on undertaking a methodical, structured approach” in its feasibility studies on both the Lanxess and Southwest Arkansas sites.

“Once these feasibility reports are published, the Company will be guided by the results of the engineering studies to ensure both projects will be executed in full compliance with all regulations, employing responsible project development principles, minimizing its environmental impact, and remaining a strong partner to the local communities.”

In a 2018 Twitter post, Mintak noted that Standard Lithium’s business model reduces risk to its projects by “ leveraging existing permitted operators’ infrastructure to leapfrog the hurdles developers face.” He specifically points to his company’s agreement with Lanxess. 

Representatives with both the Lafayette and Columbia county Chambers of Commerce said they had not been contacted by Standard Lithium for this project.

In the more than two years since Standard Lithium officials debuted their ribbon-cutting video, there’s been no shortage of news, positive and negative. On the positive front, for example, Koch Industries Inc. invested $100 million in the company in fall 2021. 

On the other hand, in February 2022, a prominent short seller, Hindenburg Research, released  a report alleging Standard Lithium’s processes were faulty. The company disputes this; but that didn’t stop its stock from dropping 27 percent, or $300 million. 

In the months and years ahead, there will likely be more headlines from Standard Lithium, which is an exciting prospect for those interested in seeing green energy achieve a stronger toehold in the move toward renewable energy. What remains to be seen is whether those companies invested in these new sources approach their work in a way that is transparent and equitable. Richard Mays, who was consulted for this article on the NEPA question, compared it to the question of pipelines. 

“Does that mean you should do away with pipelines? No, I don’t think so because they provide a great benefit, economic and other benefits, to the country, not just the companies that have the pipelines,” Mays said. “The products that they send through them provide oil and gas and so forth for heating and transportation, so we need them. But we should be very careful and hold them to a high standard. We should have regulations that are more stringent for products like that that are a danger to the environment but yet necessary to have and that are kind of a necessary evil, if you will.”