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Oil Glut by 2030? Electric Vehicles May Answer

3 min read

The Wall Street Journal published a startling report last month suggesting that the world could be awash in excess crude oil as early as 2030.

Predictions by the International Energy Agency prompted the June 12 report, and we’ll note that the IEA includes nations that consume the most oil in the world.

It forecasts that crude supplies will surge after a projected peak in 2029.

Lower-emission fuel sources like lithium-ion batteries will cut into oil demand, possibly while crude production ramps up. Spare capacity — the amount that oil producers could be pumping but don’t because supplies are adequate — could rise to levels seen in the COVID pandemic, when millions of cars were sitting parked.

The IEA, based in Paris, expects oil demand to begin contracting after 2029 “as the rollout of clean energy technologies accelerates.”

Global adoption of electric vehicles weighs into these projections, of course, but we remain a bit skeptical that the EV revolution will come as quickly as proponents would like. After all, range concerns and charging infrastructure doubts are holding back many Arkansans from buying EVs.

But the recent rush for lithium in south Arkansas is counting on mass adoption eventually.

Companies like Exxon Mobil, Standard Lithium and Tetra Technologies are investing billions of dollars in the Smackover geological formation.

Exxon is hedging against future oil market declines by developing lithium resources with Tetra. And it announced last week a memorandum of understanding to provide Korean EV manufacturer SK On with 110,000 tons of lithium sourced from Arkansas. Exxon hopes to be supply lithium for a million EVs a year by 2030, and plans to be producing lithium in Arkansas by 2027.

TerraVolta Resources LLC of Houston announced June 11 that it drilled a successful lithium supply well in the Smackover Formation. It also revealed that the Energy & Minerals Group, a private Houston investment concern, recently took majority ownership in TerraVolta.

Investors see big money in the brine fields, which also yield petroleum, natural gas and bromine, an important flame retardant in plastics.

Whether or not the world soon finds itself in an oil glut, batteries made with Arkansas elements now appear inevitable.

Standard Lithium is building on production partnerships with Lanxess AG, a major bromine supplier, and subsidiaries of Koch Industries of Wichita, Kansas.

The world’s largest lithium maker, Albemarle, is expanding bromine operations in Magnolia, and looking at Arkansas lithium.

Tetra Technologies is also producing electrolytes for zinc bromide batteries, an alternative to lithium storage, in partnership with Eos Energy Enterprises Inc. of Turtle Creek, Pennsylvania. Eos said Tetra will supply a minimum of 75% of the electrolytes it needs to build Eos Z3 “long duration energy storage cubes.”

The long-charge batteries go into heavy drills and other equipment, not EVs. But the storage cubes embody the pace of innovation in energy storage. The zinc bromide electrolyte deal is one reason Tetra is building a new billion-dollar bromine and lithium production facility in Lafayette County.

Dave Gibbs, president and CEO of Mission Creek Resources LLC, which has an operations center in Magnolia, told Arkansas Business that lithium may or may not be the primary auto fuel of the future.

Lithium definitely has a head start, and “everybody’s running around like a chicken with its head cut off to find more lithium,” Gibbs said. “But there’s an equal number of people out there running around like chickens with their heads cut off trying to find another technology.”

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