Occidental Petroleum Teams Up with Buffett to Produce Lithium

Occidental Petroleum Teams UP with Buffett to Produce Lithium
Published on: Jun 6, 2024

Occidental Petroleum (NYSE:OXY) is an oil company, but it’s not just an oil company. Its ambition is to lead the transition to low-carbon energy and it has made significant investments in emerging low-carbon energy technologies through its subsidiaries. Meanwhile, Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B), which holds a 28% stake in the oil company, has shown a keen interest in clean energy investments as well.

Despite one being a traditional fossil fuel company and the other a financial investment group led by Warren Buffett, Occidental Petroleum and Berkshire Hathaway are well-aligned when it comes to clean energy. Recently, the two companies have joined forces in the lithium sector, a critical material for batteries.

Specifically, Occidental Petroleumis forming a new joint venture (JV) with BHE Renewables, the renewable energy subsidiary of Berkshire Hathaway Energy. This company will verify and utilize TerraLithium’s Direct Lithium Extraction (DLE) and related technologies to extract and produce lithium from geothermal brine. TerraLithium, a wholly-owned subsidiary of Occidental Petroleum, holds the patents for DLE technology.

BHE Renewables operates 10 geothermal power plants in California, which can process 50,000 gallons of lithium-rich brine per minute to produce 345 megawatts of zero-emission electricity. The two companies will explore extracting lithium from these brines. If the commercial viability of DLE technology is validated, BHE Renewables plans to build and operate a commercial lithium production facility in California.

The development of electric vehicle batteries, consumer electronics, and the energy storage industry all heavily rely on lithium, and the demand for this metal is predicted to increase significantly. According to the International Renewable Energy Agency, driven by the trend toward electrification, lithium demand is expected to grow tenfold by 2030.

Occidental Petroleum and Berkshire Hathaway Energy are not the only companies betting on lithium.

Oil giant ExxonMobil (NYSE:XOM) also plans to become a leading lithium supplier to the electric vehicle market by 2030 but with a slightly different strategy. ExxonMobil intends to use traditional oil and gas drilling techniques to produce lithium-rich brine and then extract battery-grade lithium using DLE technology. To achieve this, ExxonMobil has acquired rights to over 120,000 acres of land in Arkansas’s Smackover Formation, which includes large lithium deposits, with production expected to start by 2027. According to the company’s plans, the lithium produced by 2030 could meet the needs of over 1 million electric vehicles annually.

Another oil giant, Chevron (NYSE:CVX), also employs a similar strategy to Exxon, developing lithium production capabilities internally while acquiring companies with lithium resources and expertise. For example, Chevron recently acquired biofuel producer Renewable Energy Group and one of the world’s largest hydrogen storage facilities.

The influx of oil companies into the lithium field is driven by the promising growth potential from clean energy transitions. As demand for fossil fuels peaks and begins to decline, lithium is set to become a new growth engine for these companies.

Clean Energy Lithium Oil & Gas Warren Buffett