The Arkansas Oil and Gas Commission hears testimony during last week’s hearing on the Standard Lithium-Equinor lithium royalty. (Ainsley Platt/Arkansas Advocate)
A second company hoping to extract lithium in South Arkansas applied for a lithium royalty just days after officials approved the state’s first royalty rate.
ExxonMobil’s Saltwerx submitted an application Friday for a lithium royalty identical to the one approved last Wednesday for the joint venture between Canada-based Standard Lithium and Equinor, a Norwegian energy company.
The structure of its proposed royalty and the proposed 2.5% royalty rate is identical to what the Arkansas Oil and Gas Commission approved last week, and would apply to Saltwerx’s Pine Unit where it hopes to extract lithium from brine.
In its filing, Exxon’s Saltwerx cited the decision by the commission as a “consistent, fair, and equitable precedent.”
According to the AOGC’s website, a special commission hearing is scheduled for noon June 23 in Magnolia and its regular monthly meeting is June 24 in El Dorado.
Exxon, via its subsidiary, was also a party to the 2024 royalty proposal that was unanimously rejected by AOGC commissioners, as was Standard Lithium. The commission ruled during a two-day hearing in November that a royalty could only be applied to existing brine units that the AOGC had approved – something Exxon did not yet have – after attempts by applicants to have a royalty applied to both current and future brine units.
Like the Standard Lithium-Equinor venture, Exxon received an approved unit called the Pine Unit earlier this year, resolving that issue.
However, unlike the Standard Lithium-Equinor venture, which last week had to show both that their project could “profitably extract” and was “fair and equitable,” Exxon already has a determination from the commission that its project can “profitably extract.” It’s one of a number of requirements under state royalties law. Exxon received that determination at the AOGC’s April hearing.
Info to know:
– The Arkansas Brine Conservation Act requires royalties to be paid to mineral rights owners, and says profitable extraction must be determined to occur or have the potential to occur before a royalty is set and paid.
– Royalties on substances extracted from brine other than bromine must be “fair and equitable,” in accordance with the ABCA.
– A royalty is determined on a “unit-by-unit” basis, meaning that a company has to get approval for its royalty payment for an individual brine unit, which is a specific geographic area approved by the commission for the extraction of brine, rather than for the company as a whole or a geographic area like a county.
ExxonMobil did not make someone from Saltwerx available to discuss the application, but company spokesperson Margot Armentor wrote in an emailed statement that Exxon was “encouraged” by last week’s decision and believes maintaining the “established precedent” set by that decision is important.
“The goal is a clear, consistent, globally competitive royalty structure, which will be essential for the state’s emerging lithium industry,” the company’s statement reads. “Getting this right benefits everyone a thriving lithium industry would benefit mineral owners, the state’s economy, the surrounding region, local communities and bring new jobs to Southwest Arkansas.”
You can read more about the major players, the 2024 royalty application and background about what’s happened on the lithium front here.
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