Strategic Evaluation of Extracting Lithium from Produced Water Using Techno-Finance Module

Abstract Lithium is discovered in hydrocarbon’s produced water and oil brine. It is a critical mineral for energy transition used in Battery Energy Storage Systems (BESS), Electric Vehicles (EV), and the manufacturing of solar panels and wind turbines. Development of lithium extraction from produced water is equivalent to indirectly invest in green energy. This paper applies a novel techno-finance module called Price Lithium Concentration (PLC) to explore strategic evaluation of oil company using waste produced water from Gas Oil Separation plant or oil reservoir to recover lithium. The Price Lithium Concentration module integrates Return on Investment framework with Demand vs Supply mechanism to analyse strategic planning using sensitivity analysis in various scenarios. The financial impact of Research & Development expenses is measured using the IFRS standard, under the tangible and intangible asset valuation framework. Multiple data from various sources are used to project the analysis in order to make the evaluation comprehensive, which including average commodity and future lithium price, projected global demand and supply of lithium, estimated lithium concentration and annual production of produced water, cost of water treatment and environmental issues with expected technology advancements. The evaluation also considering the perception of various stakeholders in the short term and long term, such as venture capital, private equity and banks. Lithium extraction from produced water is aligned with long-term strategic goals of energy industry for sustainability, value maximisation, and risk reduction. It is practical and economical to utilize existing facilities and invest in new technologies or create own technology. It appears won’t be viable when lithium’ concentrations are too low based on current extraction technologies and poor lithium market price. When new technologies are introduced in the future, it may turn a profit. For instance, if lithium can be extracted commercially merely from the produced water in the Permian Basin, it is projected that 15,500 metric tons of lithium can be produced annually. The novelty of the evaluation method is bridging technical feasibility and financial viability to enhance the decision-making process. The techno-finance module provides a simple and efficient approach regarding strategic evaluation, which can be applied for not only lithium extraction from petroleum waste water, but also many other business practices during energy transition.