CALGARY — Imperial Oil Ltd. has signed a deal to help advance a lithium project in Alberta's historic Leduc oilfield.
The agreement will see Imperial invest $6.35 million in E3 Lithium, a Calgary-based junior resource company that has developed a technology to extract the naturally occurring lithium (a light metal that is a key component in the batteries used in electric vehicles) from oilfield brines.
Imperial has also agreed to provide technical and development support for E3's Clearwater project, which includes drilling lithium evaluation wells and developing a field pilot project before moving onto the commercialization stage.
"This is a commercial opportunity to us," said Imperial's director of commercial business development, Jason Iwanika, in an interview.
"When you look at Canada’s growing critical minerals industry, there's been some encouraging support from government as well as just the general market. If you look at the growth in batteries, both stationary and electric vehicles, that’s an interesting market to us."
The Leduc oilfield,where E3's Clearwater project is based, was the site of Leduc No. 1, the historic gusher struck by Imperial in 1947 that launched Alberta's oil and gas industry and changed the course of the province's economy.
It has also long been known as the site of one of Canada's largest lithium resources, though there was little interest in developing a lithium industry in Alberta until the recent growth of electric vehicles and an exponential rise in demand for lithium ion batteries.
"I’m excited from the perspective that there’s room to be a first mover," Iwanika said, adding Imperial is open to potentially increasing its involvement with E3 in the future.
"Today the announcement and the agreement is a collaboration — it’s a starting point. We need to work through piloting new technology. But that relationship and that collaboration can certainly grow to something that is commercial."
Having a giant like Imperial working with his company in exploring the redevelopment of Leduc into a world-class source of lithium is an "exciting new chapter," E3 chief executive Chris Doornbos said in an interview.
"This is Imperial coming back into this aquifer and looking at it from a lithium perspective. For us, that’s huge, because it demonstrates their belief in this aquifer," Doornbos said. "They know, probably better than any other company out there, how it can produce as a resource."
Under the agreement, E3 will remain the operator of the Clearwater project but receive support from Imperial in areas such as water and reservoir management. The agreement also includes access for E3 to freehold lands in the area, which are operated by Imperial.
Drilling on the first of three evaluation wells, the first lithium wells ever drilled in Alberta, will begin immediately, Doornbos said. Work will also focus on scaling up E3's proprietary technology, which brings the brine to the surface where the lithium is removed and concentrated and then returns the liquid underground as part of a closed-loop system.
Canada has identified lithium as a focus of its $3.8-billion, eight-year critical minerals strategy. The aim is to increase extraction and production of Canadian lithium, as well as cobalt, copper, titanium, zinc and other minerals that are used as components in electric vehicles and their batteries.
The goal is to create a domestic supply chain for electric vehicles, and in doing so, boost the economy while tackling greenhouse gas emissions at the same time.
In the federal budget in April, the government announced a new 30 per cent tax credit for exploration projects related to critical minerals such as lithium.
This report by The Canadian Press was first published June 23, 2022.
Companies in this story: (TSX:IMO, TSXV:ETMC)
Amanda Stephenson, The Canadian Press