The Permian Basin of Lithium?

Is Franklin County the Permian Basin of Lithium?  We’re about to find out..  If you see Franklin County compared to the Permian Basin, does that get your attention?  They have some things in common.  Let’s explore what is about to happen in Franklin County and why that may be similar to the Permian Basin.

Lithium companies are signing contracts for mineral rights to many properties in Franklin County.  The development of the County’s lithium resources is going to have a major impact on the Mount Vernon economy.  Here is a preview of what is headed our way..

Lithium is a soft, silvery-white metal.  It is a critical component of rechargeable batteries for phones, laptops, digital cameras, electric vehicles and a wide range of tools such as weed eaters and chain saws.  As we electrify everything, demand for lithium is exploding.

Franklin County. Do we have lithium in Franklin County?  Yes , there is LOTS. It is 11,000 feet underground in an ancient sea called the Smackover Formation.  The Smackover was formed in the late Jurassic period when dinosaurs dominated the planet.  Today the Smackover is a brine that is rich in minerals including lithium.  The Smackover stretches from Florida to Texas.

Many wells have been drilled into the Smackover Formation to measure the concentration of the lithium.  A consensus has been reached that the highest concentration of lithium in the United States is under Franklin County.  That has created something of a land rush where lithium companies are leasing mineral rights from local landowners.  To make it economic, the lithium companies need at least 500 - 1000 contiguous acres, but they can achieve their goal by putting neighboring properties together.  

Leasing Mineral Rights.  The lease that the landowner signs with the lithium company takes the form of an upfront payment to secure the lease plus royalty payments if and when the lithium is extracted from the brine.  There are multiple reasons why the lithium company might choose not to exercise its option to drill wells, but if wells are drilled and lithium is extracted, the royalty payments can be very substantial.  

The Process.  The lithium companies will use the same directional drilling that is employed by the oil industry. A well is drilled down 11,000 feet into the brine, and then multiple lateral lines are drilled horizontally.  Directional drilling maximizes the reservoir contact while minimizing surface impact.  

By using a relatively new process called Direct Lithium Extraction (DLE), lithium is extracted from brine and processed.  Once the lithium is extracted, the brine is reinjected deep underground creating a closed loop.  

The DLE process of extracting lithium from brine is much more cost effective than crushing rock.  The lower cost of producing lithium will give the U.S. a competitive advantage in the global market.

Royalties.  The lithium royalties are affected by the price of lithium which is an actively traded commodity like oil.  In today’s market the price of lithium is low by historical standards, but in the last few months the price has turned up.  The Wall Street analysts who follow this industry predict that the demand for lithium is going to grow faster than supply, creating a shortage by 2030.  As the supply/demand balance tightens, higher prices are expected.  

Here is the 10 year history of the lithium price with the consensus forecast of where it is headed.

The Permian Basic experience.  Is lithium in Franklin County going to be a small-scale replay of what happened in West Texas?  The Permian Basin oil was discovered in 1921. The population of Midland was 1700.  As more companies moved into the area, the dry, flat landscape of sagebrush and tumbleweed prospered.  Today the population of Midland is 140,000.   The Netflix series Landman is based on that story.

You’re thinking that the value of the oil in the Permian Basin is huge relative to the value of Franklin County lithium, and that’s true.  But the Permian basin is massive relative to Franklin County.  It is 4000 times as big.  So the intensity of the economic development that will be focused on Franklin County may be similar to what happened in Midland and Odessa.

Are we ready for that kind of experience?  

• Dr. Jason McCullough says the newly renovated School can accommodate another 250 students at the secondary level.
• City Hall says the current upgrades to the water and sewer system will support future growth.
• There is undeveloped land in the County that is for sale.

If our economy is going to grow at a faster rate, it comes at a good time.

Is all of this really going to happen?  It certainly looks like it.

• It is beyond reasonable doubt that Franklin County brine has the highest concentration of lithium anywhere in the U.S. 
• Several lithium companies have signed multi-year leases with Franklin County landowners plus some landowners in Hopkins County.
• Standard Lithium, a publicly held Company, refers to its future as “The Franklin Project”.

When the first production well is drilled, that will be a solid indicator that lithium is going to happen.  GeoFrame expects to drill the first production well this year.

It’s going to be FUN.  There are a lot of things happening in Franklin County:

• The School’s renovation and expansion,
• Planned housing project south of the School
• New businesses opening on I-30.
• The upgrades at the Lake
• Massive upgrades to Little Creek Park (if we get the Texas Parks & Wildlife grant)
• Marvin Nichols (someday, maybe)

Lithium is coming, and it’s likely to be a major contributor to an exciting period of growth for our community.  Fasten your seat belts and stay tuned!!!