WASHINGTON — A Colorado-based explorer has uncovered a huge deposit of lithium, the main ingredient in rechargeable batteries, that stretches more than 1,900 miles and could hold the largest lithium deposit in the world.
Chesapeake Energy Corp. has secured rights to drill nearly 5 million acres of Colorado and Utah land, including nearly 700,000 acres in the Green River Formation, the largest known source of lithium in the world.
Although the property is technically in Colorado, the bulk of the site was purchased in Utah in 2016, according to Jon Block, Chesapeake’s director of exploration, and it’s “one of the most commercial landscapes” for exploring lithium anywhere in the world.
The U.S. Geological Survey calculates that, if fully developed, the Green River Formation — parts of which are in Colorado, Wyoming, Utah and New Mexico — could hold about 2 million tons of lithium.
But those big numbers have been lowered significantly over the past year, and the rock on Chesapeake’s property, which produces about half of the world’s lithium, may contain the most lithium of any area in the world.
“We think it could be 5 to 10 times the size of it,” Block said, speaking during a pre-drilling event in Denver on Wednesday.
In 2016, an Exxon Mobil Corp. study estimated that 5 billion tons of lithium could be extracted from the Green River Formation.
But with prices plunging on supplies of lithium-ion batteries and China dominating the global marketplace, Chesapeake is confident about its chances of securing a place at the table.
Despite supply concerns and rising demand, Wall Street isn’t anticipating production to hit international markets before 2020, according to energy expert Phil Flynn, who writes the Insanely Efficient blog.
But Chesapeake hopes to have commercial quantities of lithium by 2021, according to Cameron Haughey, the company’s business development director.
Block said Chesapeake is interested in developing a raw material lithium-ion battery manufacturing facility in the U.S. But in the past, he said, it wasn’t clear “how this would go.” Now, with commodity prices dropping, it could be more practical to start building out the business, especially since the lithium is in domestic markets.
The geological formation in Colorado, though not the largest in the world, has been the largest source of lithium in the world — more than twice the size of the Fox River Formation.
It was first recognized as an area of substantial lithium resources in 1998. But the finding gained additional visibility in 2015 when a U.S. Geological Survey paper found that there could be additional concentrations of lithium on Chesapeake’s Colorado property.
Now, all of that geology is available, and Chesapeake sees itself as a key player in the mining industry — not just for the recreational side of things.
“We think there’s a real business opportunity for people interested in this,” Block said.
“It’s not like we’re playing with drones, we’re playing with lithium,” he added.
Block emphasized that, while Chesapeake would do some pilot projects to determine the commercial viability of their lithium holdings, its ultimate goal is to develop some form of manufacturing facility in the U.S. He said the site is “accessible, it’s secure, it’s being drilled on.”
Companies also must meet more stringent environmental guidelines than they would in other locations. Chesapeake’s Block said that the water will likely be held in bulk tank formations in the ground rather than being extracted, and other mitigation measures would be in place to ensure streams are not impeded from passage.
Block acknowledged, though, that the environment could “take its toll” because the lithium extraction process could be “a little sensitive.”
“There are a lot of people with opinions of how these things should be done,” he said. “This is pretty emotional.”
Chesapeake believes it has a lot to offer — and one of the best answers for what happens to a resource like lithium once it’s extracted.
Chesapeake has more than 100,000 acres in the U.S. and 1 million acres in the Green River Formation.