Equinor has acquired a 45% interest in two lithium projects in Arkansas and Texas under development by Standard Lithium, which aims to commercialize direct lithium extraction (DLE) technology in the U.S.

As part of the agreement, Equinor said it will pay Standard Lithium $30 million to compensate for past project costs and interest. The Norway-headquartered company also said it will pay $33 million to progress the assets toward a possible final investment decision (FID) and up to another $70 million if FID is taken, according to a May 8 press release.

“Sustainably produced lithium can be an enabler in the energy transition, and we believe it can become an attractive business,” said Morten Halleraker, senior vice president for new business and investments in technology, digital and innovation at Equinor. “This investment is an option with limited upfront financial commitment. We can utilize core technologies from oil and gas in a complementary partnership to mature these projects towards a possible final investment decision.”

The transaction, completed effective May 7, involves Standard Lithium’s flagship South West Arkansas Project (SWA) and East Texas properties. The company will retain operatorship of the properties and have a 55% stake.

Standard’s SWA project is located on about 36,000 acres in the Smackover Formation in southwestern Arkansas. A preliminary feasibility study indicated the project could have a base case production of 30,000 tonnes per annum (tpa) of battery-quality lithium hydroxide monohydrate with an upside of 35,000 tpa, Standard has said.

Demand for lithium, a key ingredient in batteries for electric vehicles (EVs) and for energy storage, is forecast to continue rising as the world seeks cleaner energy sources. The U.S. wants to boost domestic supplies of lithium supplies to reduce its dependence on more adversarial foreign countries such as China.

Lithium companies are pursuing DLE technologies to make this happen. The technology, which has not reached commercial production in the U.S., extracts lithium from brine in hours instead of the 18-24 month or so process it takes with traditional methods that involve hard rock mining and use of solar evaporation ponds. DLE is also considered more environmentally friendly and it requires less land.

“We’re at a crucial stage in our company’s growth and this partnership with Equinor will be fundamental to the continued de-risking and execution of these important projects,” said Standard Lithium COO Andy Robinson. “One thing that we have observed in the lithium world over the past decade is that strong, mutually-aligned partnerships are the key to successful project execution and operation, and we believe we have aligned with the right partner to take SLI and the lithium industry in Arkansas and Texas to the next level.”

In April, Standard Lithium said it successfully commissioned the first commercial-scale DLE column in North America. The Li-Pro Lithium Selective Sorption unit, supplied by Koch Technology Solutions, was installed at the company’s demonstration plant near El Dorado, Arkansas. At the time, the column was extracting lithium from the Smackover Formation brine at an input flow rate of 90 gallons per minute.

Citi acted as financial adviser to Standard Lithium and Skadden, Arps, Slate, Meagher & Flom LLP and Cassels Brock and Blackwell LLP acted as legal counsel to Standard Lithium, according to a news release.

Global law firm Hogan Lovells represented Equinor.