Imperial Oil Ltd. has joined a pilot project to extract lithium in Alberta, lending its energy expertise in the quest to recover the critical mineral from a once-prolific oil formation.
Calgary-based Imperial said on Thursday that it is investing $6.35-million to acquire warrants in E3 Lithium Ltd., giving it a window into plans to pump what the companies hope will be lithium-rich brine from the aquifer under the sprawling Leduc formation.
E3, formerly known as E3 Metals Corp., is planning to complete a pre-feasibility study by the end of next year, with the goal of eventually launching a US$602-million project east of Olds, Alta., to extract the critical mineral that goes into batteries for electric vehicles.
“Brine water that would have the lithium within it would be below those traditional, depleted oil and gas opportunities,” Jason Iwanika, Imperial’s director of commercial business development, said in an interview from Calgary. “As we learn from that piloting phase jointly, we can make decisions on commercial opportunities down the road.”
Olds is a 180-kilometre drive south of the community of Leduc. Imperial discovered the Leduc field in February, 1947, in a project supervised by Vern (Dry Hole) Hunter. The company had drilled 133 dry holes across Western Canada before hitting the historic well, which led to even bigger finds in the region.
Some small Alberta oil discoveries were made before 1920, but petroleum explorers went through a bleak period until the 1947 find. The fabled Leduc No. 1 discovery well near Edmonton triggered a massive expansion of Alberta’s petroleum industry. Imperial sold its interests in the aging Leduc field in 1997.
“Imperial provided us information and data in the past that they have in their archives and so we’ve just had a really strong working relationship with them, but nothing formal until now,” said Chris Doornbos, E3′s chief executive officer and founder.
The new arrangement provides Imperial with more than 3.4 million warrants priced at $1.86 each. Each warrant allows Imperial to exercise its right to acquire one common share of E3.
Shares in E3 soared 48 per cent to close at $2.54 on Thursday on the TSX Venture Exchange, giving the Calgary-based junior resource company a stock market capitalization of $150-million, based on 59.24 million shares outstanding.
Imperial shares fell 6 per cent to finish at $58.23 on the TSX as oil prices slumped. Exxon Mobil Corp. of Irving, Tex., owns 69.6 per cent of Imperial.