Chris Doornbos started turning his attention to lithium, the third-lightest element, in 2014 after he became fascinated by Tesla’s growing popularity. “Elon Musk was the first one to make the electric car sexy,” Doornbos said. He looked at the automaker’s use of the silver-white alkali metal in lithium-ion batteries and realized that the world was soon going to need more of it.

Two years later, Doornbos—a geologist who used to work in the mining, and oil and gas sectors—started E3 Lithium in his home province of Alberta, with the aim of producing the critical mineral not through traditional hard rock mining, but by deriving it from salty water known as brines. 

“It doesn’t take long to realize that the lithium market is going to be in very short supply, and now that’s exactly what’s happened,” Doornbos told The Logic.

“There’s a mini industrial revolution happening across the entire planet. People are switching to electrical-based transportation.” 

Demand for lithium—or as some call it, “white gold”—as a battery component in electric vehicles has shot up as governments and big automakers around the world began promising to go zero-emissions by 2035. The price of lithium carbonate has soared from US$5,180 per ton in 2010 to US$17,000 per ton in 2021, and global supplies of it are under strain. 

That has Calgary-based E3 and other companies hoping to take advantage of unconventional sources like lithium brine—and also Alberta’s existing oil and gas wells, infrastructure and expertise. But without some regulatory clarity, E3 and other experts say the burgeoning lithium-brine industry may have a slow start.

Brine is fossil water. The Western Canadian Devonian system formed about 400 million years ago and the groundwater absorbed highly soluble salts like magnesium, sodium and lithium which become brine over time. The maximum concentration of lithium in Alberta’s Devonian formation ranges from 71 to 140 mg/l, according to an Alberta Geological Survey study. Concentrations must be at least 50 to 75 mg/l to be commercially viable. In November, E3 found concentrations averaging 76.5 mg/l in its south-central Alberta wells between Edmonton and Calgary.

But lithium wasn’t always a growth industry. For decades, brine was an undesirable byproduct of oil and gas extraction. It is geologically mixed with oil and gas deposits in inland basins, and reaches the surface through oil and gas wells. Brine was pumped up with valuable hydrocarbons, separated and went back down the borehole.

Traditional methods of producing lithium from brine involve the environmentally unfriendly and lengthy process of moving the brine between evaporation ponds, which needs a lot of space and leaves behind salt that could damage crops.

The key to unlocking underground lithium brine deposits is rapid extraction technology, said Roy Eccles, a geologist and operations manager at APEX Geoscience who previously worked with the Alberta Geological Survey for 21 years. Direct lithium extraction, or DLE, is when lithium is separated from brine in real time before returning underground. E3 claims it already has the capability to remove 99.9 per cent of critical metal impurities from small brine samples in three hours.

“Now companies are able to extract the lithium in fairly narrow windows of time, it’s a matter of scaling those bench-scale laboratory tests up to commercial production,” said Eccles.

Proponents say there is outsized economic potential for Alberta’s budding lithium industry, but the province’s Mineral Resource Development Act regulating Alberta’s vast mineral resources won’t be in force until later this year. Until then, companies won’t know what the final regulations for commercial extraction will be. In the meantime, the Alberta Energy Regulator (AER) is reviewing feedback from Albertans and lithium companies to inform the final legislation.

In late November, E3 received $27 million from the federal government’s flagship Strategic Innovation Fund to pilot DLE technology in the Leduc Aquifer, where the province’s oil and gas boom began in 1947. Doornbos said the fund is trying to build a coast-to-coast battery supply chain where Canada becomes a “big player” in the global electrification revolution.

Although E3’s corporate slide deck is careful to note that the technology is still being tested, Doornbos said the goal is to commercialize it by 2026. E3 was an industry participant in the upcoming Mineral Resource Development Act. He hopes the provincial government will implement their suggestions so Alberta can have “one of the best regulatory frameworks” for permitting lithium projects.

Doornbos indicated he’s confident it can get done. While Canadian well licenses can take over three years to approve, he said his application to develop a lithium brine evaluation project last year was approved in just three months under the current regime.

“We are a world-class mining jurisdiction in Canada,” he said. “We are world class because we have a very clear permitting system that is consultation driven, and Alberta and the AER and the directors are no different.”

Yet E3 CFO Raymond Chow acknowledged that there is still work to be done on regulating conflicts between different parties extracting underground resources now that companies are after more than just oil and gas from the ground.

“If you think about it, there’s oil and gas that’s produced, there’s brine that is produced, it has lithium in it, there’s hydrogen now. There’s helium and now there’s carbon sequestration,” he said. “There’s still a lot of work to the framework and regulations around that.”

Rudiger Tscherning, a law professor at the University of Calgary, agrees that there is more for the regulator to do. The energy and natural resource law specialist co-authored a paper in 2021 identifying several areas where he claims Alberta is behind on lithium regulation. One of the major concerns is how it would handle conflict between different parties.

“We’re seeing, for example, now huge areas of Alberta designated by the Alberta Energy Regulator for carbon capture and storage projects. Some of those areas … are actually prime areas for lithium extraction from brine and the big question now is: Whose priority is the No. 1 priority?” said Tscherning.

If Alberta doesn’t figure it out soon, it could lose investment dollars to neighbouring Saskatchewan, which is also keen to kickstart its lithium industry, according to Grounded Lithium CFO Greg Phaneuf. Grounded Lithium was founded two years ago and, like E3, it’s working towards DLE in consultation with Saskatchewan’s government.

“[Alberta and Saskatchewan] do compete to some extent in terms of getting business … but as far as lithium is concerned, Alberta is arguably a little bit ahead of Saskatchewan,” said Phaneuf. 

Saskatchewan expanded its Oil and Gas Processing Investment Incentive program to include lithium projects, which could draw lithium money away from its neighbour. Alberta needs to ride on its lithium momentum to attract investment into the province by providing greater regulatory clarity.

“My real concern is that we are missing that window of opportunity,” said Tscherning. 

“The worst case scenario is that this is we’ve had a lot of a buzz about it and all of a sudden [it starts to] fizzle out, and all the investment is going to move into Quebec, into Ontario [and] into Saskatchewan, for example, where there is a greater clarity in terms of the legal regimes.”

The Alberta Energy Regulator is already working closely with other government agencies to address the issue of competing interests. “We expect resource companies will work together to manage co-production,” spokesperson Karen Keller told The Logic in a statement. The provincial government will have authority on surface leases and the regulator will step in at the time of application once the mineral rights are held.

“We’re encouraged by the fact that the government has been proactive … We don’t need the regulations in place today, but we will in 12 months. The fact that they will hopefully be out in 2023 will mean that we’ll be [on] time,” said E3’s Doornbos. 

“It’s a huge opportunity for this province because we can just put Albertans to work. The same drilling company, the same pipeline company, the same welders, the same professionals … a hundred per cent of our staff is hired out of Alberta’s workforce. The opportunity is just incredible.”

Regulating brine-hosted minerals is just the AER’s first phase to enable commercial lithium extraction with oil-and-gas well technology. Public engagement to explore regulation for mines and hard-rock minerals is expected to begin later this year. 

“There are other critical strategic minerals, rare earth metals, all over Western Canada. And we really need that regulatory certainty,” said Tscherning. “We are not quite there yet … but [there is] huge potential.”