There is talk about finding lithium in the Nacogdoches area. If so…
Should we amend the lease agreement if it doesn’t include lithium in the waste removal terms?
A little Googling reveals that it’s more involved than adding a singular clause. See " The Lithium “Boom” in Northeast Texas" at the Texas Oil and Gas Attorney Blog
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You need very specific language in your lease for lithium. Please use a good oil and gas attorney for help or it will not be done correctly.
Also, if you already have an active lease, it will probably not be possible to amend the current lease. The lithium must be claimed (if possible) before drilling.
The correct language will vary from state to state depending upon statute.
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Interesting discussion point for the forum. Since the OGL generally contains a “other mineral produced” provision, does lithium have to be specifically mentioned since it is related to the production of oil and gas? In such a case, lithium would be subject to the general royalty terms of the OGL. The true question would go back to the original and subsequent granting deeds and the specific grant and definitions of the products at that time. If the waste water from the lease contains Lithium, should the operator be required to extract it if there is commercial value? The answer to that is most likely yes, but who owns the lithium?
There was recent testimony in Arkansas by an operator who is also taking leases in NE Texas who said they believe NE Texas has more lithium content, better permeability and porosity.
James raises two very interesting questions that have not yet been addressed by either Texas courts or the Texas legislature. First, is lithium covered by the “other minerals” clause in a lease? My guess is probably not, since it comes up with the water. There is a good argument to be made however that the lithium is an “other mineral”. The next big question is who owns the produced water? The Texas Water Code says water percolating underground belongs to the surface owner. On the other hand, produced water has historically been considered to belong to the lease operator and Texas statutes say the produced water belongs to whoever possesses it. Oil and gas leases must be carefully drafted to either include or exclude lithium, although this begs the question of ownership of the water. I tell my clients not to be in a hurry to sign an oil and gas lease or a brine lease in one of the northeast Texas counties that overlay the Smackover formation because this is a rapidly evolving field and it’s just a matter of time (hopefully sooner rather than later) until courts or the legislature address these issues.
Hey all,
Looks like lithium extraction or DLE (direct lithium extraction) is coming sooner than we think and it isn’t just the Smackover either!