Permian Lithium Project Tests New US Model

Element3 begins producing lithium from oilfield water, in early step toward domestic battery supply diversification

23 Feb 2026

Element3 has begun commercial production of lithium carbonate in the Permian Basin, extracting the battery material from wastewater generated by oil and gas wells in West Texas.

The project, announced by the company and reported locally, marks one of the first new US lithium production efforts in decades. Independent third-party audits of long-term output and project economics have not yet been released.

Rather than developing a conventional hard-rock mine, Element3 is processing “produced water”, a byproduct of oil drilling, and converting it into battery-grade lithium carbonate. The initial facility is designed to produce up to 3,000 metric tonnes a year. While modest compared with global demand, the company presents the site as a test case for a model that could expand if performance targets are met.

At the opening ceremony, Texas governor Greg Abbott described the project as “a meaningful step toward strengthening domestic energy and mineral security”.

The launch comes as US carmakers and battery producers seek to localise supply chains in response to federal incentives and concerns over reliance on overseas sources. It remains unclear how much of the facility’s output will be secured through long-term procurement contracts.

Element3 has partnered with Double Eagle Energy, using existing water recycling infrastructure in the Permian Basin. By building on established oilfield systems, the company aims to reduce capital spending and avoid the lengthy permitting processes often associated with new mining projects.

Industry analysts have pointed to rising interest in direct lithium extraction, a set of technologies designed to recover lithium from brines more efficiently than traditional evaporation ponds. The Permian Basin produces large volumes of wastewater each day, raising the prospect that cumulative output could increase if similar facilities prove technically and commercially viable.

The project remains at an early stage. Lithium prices have been volatile over the past two years, and long-term returns will depend on stable operations, cost control and sustained demand for electric vehicles and energy storage.

If scalable, the approach could add a new channel to US lithium supply, linking established oil infrastructure with the country’s expanding battery sector.