Standard Lithium, a start-up headquartered in Vancouver, Canada, has until now been sole owner of the projects. Neither is producing yet, but both aim to tap the Smackover Formation – a geologic formation spanning from Alabama to Texas. Historically it has been a large source of crude oil in the United States, but geologists now say it has deep underground brine reservoirs containing significant amounts of lithium.

Standard Lithium and Equinor aim to obtain the chemical through direct lithium extraction technologies, which use electrical, chemical or physical processes to concentrate lithium found in brine. Proponents contend that it is more efficient than surface mining and causes less environmental damage.

The partnership agreement announced May 8 calls for Equinor, which is based in Norway, to contribute up to $160 million for a 45% stake in both projects – $30 million in cash for Standard Lithium at closing, $60 million for a work program and a $70 million payment for Standard Lithium if and when both companies approve final investment decisions for the projects.

Equinor is not the first energy company to look for lithium in the Smackover Formation. In November ExxonMobil said it would drill in Arkansas as part of a strategy to become the world’s largest supplier of lithium for electric vehicles. Like ExxonMobil, Equinor said it brings expertise in drilling and extraction techniques that are core to its oil and gas business.

Lithium demand has skyrocketed in recent years due to burgeoning demand for EVs, most of which are powered by lithium-ion batteries, and companies and governments are racing to develop supply. Before the global shift to EVs, one of the main uses for lithium was as a thickener in lubricating greases. The escalation in lithium costs is leading numerous grease producers to shift to other types of thickeners.