Prairie Lithium converts exploration permits to lithium leases

Prairie Lithium working on delineating resource in SE Sask

By Brian Zinchuk

EMERALD PARK – When you’re first exploring for minerals in Saskatchewan, you take out an exploration permit on the lands you’re looking at. And when you’re serious about doing something with those lands, you convert those lands into leases. This is typically done by drilling a well.

But before you get into a major, multi-well drilling program, it’s important to delineate your resource, figuring out just how far out your resource extends. Is it a one-well wonder, or prolific?

These are all things Prairie Lithium Corporation is doing right now in the Torquay area, seeking to develop lithium from brines deep in Saskatchewan’s sedimentary geology.

Dr. Ben Rostron taking the very first sample from the very first targeted lithium well drilled in Saskatchewan on Oct. 19, 2021, one year ago. Photo by Brian Zinchuk

A little over a year ago, Prairie Lithium drilled and tested the first targeted lithium well in Saskatchewan. And on Oct. 19 of this year, it announced that, to its knowledge, it had converted the first two lithium exploration permits to leases in this province.

The company said it had converted two crown mineral exploration permits with a combined area of 6,795 acres, into 21-year mineral leases. Those mineral leases, SML001 and 002, are the first crown mineral leases issued for lithium by the province, the company said.

It’s an important step, because leases are required before companies are allowed to produce a resource at commercial-scale production rates. The company said this achievement illustrates the progress Prairie Lithium has been making towards readying its resource for deployment of direct lithium extraction technology (DLE) on its lithium-rich brine resource in Saskatchewan.

Pipeline Online spoke to Prairie Lithium president and CEO Zach Maurer on Oct. 19 by phone.

Regarding these leases, he said, “We’ve converted the exploration permits that cover our minerals from the well that we drilled last year, and the exploration permit directly adjacent to the north of the well we drilled last year. Having a mineral lease in hand is a key step towards readying the resource for larger scale brine production testing. With exploration permits, you can explore but not produce sufficient volumes that are needed to support the next phase of DLE technology development.”

Conversion to a lease is only possible when a company has met the minimum work requirement expenditure associated with an exploration permit. Prairie Lithium’s conversion of mineral permits to 21-year mineral leases is a direct result of the exploration work undertaken in 2021 to better understand the distribution of lithium in the Duperow Aquifer in Southeast Saskatchewan. The exploration program included drilling a new well (14-33-002-12 W2M) and re-completing a well at (01-02-001-12 W2M).

That first well was drilled a few kilometres northwest of Torquay, and was the aforementioned first lithium well drilled. The second well was originally drilled by Deep Earth Energy Production (DEEP) within a few hundred metres of the U.S. border, just west of the Port of Torquay. It was initially drilled as part of DEEP’s exploration program to better understand the geothermal potential of the area, and is among the deepest wells drilled in the province. Going right to the Precambrian basement, it had the depth that allowed Prairie Lithium to recomplete it in the zones they are targeting – the Duperow formation.

While lithium is known to be present in several of the geological formations in Saskatchewan, so far the Duperow has proven to have by-far the highest concentrations.

Representative fluid samples were collected from eight separate zones in the well at 14-33 and three separate zones in the well at 01-02. In addition to collecting fluid samples, the 14-33 well was flow-tested for overall productivity because long-term sustainable production of brine will be necessary for project viability, the company said.

The permit to lease conversion allows Prairie Lithium the opportunity to advance their research and development at a meaningful scale in the field at the appropriate time.

Direct lithium extraction

So while lithium’s presence is known in various brines, the ability to process that brine into a marketable product is key to making it commercial. Prairie Lithium intends to scale-up and deploy DLE technologies that will maximize the long-term value of its resource, the company said. In parallel to its own DLE technology development, the company is also actively assessing external DLE technologies to ensure that it is utilizing the most cost effective DLE process for long-term production of its resource.

Prairie Lithium acknowledges that DLE technologies are not yet ready to be commercially deployed. The permit to lease conversion will allow Prairie Lithium the opportunity to test DLE technologies on its resource in real world conditions, it said.

Delineation – what have they got?

On Sept. 21, Prairie Lithium announced it had acquired three oil wells that otherwise would have been abandoned due to limited oil production.

Although the wells no longer have use for oil production, they do provide Prairie Lithium with the opportunity to access the production and disposal formations required for its lithium operations.

Prairie Lithium was approached by a Saskatchewan-based oil and gas company in February 2022 with a list of wells they planned to abandon. The wells were sold to Prairie Lithium for $1 per well. This deal saved the oil and gas company the cost of abandoning the wells and saved Prairie Lithium the cost of drilling entirely new wells.

Two of the wells are located in close proximity to each other, roughly three to four kilometres north of Oungre. The third well is northwest of Torquay, and approximately seven kilometres north of Prairie Lithium’s first well drilled, 14-33.

Prairie Lithium is bringing in a drilling rig to makes these holes a little deeper, and then recompleting them with a service rig. The company has secured Panther Drilling of Weyburn and Independent Well Services Ltd. of Estevan to perform re-entry work on one of the newly acquired wellbores.

Maurer explained that the first well they are working on currently goes just a few metres into the Duperow. But the Duperow typically has an average thickness of 150 metres in this area. They want to drill through the entire formation to test it much more comprehensively. Based on the wells drilled and re-completed last year, the company knows which high grade zones within the Duperow it wants to test in more detail for lithium concentration and brine productivity.

“This is a massive rock formation,” he noted.

Put into context, the much-ballyhooed Bakken formation is two to three metres thick around Stoughton.

The re-entry, recompletion and testing of this well is part of the company’s delineation strategy across their land base. The first well they drilled was close to the centre. The DEEP well was almost due south, and this next well is almost due north. The two wells near Oungre are almost due west, providing an east-west component to the delineation strategy.

Regarding the DEEP well, he said, “We did the re-entry into that geothermal well. The lithium results were really good, and consistently delineated with the well that we drilled at 14-33.

“Now the purpose of this re-entry program is to move north and confirm that north-south delineation. And then future plans would involve additional east-west delineation of the resource. And then that will start to give us a really good idea as to what the resource potential is in that area,” Maurer said.

This well is being completed to measure lithium concentrations across Prairie Lithium’s main target intervals within the Duperow formation and to understand the productivity across these intervals to ensure a sufficient volume of lithium-rich brine can be produced for long term development. The workover and flow testing are expected to be completed by Dec. 1, 2022.

Re-entries are not common in southeast Saskatchewan. Most oil companies prefer to start fresh with a brand-new wellbore than take a risk on an old wellbore that could have problems, such as a poor cement job. And Maurer explained they’re taking a similar approach.

“That’s why we drilled our first well as a brand new vertical well. So we drilled that first well, the vertical, to make sure that we understand the rock formation, and make sure that we knew what we were getting into. We were in control of everything associated with that well.

“These wells that we’re taking on, these last three, and the geothermal well we took on last year and re-entered, these aren’t intended to be production wells.

“They’re really just exploration test holes, so they’re just providing us an access point to the Duperow formation. And then when we drill our production wells, those will be new drills.”

This strategy means a savings of around a million dollars per test well, with that $1 purchase price getting them to the top of the formation.

The exploration program will run the better part of a month, abandoning the original completion, bringing in the drilling rig to deepen the well, then doing new completions, installing an electric submersible pump and testing. It’s very similar to what took place on the company’s first well drilled last year.

Prairie Lithium is not doing any coring at this point, as Maurer said, “The additional cost and risk of acquiring core isn’t worth it for us right now, we are more interested in the fluids then the rock right now.”

Brian Zinchuk is editor and owner of PipelineOnline.ca and occasional contributor to the Frontier Centre for Public Policy. He can be reached at brian.zinchuk@pipelineonline.ca.