Texas Startup Element3 Turns Oil Wastewater Into Lithium at 3,000 Tons a Year

Element3's new Midland, Texas facility can produce up to 3,000 tons of lithium a year — and it's the first new lithium extraction facility in the United States since the 1960s. The Houston startup, founded in 2021, pulls the mineral not from a mine, but from the billions of barrels of brackish wastewater that Permian Basin oil drilling brings up every day.

The numbers explain why that wastewater matters. Permian derricks pump roughly 6 million barrels of oil a day. Alongside it, drilling unearths about 26 million barrels of water daily — roughly the daily water use of all of New York City. The water is black-gray with oil residue and carries a funky odor from underground bacteria. It's also concentrated prehistoric seawater, aged hundreds of millions of years, five times as salty as today's oceans, and rich in lithium, magnesium and strontium.

Element3's CEO and founder, Hood Whitson, sees a straightforward trade. "It's a wonderful circular economy, waste-to-value story," he said.

How does the extraction actually work?

Element3 is commercializing U.S. Department of Energy research from Oak Ridge National Laboratory on filtering this oil by-product, and is working across Texas to scale up production. The company has raised a little over $20 million and has 15 employees, per PitchBook.

The wastewater currently runs through a massive series of pipes — built by energy companies — for use in fracking. Element3 sets up processing plants adjacent to those pipes. Its 6,000-square-foot commercial facility in Midland, which opened in February, sits near the oil fields and diverts, filters, and returns the water to the existing pipe system, eliminating the need to dispose of or move it.

The filtering itself uses a proprietary medium: a specialized direct lithium exchange unit with absorptive materials that soak up lithium ions. The result is lithium chloride, which the facility processes via carbonization and electrolysis into lithium carbonate powder and lithium hydroxide — two key battery raw materials.

That infrastructure insight is Whitson's edge: energy companies already built, and pay for, the networks that move this water. Element3 layers extraction on top of it.

Why does a domestic lithium source matter?

The U.S. currently relies on a single lithium source — a mine in Silver Springs, Nevada that produces about 5,000 tons annually. Most lithium processing happens in China, and the U.S. imported more than $16 billion worth of lithium-ion batteries from China in 2024.

For years, DOE researchers have studied what Whitson called "unconventional brine mining" — extracting lithium from California's inland Salton Sea, for example, or pulling rare earth metals out of industrial waste sites.

"This is one of our nation's largest untapped natural resources," Whitson said. "It's really a grand opportunity."

Whitson also claims an emissions edge: setting aside the fossil fuel extraction already happening, Element3's process is lower-emissions than the existing U.S. mine and many foreign processing facilities in places like Chile.

Who else is cashing in on produced water?

Element3 isn't alone in spotting value in the by-product. Iofina just opened a West Texas facility that creates iodine from the same wastewater.

Whitson frames his company as part of a broader Texas shift. The state's energy industry, long dominated by oil and gas, has embraced an anything-and-everything approach — wind, solar, geothermal — often using skilled oil and gas workers to grow new sectors.

"This is a new opportunity to grow another source of good-paying energy jobs, and proof that our nation's energy companies can continue to evolve with energy demand," Whitson said.

"We strongly believe in the electrification of everything," he added. "We're now able to layer a critical materials industry on top of what West Texas has already built."

One plant at 3,000 tons a year won't close a $16 billion import gap on its own. But if Element3 can scale its filter-and-return model across the Permian's existing pipe network, Texas oil country could become an unexpected pillar of the U.S. battery supply chain.