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East Texas has always been considered “energy country.” More than a century ago, the Spindletop gusher near Beaumont announced the dawn of America’s modern oil and gas era. Today, the region that once defined fossil fuel wealth is on the cusp of another transformation, fueled not by crude oil but by lithium-rich oilfield brine.
Oilfield brine, also known as produced water, is a highly saline water by-product of crude oil and natural gas extraction. It contains dissolved salts, minerals, and chemicals from geological formations. It can also contain high concentrations of dissolved lithium.
Lithium is the essential element in the batteries that power electric vehicles, smartphones, and grid-scale energy storage. Global demand is projected to triple by 2030. Despite holding massive, untapped resources, the United States currently produces less than one percent of the world’s lithium supply, leaving critical technology supply chains dangerously dependent on imports from abroad.
That vulnerability has spurred a new domestic resource race, and East Texas may be in the lead. Beneath the pine forests and old oilfields of northeast Texas lies the Smackover Formation, a sprawling geological structure that sweeps from East Texas through Arkansas and into parts of Louisiana. Its ancient brines contain some of the most lithium-rich concentrations in North America, and a new technology called Direct Lithium Extraction is making it possible to produce that resource in ways that were not economically feasible even a decade ago.
To understand the significance of the DLE revolution, it helps to know what came before it.
Traditional lithium mining comes in two forms. The first is hard-rock mining—typically of spodumene ore in places like Australia—which involves blasting, crushing, and refining solid rock. The second is brine evaporation, practiced in the high-altitude salt flats of Chile, Argentina, and Bolivia. In brine evaporation, lithium-bearing saltwater is pumped to the surface and then left in enormous evaporation ponds for 8-12 months, allowing the sun and wind to concentrate the lithium before chemical processing begins. Both methods are land-intensive, slow, and carry significant environmental costs.
Direct Lithium Extraction takes a fundamentally different approach. Rather than waiting for evaporation, DLE uses specialized materials—adsorbents, ion-exchange membranes, or selective solvents—to pull lithium ions directly out of the brine. The brine is pumped to a processing facility, the lithium is captured in hours or days (rather than months), the extracted lithium is purified into battery-grade lithium carbonate or hydroxide, and the depleted brine is reinjected underground in a closed-loop system.
The Smackover Formation is not new to energy producers. An ancient geological deposit that began producing oil in the 1920s, it has been producing hydrocarbons for a century. What is new is the discovery that its brines—the saline water that co-exists with oil and gas in the formation—contain extraordinarily high concentrations of lithium.
In 2023, Standard Lithium reported the highest lithium concentrations in North America from Smackover samples in Franklin County, Texas, measuring as high as 806mg per liter. By comparison, lithium brine projects in South America typically produce at 200-400mg/L. The Smackover’s brines are not just lithium-rich—they may be among the purest and most concentrated in the world.
The formation is particularly well-developed beneath Cass, Franklin, Morris, Titus, and parts of Anderson and Cherokee Counties in northeast Texas. These counties have deep oil and gas production histories, meaning much of the subsurface is already mapped, and much of the surface infrastructure, roads, pipelines, and industrial facilities already exist. For developers, this is a significant opportunity, reducing capital costs and construction timelines.
The rush to produce lithium from Texas oilfield brines has exposed a critical gap in the state’s legal framework: nobody is entirely sure who owns it.
Under Texas law, fee ownership in property can be severed between the surface estate and the mineral estate, the particulars regarding which legal rights belong to the surface estate and which to the mineral estate is beyond the scope of this article; however, generally speaking, oil, gas, and certain other minerals are largely part of the mineral estate. Groundwater, by contrast, is usually owned by the surface owner. Produced water—the oilfield brine that rises to the surface as a byproduct of oil and gas production—has historically occupied an uncomfortable middle ground.
On June 27, 2025, the Texas Supreme Court issued its long-awaited opinion in Cactus Water Services, LLC v. COG Operating, LLC, resolving a fundamental question: who owns produced water when an oil and gas lease does not address the issue?
The court ruled in favor of COG Operating, holding that, unless expressly reserved, a deed or lease conveying oil and gas rights also conveys the produced water that comes with those operations. In other words, it is the mineral lessee (the oil and gas operator), not the surface owner, who holds title to produced water (the by-product of hydrocarbon extraction).
This ruling has significant practical consequences. Surface owners who had entered into separate “produced water leases” with companies seeking to monetize oilfield brine now find those arrangements on uncertain legal footing. For operators and investors in DLE projects, the ruling provides a measure of clarity: the party with the oil and gas lease controls the produced water.
However, the Texas Supreme Court deliberately declined to resolve the ownership of non-minerals dissolved in produced water and not expressly addressed in a deed or lease. In a footnote, the majority noted that it was not addressing any ownership questions related to non-hydrocarbon minerals—a category that squarely includes lithium.
Justice Busby filed a concurring opinion specifically flagging certain unresolved issues: royalty interests, lithium rights, and the legal status of brine reuse. The Texas Legislature attempted to address this ambiguity in 2025 with Senate Bill 1763, which would have classified minerals contained within brine as part of the mineral estate. Notably, the bill defined “brine” to exclude groundwater, surface water, and produced water, which is a distinction with significant practical consequences for DLE operations. The bill failed to advance in the 2025 session, leaving the legal landscape unsettled and signaling that future litigation is likely.
Separately, the Texas Railroad Commission—the state’s primary oil and gas regulator—adopted new rules in 2024 governing brine projects and wells. These rules represent a first step toward a regulatory framework for DLE in Texas, though significant gaps remain, particularly regarding permitting, environmental monitoring, and production reporting for lithium-specific extraction activities.
To appreciate the potential for lithium production in East Texas, it is worth understanding the scale of the produced water challenge that already exists.
Texas oil and gas operations generate an estimated 52 billion gallons of produced water per year and have historically been viewed as a costly waste product, managed almost entirely by injection into underground disposal wells. That disposal method, while effective at keeping produced water and soil, has been increasingly linked to induced seismic activity, particularly in the Permian Basin.
Produced water is not ordinary wastewater. It is far saltier than seawater and often contains naturally occurring radioactive materials, heavy metals, and hydrocarbons. Approximately 90 percent is currently reinjected into the subsurface, some is recycled for hydraulic fracturing operations, and an even smaller portion is evaporated in surface impoundments, where regulations allow.
The recognition that produced water may also carry commercially valuable minerals—including lithium, but also bromine, strontium, and other elements—transforms this waste management problem into an economic opportunity. DLE technology does not merely extract lithium; it repurposes a massive waste stream, potentially reducing disposal costs, mitigating seismic risk, and generating a new revenue stream simultaneously.
Despite the excitement surrounding DLE in East Texas, significant challenges remain.
Initial research on DLE technologies dates back to the 1970s and 1980s, but successful commercialization at scale has remained elusive. Many companies have demonstrated small-scale production; translating that into profitable, large-volume operations is a different challenge.
Global lithium prices have been volatile in recent years, surging during the EV boom and subsequently declining as supply from Australia and South America expanded. The economics of DLE projects are sensitive to lithium pricing, and a prolonged price depression could slow development timelines.
As discussed above, the ownership of lithium dissolved in brine remains legally unresolved in Texas and continues to evolve rapidly. This uncertainty creates risk for investors and may slow capital distribution until the Legislature or courts provide greater clarity. The failure of SB 1763 in 2025 means the question will almost certainly return in future legislative sessions.
Local communities have raised questions about water use, aquifer integrity, and the cumulative impacts of industrial development. While DLE’s close-loop design significantly reduces environmental risk compared to traditional mining or oil and gas operations, community engagement and transparent environmental monitoring will be essential to maintaining the social license to operate.
The conference of technological innovation, geopolitical urgency, and East Texas geology has created a genuinely historic opportunity. The Smackover Formation’s lithium-rich brines, accessible by Direct Lithium Extraction, offer a path to domestic critical mineral production that does not require destroying pristine landscapes or shipping wealth overseas.
For the oil and gas industry, DLE represents a potential new revenue stream born from a previously considered waste product, major cost burden, and potential liability.
For landowners and mineral rights holders, it raises important questions—not yet answered by the courts or Legislature—about who stands to benefit from the lithium now recently discovered and increasingly accessible in the oilfield brine. For East Texas communities, it promises economic diversification and opportunity rooted in the same geological heritage that produced the oil boom.
For the United States, success in the Smackover could meaningfully reduce dependence on foreign sources for a mineral that underlies the batteries of the 21st century.
The legal frameworks, royalty structures, and regulatory systems are still being written. Operators, landowners, investors, and attorneys who engage with these questions now, rather than after the boom is well underway, will be best positioned to navigate what may be east Texas’s most consequential discovery since Spindletop.
If you have any further questions about your lands, minerals, or rights, give our experienced Dore Rothberg Law attorneys a call: 281-829-1555. You can also reach us by scheduling a consultation here.
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