Vancouver-based helium and natural gas producer Desert Mountain Energy (DME) has signed a non-binding letter of intent (LOI) to form a joint venture (JV) to build and operate a sodium nickel chloride (SNC) battery manufacturing facility in Roswell, New Mexico.
DME did not specify the other company in the JV but mentioned that both parties will now start detailed due diligence, engineering assessment, and the creation of a final JV agreement.
The proposed operation plans to use produced water from regional oil and gas wells within an environmentally friendly cooling and processing system. This system aims to support both battery manufacturing and a future AI data centre.
SNC batteries
In the produced water treatment process, salts and specific critical rare earth elements (REEs) are extracted and separated. Sodium is dried and directly used in manufacturing SNC battery units. The isolated REEs are dried, sealed, and then shipped to approved facilities for additional refining.
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DME also emphasises research from Altech, a multi-industry component and device supplier, which points out several benefits of SNC chemistry. These include the possibility of sourcing alumina from recycled special aircraft components, thereby supporting wider circular-economy initiatives.
Altech recently announced it had entered into a strategic collaboration to sell SNC batteries with a subsidiary of China-based battery manufacturer Chilwee Group, AMPower.
After that announcement, the company embarked on a broad strategic shift, following a board restructuring to speed up the commercialisation of its ‘CERENERGY’ and ‘Silumina Anodes’ technologies.
CERENERGY is Altech’s SNC battery. In 2024, Altech signed an offtake agreement to supply the Western defence market with its CERENERGY battery energy storage system (BESS) technology.
With the restructure, Altech will reevaluate the feasibility of its agreement to distribute AMPower’s SNC batteries, emphasising the need to optimise capital deployment.
Though the partnership presents immediate revenue potential, the board argued that focus should remain on the company’s two flagship technologies.
A study published in the Journal of Power Sources also noted that SNC cells are suitable for large-scale BESS, offering claimed benefits such as a negligible fire risk.
DME claims that the JV and related AI infrastructure development are anticipated to generate new employment opportunities and diversify revenue streams for Chaves County and New Mexico.
Enhanced support services for smaller oil and gas operators, such as reduced disposal costs and longer well lifespans, are expected to boost production, thereby increasing tax revenues for local schools, counties, and state programs.
The initiative supports local, state, and federal programmes that provide incentives for energy-transition manufacturing, critical materials management, and the deployment of advanced technologies, including aspects mentioned in the Genesis Mission Executive Order from the White House.
New Mexico has taken proactive steps in BESS development. In 2023, its Senate approved a bill requiring investor-owned utilities to operate 2GW/7GWh of energy storage by 2034.
Earlier this year, the New Mexico Public Regulation Commission (NMPRC) approved utility Public Service Company of New Mexico’s (PNM’s) 2028 resource plan, which expands solar and storage capacities.
The plan includes 300MW of capacity through energy storage agreements (ESAs) for two standalone battery facilities, each with 150MW, and a 150MW solar plus battery storage project (comprising 100MW of solar and 50MW of batteries), all owned and operated by PNM.
In July, ESN Premium reported that PNM was seeking regulatory approval of offtake agreements associated with three hybrid BESS projects in New Mexico .
PNM submitted details of six agreements to the NMPRC. These agreements were negotiated to facilitate the expansion of Meta’s Los Lunas Data Centre campus in Valencia County. Among Meta’s 28 publicly announced US data centres, Los Lunas is one of the largest, with total investments projected to surpass US$2.5 billion.
Produced water
Produced water, the largest byproduct of oil and gas extraction, is water that occurs naturally with hydrocarbons or is injected during extraction, mixed with oil and gas. It often contains high salinity, heavy metals, hydrocarbons, chemical additives, and radioactive materials, with composition varying by geology and method.
According to a 2020 study published in the peer-reviewed open-access journal ‘Water’. the oil and gas industry generates approximately 250 million barrels of produced water daily, surpassing oil output and posing environmental and operational challenges.
Companies manage it through injection, evaporation, disposal, or treatment for reuse in hydraulic fracturing, agriculture, or other industrial applications.
Under the proposed setup, produced water from area operators would be treated and reused for cooling and processing, greatly decreasing the amount of water drawn from the aquifer and cutting operating costs for smaller oil and gas producers.
DME says that its wells produce very little water, but the company’s expertise in processing enables it to act as a strategic solutions provider for nearby operators.
The initiative also aligns with DME’s strategy to utilise its natural-gas resources for generating local electricity to power the produced-water system and nearby AI data centre infrastructure, “creating a vertically integrated and energy-efficient footprint.”
The Energy Storage Summit USA will be held from 24-25 March 2026, in Dallas, TX. It features keynote speeches and panel discussions on topics like FEOC challenges, power demand forecasting, and managing the BESS supply chain. For complete information, visit the Energy Storage Summit USA website.
