No Such Thing as “Standard” Oil, with Deborah Gordon

Notable Quotes

• Unpriced externalities in oil and gas: “The two main things that we measure that determine the benchmark price of a crude or the discounted price of a crude don’t have any relationship to greenhouse gas emissions.” (8:51)
• The United States exports some of its dirtiest fossil fuel byproducts: “Petroleum coke rivals coal. It’s worse than coal in terms of its carbon dioxide emissions, and it’s dirtier than coal. It goes into power plants around the world, especially in Asia and in the Global South. And the United States just offloads this … There could be tighter regulations around what I would call the waste, or the byproducts, of oil and gas that the United States offloads to others.” (17:21)
• Decarbonizing the oil and gas supply chain: “A lot of emissions are coming before I, the consumer, even go to the gas pump and see a gallon of gasoline. And that might have been okay early in the twentieth century. But, in today’s day and age of climate change and renewables, it’s unforgivable, in my mind, that we should use fossil fuels to make those fossil fuels that we have no real substitutes for right now.” (20:12)

Top of the Stack

• No Standard Oil by Deborah Gordon
• Oil Climate Index plus Gas at RMI
• Project Escape: Lessons for an Unscripted Life by Lucinda Jackson
• Licorice Pizza movie, from Paul Thomas Anderson

The Full Transcript

Daniel Raimi: Hello, and welcome to Resources Radio, a weekly podcast from Resources for the Future. I’m your host, Daniel Raimi.

Today we talk with Dr. Deborah Gordon, a senior principal in the Climate Intelligence Program at RMI and a senior fellow at the Watson Institute for International and Public Affairs at Brown University. Debbie recently published No Standard Oil: Managing Abundant Petroleum in a Warming World, a book that does an amazing job of helping us understand the wide variety of different kinds of crude oils and natural gases and why those differences matter for climate policy. The book also offers a range of recommendations for policymakers, business leaders, and environmental advocates. We touch on all those issues and more in today’s conversation, so stay with us.

Debbie Gordon from RMI, it is a pleasure to talk to you. Welcome to Resources Radio.

Deborah Gordon: Thank you. It’s great to be here.

Daniel Raimi: So Debbie, we’re going to talk today about your new book called No Standard Oil, which I thoroughly enjoyed and highly recommend to our audience, especially those of you who are particularly interested in oil and gas, as I am. But before we talk about the book, we always ask our guests how they got interested in working in energy and environmental issues. So I’m curious what brought you into this field initially, either as a child with interest or in your professional life?

Deborah Gordon: I was a new driver during the oil crisis. I think that’s personal as it gets. As a 15-year-old, waiting in line at the gas pump was not how I wanted to spend my time. And if I put that together with my love—if you asked me at the time what my single favorite subject in school was, I would’ve said chemistry. I had no clue that chemical engineering was even a field. That’s not how high school is. You take the basics.

When I went to college, it was very apparent to me, almost right away within the year, that chemistry wasn’t going to be my major, and I wasn’t going to go into medicine. And with the oil crisis on my mind, it was really to me all about chemical engineering. I worked in a hydrogen-catalysis lab while in undergrad, thought a lot about renewable energy sources, and then, as I graduated from undergrad, watched renewables fall into the valley of death because the price of oil plummeted in ’82.

From there, I went to work for Chevron. There were no renewables jobs to speak of. Renewable energy was already passed in that wave of its evolution. And while at Chevron doing a lot of environmental remediation, environmental permitting, environmental regulatory work, I got very interested in public policy. That was the arc of my career. And then I went back to grad school in public policy and really merged the two, the chemical engineering and the public policy. And I don’t think you get any closer to public policy and chemical engineering than oil and gas. So, that put me squarely there.

Daniel Raimi: Absolutely. And your book and so much of your work reflects those two streams of expertise in such a perfect way. Your story about the gas line reminds me of a recommendation that I wanted to make to everyone, which is the film Licorice Pizza. Have you seen Licorice Pizza?

Deborah Gordon: Oh, I’ve heard of it. No.

Daniel Raimi: It’s got the best gas-line scene that I’ve ever seen in any movie. That’s all I’ll say because I don’t want to give it away, but it’s really great. That’s a bit of an aside.

Let’s talk about your book, which is No Standard Oil. It does a fantastic job explaining one basic principle that a lot of people don’t know, which is that there’s not just one kind of oil or one kind of natural gas, but there’s a wide range of oils and gases that are out there. Can you give us a thumbnail sketch of why that matters for energy and climate policy?

Deborah Gordon: I’d like to say this almost in the negative of, if we don’t acknowledge that these oils and gases are different, and it is a reality, we end up missing opportunities to reduce their emissions. Saying it the other way is, oil is all one thing, there’s a standard barrel out there, gas is all one thing. Then we’re not going to regulate price and use and acknowledge these varying risks of different oils and gases. And that matters a lot to the climate, especially at this moment in time when we’re facing more climate disruption at a greater pace. Understanding which resources have the greatest risks and either managing them better or not using them as we use less will matter a lot.

Daniel Raimi: Absolutely. And we’re going to talk about those details over the course of our conversation. Before we get into those details, though, can you give us a couple examples of the different kinds of oils that are produced from different formations around the world, and how they vary in terms of their life-cycle carbon footprints?

Deborah Gordon: Sure. There are two aspects, two main aspects of what make oil and gas really different from each other. One is their inherent characteristics. Are they heavy? By heavy—do they have a lot of carbon in them? Those are the oils with really low gravities. Are they light? Do they have a lot of gas in them? A lot of methane in them? Those have much higher American Petroleum Institute (API) gravities. Are they sour, meaning they have a lot of carbon dioxide that is packaged into them under the ground? Are they wet gases, so they have a lot of liquids, condensates mixed into the gas? These are all resource characteristics that are reservoir-based. This is what the earth has cooked over millions of years under the ground, and they’re all so very different.

Then later, on top of that, you have different industry practices for extracting them, for processing them, for shipping them, for refining them. And when you package both what the oils and gases are in terms of their characteristics together with how the industry handles them, you end up with really different climate footprints. I mean, almost to the point where in their overall life cycle, any two gases can be a difference of five times between the highest and lowest, and oil is the difference of three times, including all end juices. This is a huge variance in these emissions.

Daniel Raimi: That is really huge. And there are a couple terms that you mentioned that I would love for you to define for our audience. The first one is “API gravity.” You mentioned that “API” stands for American Petroleum Institute. So if you could define that term, and then also define “sour” and “sweet”—what’s the difference between a sour crude and a sweet crude?

Deborah Gordon: API gravity is basically the measure of the weight, how heavy an oil is. It’s relative to water. They use a basis, and it’s measured in degrees. And it’s the opposite of what you think: Heavier oils have a much lower API gravity. An extra heavy oil—California oil might have an API gravity of eight, for example. And very light oils going into condensate and gases have very high gravity. They might be 50 or 60 or 70. And gases fall off the API gravity scale. A gas isn’t measured relative to water, so there is no API gravity for a dry gas.

In terms of sweet and sour, it’s interesting. I will say something about both of these as soon as I tell you sweet and sour is how much sulfur is in the gas. And why that’s the case is that in a very high sulfur field, hydrogen sulfide, one of the carriers of the sulfur, is deadly. So you have to treat these oils and gases very carefully, so as not to jeopardize or put your workforce at risk. But they’re also very corrosive to equipment, so you want to remove a lot of that sulfur.

Sulfur, I should say, is a byproduct of oil and gas that goes into the chemical industry. It’s not like sulfur is a waste product. It’s an actual industrial input to everything we do. And there are really not many other sources of sulfur in the world other than mining a volcano. So the oil and gas sector ends up being as important a feedstock of sulfur as anything in the world.

But the one thing I was going to say about both the API gravity and the sulfur is, if you plot the greenhouse gas emissions that we’ve modeled and are talked about in No Standard Oil against gravity and sulfur, there’s basically no relationship. So the life-cycle emissions have no relationship. That’s a big issue because the way we price oil today is based on its gravity and its sulfur. The two main things that we measure that determine the benchmark price of a crude or the discounted price of a crude don’t have any relationship to greenhouse gas emissions.

Daniel Raimi: Right. The externalities unpriced. So fascinating. Just one quick follow-up question: you mentioned the only other way to get sulfur would be to mine volcanoes. Do we mine volcanoes? Is that a thing?

Deborah Gordon: We don’t mine volcanoes today, but I think preindustrial, if there was the need to homeopathically use sulfur in any remedy, you were probably going and scraping it from off the rock. It was something that there was an awareness of in Indigenous cultures. But industrially, no, we’ve been getting it from the oil and gas sector.

Daniel Raimi: Fascinating. So we have gone at light speed through some of the technical issues that you cover in the book about the different types of oils and gases. We may come back to some of those details, but first I’d love to ask you about some of the high-level policy implications that flow from the book and the failure to acknowledge the life-cycle greenhouse gas emissions of these different kinds of oils and gases. Can you highlight a couple that you think are particularly important for policymakers in Washington, DC?

Deborah Gordon: I would say the lack of transparency and disclosure on these underlying different oil and gas characteristics and these different operating methods is huge. Again, if you treat them all the same, you have no way to distinguish them.

I could go way back to my Chevron days. We were permitting offshore Santa Barbara field at the time in the early ’80s, thought to be the largest find in the United States. And it turns out, that oil was extra heavy, very solidified, very high in sulfur, and needed heated pipelines to move. It couldn’t go into the existing refineries because they weren’t designed to take it. It was unconventional. And honestly, we never uttered the word. And I don’t think we didn’t utter the word that this was an unconventional resource because we were withholding anything; literally, we never acknowledged it. So the idea that there are these mixes of oils and gases that have more differences among them than similarities isn’t really acknowledged. The data’s not collected by government. The companies don’t really distinguish it.

When we started fracking, for example, we didn’t open the door and say, “We’re going to start fracking.” This is about a decade ago. “We’re going to start fracking. What will that mean for climate change?” This is a whole new technique to remove oil and gas from the ground, but there was never a conversation about what that meant for climate change. This lack of information flow and transparency, and the fact that we’re constantly evolving in this space with new methods to remove and process oil and gas, but there’s never any discussion more than, “It’s happening and no one really knows what happened,” is a big problem. Assets transfer; we have no information about that. Methane satellites are measuring methane; there’s no one place to go to get that information. So, the single biggest overarching problem is a lack of transparency.

Daniel Raimi: That makes sense. And that’s exactly the gap that one of your major projects seeks to fill, right? The Oil And Gas Index. Can you tell us a little bit about that project?

Deborah Gordon: The Oil Climate Index plus Gas started about a decade ago with partners at Stanford and the University of Calgary. And actually for me, my question—and this happened when I was working at the Carnegie Endowment in DC, and fracking had just started—there were a lot of conversations about the bounty, the new bounty of oil and gas that the United States was going to have. Up to that point in time, we thought we were going to import. We were going to be sheer importers of oil and gas. We were building import terminals for natural gas. We were importing; we’re building pipelines and expanding pipelines for oil from Canada. And this changed everything, to frack.

But my overriding—I had this hypothesis: if the resources we were going to access, these really light oils and these gases and these condensates, were going to come out of the ground from a whole new method called fracking, which is to basically open up fissures and horizontally drill and gather these resources, then that would mean that there might be a real difference in their emissions footprints.

This project grew up with asking that question: How do the underlying resources and their engineering practices change the emissions? And so we built a pipeline, these three models. The Oil-Climate Index has three underlying models. An upstream greenhouse gas emissions model that comes out of Stanford. It’s called UPG. Then a refining greenhouse gas estimating model called Prelim, and then a downstream transport of all these products and also end uses called OPEM. And when you put all three of those models together, you run these resources through all three of those models and add them up, you get the life-cycle emissions from any given barrel of oil or gas on an equivalent barrel of oil basis.

Daniel Raimi: It’s such a great resource, and we’ll certainly have a link to it in the show notes so people can explore it, where you cover so many of the world’s major sources of oil and gas.

But let’s get back down to the policy issue. We’ve been talking about the technologies, the types of oils. What are some of the policies that you think could get at some of the lowest-hanging fruit to reduce greenhouse gas emissions across the industry? And what are the sort of processes that those policies would target? Would they be targeting upstream development, refining, end-use consumption? Can you give us a sense of some of those sort of low-cost policies that you think might be desirable?

Deborah Gordon: It depends on where you are. Obviously, there’s policy appetite in different places for different things. And one of the issues with oil and gas and managing it from a policy side is it’s a global affair. It’s priced globally. Oil and now more gas are moving. These are global commodities. So there’s a lot of fungibility and movement in this sector, which challenges policymaking. What can we do in the United States that will change the global state of affairs of oil and gas? We produce a lot, but we ship a lot of oil and gas out, too. Some is cleaner and some is less clean in terms of its emissions.

From a policymaking point of view on the methane side, and methane is a very potent greenhouse gas. It’s the main constituent of natural gas. Natural gas is like 80 to 90-plus percent methane. That’s what makes it up. And it’s also, when it leaks, hugely powerful in terms of climate warming. I think this idea of using a 100-year global warming potential is a really big problem for near-term policymaking on the methane side.

The Oil-Climate Index defaults to 20-year global warming potential. You can toggle back to 100 and see how differently those emissions reside, both in their total emissions, in terms of where in the supply chain emissions are. But we’re missing a lot of methane right now from the oil and gas sector, because we’re not counting it, basically. We’re discounting its impact a lot.

In terms of US policymaking, this came up early on in the early iterations of the Oil-Climate Index. The Energy Information Administration, EIA, is not authorized to gather a lot of the data that we need. They’re not allowed to report it. They’re not allowed to collect it. There are some limits on statistical agencies in the United States. EIA is one of them that say, “You can gather information, but within bounds.” And one of those bounds is if industry gathers it, you can’t. Well, of course the industry gathers a lot of this information, but it’s not transparent or made public. That’s a really big part.

Another big risk that the United States is posing to the world from oil and gas, somewhat unknowingly to most people: the heaviest oils, these will come from—California has really heavy oils; Mexico, we take a lot of their oil; Brazil, we take their oil; Canada, we take their oil. These are really heavy oils. The way you turn those oils into gasoline and diesel is you wring out all the carbon, the extra carbon, and that makes something called petroleum coke. And petroleum coke rivals coal. It’s worse than coal in terms of its carbon dioxide emissions, and it’s dirtier than coal.

It goes into power plants around the world, especially in Asia and in the Global South. And the United States just offloads this. California, one of the most regulated places in the world, sells its petcoke, and it just offloads it. And it’s very polluting in terms of sulfate emissions in particulates. It’s dangerous for public health. There could be tighter regulations around what I would call the waste, or the byproducts, of oil and gas that the United States offloads to others.

Daniel Raimi: That’s interesting. I live in Ann Arbor, Michigan, and there was a famous instance a couple years ago where a refinery in Detroit was storing all of its petroleum coke in a giant pile outdoors, uncovered, underneath the Ambassador Bridge. And when the wind would blow, the petcoke would literally blow onto the community. And the pile was just sitting there waiting for a buyer. Some of it actually got shipped to a nearby coal plant, but I think most of it did get shipped overseas. And the pile is not there anymore, thankfully, for everyone.

Deborah Gordon: Yes. Petcoke is worse for you in the neighborhood, if it’s burned. It’s bad enough if it gets airborne and you breathe it in. It’s much worse for your health if you are breathing in the resulting emissions from having burned it.

Daniel Raimi: I’d love to ask you a couple questions now, Debbie, about some implications for the industry, rather than for policymakers. You have a background working in the oil and gas industry, as you mentioned. And you provide several recommendations for how oil and gas companies can play a more constructive role in making progress on climate change (setting regulation aside for the moment). Can you highlight a couple of those activities that you think industry can do to make progress on climate?

Deborah Gordon: By far the number one, it’s where most of the mitigation opportunities reside. This industry is really interesting. Rockefeller himself in the turn of the last century was brilliant in the way that he grew this industry as a vertical supply chain. They use their own product; they use their own less valuable product to make more valuable commodities. Fossil fuels, diesel, natural gas, even petcoke—this petroleum coke we were just talking about—they become inputs to extracting, processing, refining, and shipping gasoline, diesel, jet fuel, things that are more valuable, petrochemical feedstock.

In other words, a lot of emissions are coming before I, the consumer, even go to the gas pump and see a gallon of gasoline. And that might have been okay early in the twentieth century. But, in today’s day and age of climate change and renewables, it’s unforgivable, in my mind, that we should use fossil fuels to make those fossil fuels that we have no real substitutes for right now.

So employing renewable energy, wind, solar, air pneumatics; employing renewable hydrogen instead of making hydrogen out of natural gas; employing renewables in every segment of the oil and gas supply chain—maximizing that can reduce emissions in a huge way. It also capitalizes the renewable sector. It integrates the oil industry and the gas industry into the renewable sector, and it cross-trains your workforce.

The idea of building out to become more robust energy industries—the first place to go is the use of renewables in the oil and gas supply chain. And then the second biggest thing the industry can do is to report ownership and equity shares. The world has to understand these assets trade wildly. They move hands all the time. Companies go in, companies go out, and civil society and policymakers don’t have a clue.

Daniel Raimi: When you say—just so listeners understand—when you say asset, you mean an investment share in an oil and gas field, for example?

Deborah Gordon: A field, a pipeline, a refinery, a processing plant. Every part of the infrastructure in this industry is owned and operated by someone, a company. But who that company is from year to year, from decade to decade, changes a lot. Sometimes companies go out of business, they’re bought out, they merge, they sell assets. For example, when we see gross emitters from satellites from space, for methane, we need to know who to contact on the ground, who has a problem. But we don’t have a clue. But there’s no database for that.

Daniel Raimi: You’re right. That’s a great point. And just one follow-up question on the use of renewables in the extraction-processing of oil and gas. There are a number of companies that have announced these net-zero pledges for what you would call Scope 1 and Scope 2 emissions. Do you get the sense that the industry is taking action on that issue at a speed that you would like them to? Or, is it the exception rather than the rule that companies are being ambitious on employing more renewables in their internal supply chains?

Deborah Gordon: It’s a bit more the exception than the rule right now, especially when you look globally at this. Some companies are leaning in more. In Europe, I would say Equinor is a good example, a Norwegian company. Equinor has all of their—well, all of their platforms don’t operate like ours do, their systems. They operate them as an integrated system. Not every platform has to do everything. They actually fine tune their platforms: some will extract, some will process, some will reinject. They all do different things, so they’re very tailored, and they’re more and more pulling onshore electricity from hydro onto their platforms. So you can see who the leaders are.

I think a big risk in the industry is the economics. The oil and gas industry has been around for 150 years as a modern industry. When you take some of these older legacy assets, the economics aren’t favorable to invest a lot into them. That’s where you need policy to actually create those incentives. Then you also need civil society to acknowledge that to do things cleaner it might cost more.

We were all just up in arms about the price of gasoline at the pump, going up to $5 a gallon. And to have a war in Ukraine be the reason is something that is upsetting. That should not be the reason why the price goes up. But if we’re going to integrate renewables and really reduce the climate footprint of the products that we depend on, that might be a rationalization for why we’re going to pay a little bit more.

Daniel Raimi: That makes sense. So another question on the industry: one of the really interesting questions that you pose in the book is for climate advocates, for those working in nongovernmental organizations (NGOs) and in civil society trying to make progress on climate change. A question that you pose is whether it is more constructive for those advocates to try to work with the oil and gas industry, to try to leverage the expertise and assets that these companies already have, or to try to work against them, to “defeat them” in the arena of public opinion and politics. Can you talk about how you think about that question of working with or against the industry, if you are an environmental advocate?

Deborah Gordon: Yeah. I think of this whole proposition of the costs and benefits of what oil and gas do in society and then the externalities in terms of their costs, I think of it as a multidimensional game of chess. And if you are going to play chess, you can’t ignore your opponent, and you can’t be your opponent. You have different stakes in the game. I think that advocates have to get a lot smarter, and that starts with a reality check, which is, We’re not going to just turn oil and gas off tomorrow. We can have aspirations. I think a lot about New Year’s resolutions when I think about this. It could be January one, and I’m going to say, I’m going to lose 30 pounds. That’s what I’m doing this year. But that doesn’t mean I’m going to lose 30 pounds, right? That’s hard. It’s hard. And I could do damage losing 30 pounds if I go on a fast for the next three months.

I think that this idea of surgical precision, thinking about this sector in a more surgical way, getting really smart, having this idea of using national labs, using the government’s intelligence, using academia to really get smart about what the opportunities are and how to go. I could go meatless for a day, but it’s going to be really hard for me to live without oil and gas for the next week. So I think that civil society won’t get anywhere if the oil and gas industry is the enemy because we use the product that they’re making. At the same time, we’re playing a game here in terms of how to actually benefit the climate. How to actually get what we need, but use less, use less of the most impactful.

I didn’t raise it before, but I think a very useful tool here that can be used both by industry, government, and civil society is shadow pricing. The industry does shadow pricing. In other words, we don’t have a price on carbon, not in the world, right? Or on methane. But we—on the web tool for the Oil-Climate Index, and I discuss it in No Standard Oil—we can put a price. Basically, we convert those emissions into a price per barrel of oil or gas. And you could start to then see the monetization of, which are the most offensive assets and which aren’t being handled very well. Striking, rather than this Whac-A-Mole game— understanding which assets, which operations, which places have the greatest opportunities to reduce emissions, rather than thinking you could just either similarly get off, or you can fix it all with a simple wave of the wand.

Daniel Raimi: Those are such good points. What it makes me think of is—your point about precision and getting smarter within the advocacy community reminds me of the many times that I cringe whenever I hear people refer to the fossil fuel industry as if it were a single thing. One of the really great things about your book is it helps us understand how much variation there is within the industry. Even within, let’s say, the oil sector. There’s a million different nuances that we need to understand if we’re going to make smart policy to tackle climate change and avoid the worst outcomes of climate change.

So, Debbie Gordon from RMI, one more time, thank you so much for joining us on Resources Radio. It’s been a really fascinating conversation. And I’d love to close out the conversation now with the same question we ask all of our guests, which is to recommend something that you’ve read or you’ve watched or you’ve heard that could be related to the environment or not related to the environment. Whatever’s on your mind that you think is really great and that you’d recommend to our listeners. So what’s on the top of your literal or your metaphorical reading stack?

Deborah Gordon: I literally just finished it and absolutely loved it. And there’s a backstory for a second here. I assembled a group of retirees or soon-to-be and now-retired Chevron oil and gas folks to start asking these questions. These are people that have worked in the environmental part of the community and have since retired. And I thought, Gosh, we all work so hard. At the time it was more air pollution than climate change, but climate change was rising too. We worked so hard to increase the corporate responsibility of these companies. So one of my friends, a recent retiree, Lucinda Jackson, just wrote a phenomenal book—it had nothing to do with climate change—called Project Escape. And the subtitle is “Lessons For An Unscripted Life.” It’s about any time in your life and especially upon retirement in your life. But she basically went into Peace Corps with her husband to Palau and learned everything about herself in the world. After a full career, she relearned about her whole life. It is the most fascinating read, personal read of a memoir that I’ve ever read. Highly recommend it.

Daniel Raimi: That’s fantastic. So she retired after a full career and then did Peace Corps?

Deborah Gordon: Yep.

Daniel Raimi: Amazing.

Deborah Gordon: Amazing. And went to Palau. And she’s such a good—if that was the rule, she was going to follow it. And when she and her husband got there, they realized that you can’t live by the rules that are set when you go to places around the world, just how countries and different people think and how governments act. And it’s a great read.

Daniel Raimi: Fantastic. Well, thanks so much for that recommendation. Sounds really fascinating. And thank you again for the book, which is No Standard Oil, and for coming onto the podcast today and helping us understand it. We really appreciate it.

Deborah Gordon: Oh, pleasure.

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