00:00:01 Jordan Yates
This episode of The Energy Pipeline is sponsored by Caterpillar Oil and Gas. Since the 1930s, Caterpillar's manufactured engines for drilling, production, well service, and gas compression. With more than 2, 100 dealer locations worldwide, Caterpillar offers customers a dedicated support team to assist with their premier power solutions.

00:00:27 Speaker 2
The Energy Pipeline is your lifeline to all things oil and gas, to drill down deep into the issues impacting our industry. From the frack site, to the future of sustainability, hear more about industry issues, tools, and resources, to streamline and modernize the future of oil and gas. Welcome to The Energy Pipeline.

00:00:50 Jordan Yates
Hey everyone. Welcome back to another episode of The Energy Pipeline. Today I'm here with my co- host, Lizzie Hurt, and our guest, Delfina Govia. Delfina is the Chief Sustainability Officer for a global logistics company, and a podcast host, Delvina... Oh, sorry, Delvina. Delfina, say hello.

00:01:12 Delfina Govia
Hello. Also, Jordan, I've been working in the oil industry for 43 years. I am so glad to see your show airing on the oil and gas industry network. I'm a pleasure to have a chance to talk to Lizzie Hurt, who works for an organization that has been supporting our oil and gas industry for decades, right?

00:01:36 Jordan Yates
Yes. It's going to be so much fun. If you guys have not listened to Delfina's podcast, you need to, because her energy is so much fun to listen to. We have a joke between podcast hosts like, " Oh, we don't listen to each other's shows," but I actually listen to hers, so I would recommend it. Okay, today we're going to be talking about unveiling the carbon footprint. I'm just going to ask you a pretty plain and simple question to get going, which is, " What is a carbon footprint, and why is it a significant concern in the context of the oil and gas industry?"

00:02:14 Delfina Govia
A carbon footprint is basically a measurement of what an organization's greenhouse gas emissions are. When we talk about that, we talk about, I'm going to use some language that people keep hearing, just so that these buzzwords are in their heads, and they understand what it means. When you talk about greenhouse gas emissions, normally people hear them in the context of Scope 1, Scope 2, and Scope 3. Let me just explain a little bit more what is Scope 1? Scope 1 emissions, greenhouse gas emissions, are emissions that occur from direct operations that an organization has. Whatever you are doing, that you have control of, if greenhouse gas emissions are coming off of that. That's your Scope 1. Scope 2 is emissions that are created by the source of power that you are consuming. If I, in my home, to make it really simple, if I'm buying natural gas for my home, from the utility company here in Houston, Texas, and they use a fossil fuel to power that utility to create that energy, that scope to emissions is my scope to emissions for a company. When a company buys energy, however that energy is produced, that's your scope to emissions. Scope 3 is anything that happens within your supply chain that is then once more removed. As an example, if I am a company, and I am purchasing transportation services, and that trucking company that is delivering transportation services for me is driving down the road, and their trucks are emitting carbon dioxide into the air, that would be Scope 3 emissions. Scope 1, Scope 2, Scope 3, add those all together, and that's your carbon footprint.

00:04:24 Jordan Yates
That sounds like a nightmare to have to track. Oh yeah, baby. Especially since the majority of organizations' emissions are Scope 3, which they have the least amount of control over.

00:04:41 Lizzie Hurt
Wow. Oh, that's really interesting to hear. I would've thought the focus would've been mostly on Scope 1. I guess that's not true.

00:04:50 Delfina Govia
Well, you used an important word there, and the word there of focus. What organizations have concentrated on most immediately is absolutely their Scope 1, because it's what they can control, it is what they are going to be asked about. If they are, let's say, a publicly traded company, their shareholders may want to know. If they have investors beyond just the shareholders. If they have other organizations, companies that are investing in them, they're going to be asked mainly about those Scope 1 emissions. Other stakeholders, like customers, are going to ask about your Scope 1 emissions. What are you causing to be emitted into the environment? That's where they have focused the most on. However, they are still quite concerned with the Scope 3 emissions. And yes, focused, but not as much on their Scope 2, by making more intelligent solutions about how they are securing their energy sources.

00:06:04 Jordan Yates
Delfina, would you say, since you work at a logistics company, that the Scope 3 is something that would be in your focus there? Am I following that correctly, or is that not related there?

00:06:16 Delfina Govia
In a logistics company, we are everybody's Scope 3.

00:06:19 Jordan Yates
Okay.

00:06:22 Delfina Govia
It's not about us, our own Scope 3, it's about the fact that we are everybody else's Scope 3. Organizations that need to understand that Scope 3, mitigate that Scope 3, we have to partner with them to help them put together the roadmap that's going to get them to whatever their goals are, whether they have declared that they want to be net zero or carbon- neutral, or simply that they're going to put in place efforts and plans to reduce. We are everybody's Scope 3.

00:07:02 Jordan Yates
Wow. That's a very big responsibility, and cool, because you do get to see the layer that seems so obscure to everybody else. I imagine that your views on sustainability, and the coined term of energy transition, is a bit more knowledgeable than the common person, considering the fact that you do look at every layer of it. What would you say, when we are addressing the term of energy transition, is that typically looking at all three layers or all three scopes, or-

00:07:39 Delfina Govia
Absolutely.

00:07:40 Jordan Yates
Okay. Could you explain how this transition's actually affecting those on the different levels?

00:07:47 Delfina Govia
Sure. Let me go back to the Scope 2 and the Scope 3 emissions. Scope 2, the majority of it, is how organizations procure their energy source. Let's go back to power plants. Power plants are powered by a number of things; natural gas, fossil fuels, coal, nuclear. That's how they're powered. To be able to reduce emissions, to be able to have an energy transition, what it means there is to find renewable energy sources that can feed into the production of power, of energy, of utilities, and not just electricity, but steam that is used in industrial processes. Hydropower is an example of a way of a renewable energy source. Solar is a renewable energy source, wind, a renewable energy source. Using that to power the production of electricity, instead of the what are considered dirtier options, is a big focus in the energy transition, transitioning away from dirtier fuels, non- renewable fuels, to renewable fuels. Then in Scope 3, what we are looking at is, especially if we're talking about the energy transition, the energy industry, we're looking primarily at the transportation space, and what renewable sources can be applied in transportation. Unfortunately, you don't have solar- powered trucks, right?

00:09:50 Jordan Yates
Not yet.

00:09:50 Delfina Govia
You don't have solar- powered cars. But we're talking about electric vehicles that are running off of an electric battery, which is stored energy, as opposed to using gasoline in your vehicle. Same thing with ships. In ships, where we have a huge move towards new ships coming online, using LNG as a source of fuel. You are using bunker fuel is probably the dirtiest of the fossil fuels that we have, of the diesel fuels that we have. It's nasty, dirty stuff. How do you improve the emissions off of that sort of thing? We're moving towards biofuels. We're investing in other renewable fuels to see what might act. Ammonia is on the table, methanol is on the table. As a matter of fact, Caterpillar, we've got Lizzie on the call. Caterpillar has now created an engine that is a dual fuel. It can be easily upgraded to be used with methanol in ships, in motors that they're doing that with. In the energy transition, it's transitioning away from the use of dirtier fuels to renewable sources of fuel.

00:11:18 Jordan Yates
I like that. I like that there's more options. I think sometimes we get a little focused on one versus the other, and that they're all working. It's a competition, but I think it's just enhancing the options we have now, and adding different layers. I like all the new energy options. I think they're cool, because it feels like a bunch of scientists got together, and are like, " How else can we make things work? How else can we bring power?" To me, anytime, even if it's renewable or not, I think any source of new energy is exciting. Lizzie, was there something you wanted to ask?

00:11:55 Lizzie Hurt
Yeah. In that answer, Delfina, you touched on Scope 2 and Scope 3, at least to my ears, it sounded like Scope 2 and Scope 3. Let's go back to Scope 1. I really want to dive into maybe a little bit more about the oil and gas sector. If we take a step back, can you help explain the major sources of carbon emissions, within the oil and gas sector, that fall into the Scope 1 category in different areas, like upstream, midstream, and downstream?

00:12:27 Delfina Govia
Absolutely. First, before I answer that question directly, I'm going to make this comment. The oil and gas industry is beat up the most, of all industries, when we're talking about a carbon footprint, when we're talking about emissions, when we're talking about the energy transition. What is not well understood is that the emissions, the direct emissions, and this is why I'm glad you asked the question, Lizzie, about the Scope 1 emissions coming off of the energy industry, upstream, midstream, downstream, the Scope 1 emissions, what we actually emit in the oil and gas industry, remember, I'm 43 years in this industry and I love it to death. The emissions from direct oil and gas operations is minimal, minimal, compared to the use of the production of the industry as an energy source in everything else. That does not mean that in the oil industry, we have not taken responsibility, if you will, in understanding and trying to come up with better solutions, and advancing renewable fuels, and other options, to reduce carbon footprint for others. But that's why we get beat up. We get beat up not because of what we're actually producing ourselves, but because the product of our efforts is the main energy source. 84% of the world's energy comes from oil and gas. Back to your question, Lizzie, about what exactly are our emissions in this space. In upstream, 60% of the Scope 1 for emissions comes from upstream, and that is primarily around the topic of methane. If you will see, we have had a number of methane summits. The Methane Mitigation Summit just occurred recently. I unfortunately didn't go to that. The Methane Mitigation Summit occurred last year, which I was at with bells on. We actually did a podcast, so you guys can look. Look at the two episode, I think it was two episodes on my show, and Joe Batir, on Energy Transition, did also an episode on his show around the Methane Mitigation conference. But it is around the methane emissions coming off of oil and gas productions. That's primarily around flaring, venting, and fugitive emissions that come off of, I don't want to get technical on everybody, but devices, compressors, that the gas escapes, the methane escapes. That is 60%, and upstream, that's where it's mainly from. In midstream, it is, again, a lot around methane and some fugitive emissions. But also, the fact that we burn fossil fuels in in our compressors at our compressor stations, to move product through pipelines. 15% of our Scope 1 emissions in oil and gas come off of midstream. Now downstream. Downstream, again, also, there's refining, there's petrochemicals. To be able to produce, to refine product, to produce petrochemicals, there is a tremendous amount of energy required, and we use fossil fuels in the refining of products, and in the production of petrochemicals. There is also sub combustion, there is also flaring. There's emissions, again, fugitive emissions that come off of processes, leaks, venting. I would say that the downstream sector, if I do my math correctly, is about 25% of our Scope 1. But these are all things that are manageable as we, I'm not saying if, it is all manageable, that we are attacking fiercely in the oil industry today.

00:16:56 Jordan Yates
There are, correct me if I'm wrong, it's been a while since I've done this, specifically, methods when it comes to these gases, we emit, for example, flaring. I used to work for a facilities company, and they sold big on zero smoke flares. They're saying there's a safer way to flare, and then there's a bad way to flare. Companies get really hounded on regulations for flaring. Would you say that within the industry there are nuances, where you can make the bad things a little less bad, a little less emitting? Or is it more propaganda of like, " Yeah, we're flaring less bad." Or is it always bad? When I say bad, I mean emitting. Is it still, if you have no smoke in your flare, are you still emitting just as much, or is removing the smoke actually helping?

00:17:47 Delfina Govia
Okay, removing the smoke is helping.

00:17:49 Jordan Yates
Okay.

00:17:50 Delfina Govia
Period, the end. Even if, even if, it's just to make people feel better. Let's also remember, there's a couple of components to this. There are so many topics within this space, so many topics within this space, that are public perception. As you pointed out, Jordan, there are many instances where public perception and the truth may be world's apart. But it doesn't matter, because we're the big bad oil industry, and everybody hates us no matter what, period. The end. Because we don't have big public relations departments that are trying to make us look good. We've always done the right thing. We've always done good things. But back to your question. On the topic of flaring, there are new technologies in place that have allowed us to dramatically improve our operations across the board; venting, flaring, et cetera, et cetera. We have locations in the United States, for example, Colorado, where there is a zero, zero, flaring venting rule. It's like, " Thou shalt not." The companies that operate in that state have risen to the occasion, and reduced their emissions. There are other locations across the country, that do not live in thou shalt not states, that have also dramatically improved their emissions by incorporating new technologies, new processes. But I think that what we're touching on here, it's not a matter of just public perception, there's also an economic component to all of this. It's a topic that we are continuing to wrestle with as an industry, and not just as an industry, as a planet. It's a broader topic of the economics of it all. What does that do to our industry when we put regulations in place, or we put goals in place, that do not allow the little guy to continue to do business? The big companies, the big boys, are able to invest in the technologies to improve their operations from an emission standpoint. However, that doesn't mean that smaller companies, especially when the price of oil is lower, that have the economic power to put in place some of the options and the tools that others have. I also think that, as we're having this discussion, what it takes to really do this properly is not completely well understood. It's not that, " Oh, well, they're flaring, tell them to stop it." It's not that simple.

00:21:31 Jordan Yates
Sure it is.

00:21:31 Delfina Govia
"Sure it is,just stop it." We'll just stop using fossil fuels for everything. All righty, then. Let's not even go there. All the environmentalists, you're still wearing clothing, you're still using cups, you're still sleeping on a bed, that's a byproduct some way somehow of the fossil fuels at its core, the petrochemicals that make the plastics in everything that we do. Let's not even start on that. Don't get me on my soap opera.

00:22:03 Jordan Yates
Girl, I could go all day.

00:22:07 Delfina Govia
And people, they don't want to hear it. They just don't want to hear it.

00:22:09 Jordan Yates
No. Go listen to episode three, though. We talk about petrochemicals.

00:22:12 Delfina Govia
Okay.

00:22:12 Jordan Yates
If you want to be exhausted-

00:22:13 Delfina Govia
Oh, girl.

00:22:15 Jordan Yates
Yeah, it's good. It was good. But I feel you there.

00:22:18 Delfina Govia
Yeah. Yeah. There's a whole other aspect to this. Again, I talk about the lack of public relations within the oil industry, that is just not a forte of ours. Our forte is doing the most difficult thing known to man. What we do every single day in the oil industry... Okay, my listeners out there, shut up. You've heard me say this before. What we do every single day in the oil industry is harder than putting a man on the moon. It is more difficult than putting a man on the moon. What it takes for us to do what we do is impossible. If anyone sits down and describes to you what we do, they're going to like, " Oh, my God, that's not possible." It's like, " Yeah, we do." Not only in the complexity, the technical complexity of what we do, to pull oil out of the ground, out of the bottom of the ocean, miles beneath the surface, that technology needs to be advanced and needs to be improved. There are numerous efforts that are exterior to the oil industry, but inside the oil industry, we're improving technologies to be able to do more with combating GHG emissions, climate change. On top of that, there are what they call IOT, information technology, that is being applied to the space, in the form of sensors, that allow us detection systems, that allow us to detect, that allow us to then take that information, that data, and manage it. You can't do anything if you don't measure something. Measuring, managing, monitoring, all that technology, that data coming together, so that it's not like, " Oh, we've got a leak, let's go stop it," but the predictive analytics involved to prevent emissions before it's happening. This is a very complicated space that is requiring the efforts of, not only the great technical petroleum technical minds at play, but technical minds from other disciplines, in the world of information technology. Even in talking about AI, this episode will air after one with Malur Narayan who went and spoke to the UN AI group in Geneva about how do you take AI, artificial intelligence, build digital twins to manage your emissions, let's say, in a refinery. That level of investment is not available to everybody in the picture. It's a struggle that we have to overcome to recognize that those that have are doing, but those that don't have as much are going to suffer.

00:25:34 Jordan Yates
I think it's frustrating, sometimes, that so much of the issues in this world come down to the socioeconomic aspect. I think the best and easiest to understand, saying that I've heard that you guys could relate to this, is if you ever watched anything with the Kardashians, there is this thing that says, " You're not ugly, you're just broke." It's not that you aren't pretty naturally, it's just that you couldn't get a nose job, and your face redone, and all of that. I feel that way about a lot of industries, especially oil and gas. It's like you said for the smaller companies, or the ones that are stretched thin because of all the regulations already put on them, giving them less bandwidth to actually go in the R& D lab, and figure out better ways to improve what they're doing. Then also trying to find money to spend on PR, to get people off their backs for a second, so they can actually focus on R& D. I feel like sometimes it just comes down to the money aspect. At the end, it can be frustrating, because we have these big ideas that we want the world to be a better place. We want it to be sustainable, but it all comes at a cost. Then we have to weigh, " Well, what's the cost? A safer planet, or having more money?" Everything costs money. I think sometimes we just have to step back, and chill out a bit, and see how we can actually help the problem. Because I feel like, rather than being attacked by standard environmentalists, what if we spent more of that energy on actually improving the existing technology? Of course, it's all a dreamer's thought of, " Oh, what if we could all just work together?" But I think that these energy topics in the media are good conversation starters, and I appreciate people like you, Delfina, who can actually speak to both sides of it, and wanting to improve while also understanding the logistics that go into these improvements. I love how you broke it down into the three different zones so we could actually can conceptualize it. Because I think as individuals, we are all in our own Zone 1s, and perhaps we can't all contribute to the Zone 2 or 3, but Zone 1 is where I guess we could start. Is there a way that you could suggest small changes to where we could be effective in our Zone 1s?

00:27:55 Delfina Govia
Well, you're bringing up a really important point about the economics of the whole thing. What we have to do is we have to pull into this conversation, not actually, since we don't have anybody we can just call on the phone, and get them on this call, but what we need to pull into the conversation is the finance community. One of the things that we heard heard repeatedly during CERAWeek was the economic investment, the investment from the financial community that has to go into this space. The financial community has invested quite heavily into renewable fuels, into different types of technologies that are going to improve in the energy transition. But where's that investment going? Are we seeing that investment going into third world nations? Maybe not. The answer is no, it's not. If you're an investor, you're going to invest where you're going to get the biggest return on your money, and perhaps a third world nation is not where it's going to be. We heard from representatives, from oil companies, national oil companies, from other parts of the world saying, " You finance guys are putting all your money into the first world nations." Yet, everybody wants to beat up on us, over here, when our oil industry is what sustains our country. All of this talk, and none of the financial investment that is coming over here, and it's just basically, we're getting beat up for something, and we're not getting the support that we need, very much from a capitalistic perspective. I just have to say that, that there is a whole other aspect to this conversation, which is the financial community. Then, down to who bears the cost, ultimately, and that is the consumer. When you ask the question, Jordan, of what can we do on our Scope 1 ourselves, do you mean as individuals, or are you talking about an oil company in and of itself?

00:30:14 Jordan Yates
I guess I'm asking more as an individual, because as the listeners hear this, maybe they want an action item of something that they can actually feel like they're contributing. I don't know if it's as simple as recycling-

00:30:27 Delfina Govia
It is.

00:30:28 Jordan Yates
...or only, what is it? If it's yellow, let it mellow. If it's brown, flush it down. I read that in a book when I was in elementary school, and it stuck with me.

00:30:39 Delfina Govia
Right.

00:30:39 Jordan Yates
I have to admit I don't do that, but I've heard it's effective. Is there anything that you would say, on a personal level, that we could do, that you would say is very effective?

00:30:49 Delfina Govia
Let me tell you the very first thing that we need to do, and that is... Again, my listeners shut up. You've heard me say this before on my show. The very first thing that we need to do is we need to start with the children. It is not that the energy itself is the problem. It's the fact that human beings are acting and behaving in ways that are causing problems. It all starts with ourselves, in how we behave. Do we behave responsibly? But we have to start with the children. We have to start with educating children, and not in a scary, uninformed way. An organization that I showcase on my show is called CELF, Children's Education Literacy Foundation. Okay, Lisa, I know I probably messed that up, but it's CELF, C- E- L- F. What they do is they go into schools, and they work with teachers, and they provide them with scientific tools so the children can study topics of sustainability, and it educates them. It allows children to understand, right from a very early age, what the energy transition is about, what opportunities there are for them to contribute as young members of society. Then from there, we are going to grow the young people, that then go into industry, that lead us forward. Then, from an individual perspective, is we need to stop pointing fingers, stop arguing, and figure out ways that we can have open and honest dialogues, and work together. Then, yes, take personal responsibility. Do I personally recommend that everybody go out and buy an electric vehicle? No, I don't. We're not going to get on that topic. It has nothing to do with the fact that I've worked in the oil industry for 43 years, and I still want everybody to buy gasoline, or the fact that my child is graduating with a petroleum and engineering degree next year. It has nothing to do with that. I have my own issue with electric vehicles, and batteries, and the whole infrastructure. It is having, we as individuals, need to have intelligent conversations, because as citizens of the United States of America, we need to understand what our lawmakers are talking about, what they're doing, what they're putting in place. Hopefully, as a society, we can ask for the governmental support that we really, truly need to advance, and also remember how incredibly privileged we are in this country, and that things that make sense in our heads here do not make sense for people in other parts of the world that have no options. Let's really, truly, be good global citizens.

00:34:22 Jordan Yates
Insert slow clap. Lizzie, how do you feel about all of this? I know we're getting close to our time, but I'd love to hear your thoughts, and any remaining questions you have for Delfina.

00:34:36 Lizzie Hurt
Yeah. You made a lot of really good points there, Delfina. I honestly liked hearing about the CELF, C- E- L- F, organization targeting children, getting them to think about that. Because even from me trying to get kids excited about STEM, you got to get the kids excited. Getting more women in engineering, that's a 20- year- long problem type deal. I think that's great, with a sustainability standpoint, going and targeting, getting children to think about that. I think that's a really, really great point. I think that's pretty good, Jordan.

00:35:12 Jordan Yates
I know I feel like sometimes I don't even actually need questions, because Delfina, you get to so many good points on your own. That's why I love having podcasters on my podcast, because they understand how to formulate it all on their own. It's wonderful. I liked having you as a guest, it was very exciting. I don't know if it's because my air conditioning's really low, or because you've been inspiring me, but I keep getting the chills, so it's been fun. Delfina, one last question. Before we started, you were giving us tips or recommendations of other good podcast episodes that touched on some of these subjects. Could you plug those for the listeners now, and tell them what they should listen to if they want to hear more on this discussion?

00:35:58 Delfina Govia
I absolutely would recommend that if anybody wants to understand, learn, about geothermal as a wonderful, wonderful option, listen to Joe Batir's Energy Transition podcast. Joe is fabulous. He explores a number of different topics in the world of energy transition. Look up Joe Batir Energy Transition, that's on the Oil& Gas Global Network. Elena Melchert, who does our Upstream podcast. She's also a good source. On my particular show, I would recommend people listen in to a couple of folks that really honed in on the challenges. The first one would be, listen to Jane Stricker, who is the Jane Stricker Executive Director of HETI, Houston Energy Transition Initiative. Houston Energy Transition Initiative is part of the Greater Houston partnership, and it is focused on all that we need to do, as an industry, bringing people together, to continue to promote the fact that we are here in Houston, Texas, the energy transition capital of the world. Listen to Jane get involved with HETI is another recommendation. Then I would also listen to my other show, with Cosma Panzacchi, who is the Senior Vice President of Strategy and Sustainability for Siemens Energy. He does a brilliant job of talking about how, as a senior executive at one of the most recognized and influential companies in this world, how he is tackling the challenge of sustainability within his organization. There are two. Then, of course, there's a million and one episodes on different types of technologies, new technologies, that are coming to bear. There's one from the guys from Catalyst and Gardner Denver that partnered on this really cool hydraulic fracking direct drive solution for fracking. It's fantastic. Yeah. That's what I would say, is listen to those podcasts. Listen to Joe, listen to Elena, bunch of mine, and of course yours, Jordan.

00:38:17 Jordan Yates
I was going to say, you better plug me in my own podcast.

00:38:19 Delfina Govia
Absolutely.

00:38:21 Jordan Yates
Well guys, thank you so much for listening today. I hope you learned something, and I hope we were also able to entertain you a bit. My name is Jordan Yates, and I'll see you next week. Bye.

00:38:34 Speaker 2
Come back next week for another episode of The Energy Pipeline, a production of the Oil and Gas Global Network. To learn more go to oggn.com.