A method of making surfactants from lignin is disclosed by reducing lignin in the presence of a metal oxide or iron based catalyst in an organic hydrogen donor solvent to produce lignin phenol and subjecting the lignin phenol to one or a combination of several reactions such as alkoxylation, alkylation, sulfonation, sulfation, alkoxysulfation, and sulfomethylation. The lignin surfactants so produced can be employed in a surfactant system to recover oil from underground formations.