Episode: 434 |
John Van Leeuwen:
The Oil and Gas Industry:



John Van Leeuwen

The Oil and Gas Industry

Show Notes

John has 25 years consulting experience consulting in Manufacturing, Supply Chain Management, Sourcing, plant and business unit transformation, revenue enhancement, growth strategies and turnarounds. He has launched many multi-year corporate transformations which have delivered over $1.5 billion in annual value. He has advised senior executives and business unit leaders in a broad range of industries including oil and gas, chemicals, basic materials, industrials, automotive, engineered products and aerospace. John’s company website is Lionstutz.com and he can be reached at JohnVanLeeuwen@Lionstutz.com.

  • 01:50: Terminology of the oil and gas industry
  • 07:30: Drill holes and piping
  • 10:14: How they keep the oil and gas moving
  • 13:17: The ecosystem of the industry
  • 20:15: Labor in the industry

One weekly email with bonus materials and summaries of each new episode:

Will Bachman 0:01

Hello, and welcome to Unleashed the show that explores how to thrive as an independent professional. I’m your host Will Bachman. And I’m excited to be here today with my good friend, john van Lewin, known each other for years. And, john, welcome to the show.


Jon Van Leeuwen 0:16

Thank you for having me. Well, I’ve been looking forward to being part of this.


Will Bachman 0:19

So john, I know you do a ton of your work in the oil and gas industry. And I asked you while ago to give me a bit of a primer on the industry. And thanks so much for coming on the show to do that. I was hoping that, you know, I’ve heard the trains upstream and downstream, and maybe I have some idea what we’re talking about with those terms, but would really love to hear just a real primer on oil and gas and just walk me through the whole value stream from just the very kind of very beginning on the left hand side to, to the to the gas pump on the on the far right.


Jon Van Leeuwen 0:54

Um, I’m looking forward to doing that bill will. But the first thing I wanted to say is, in the oil and gas industry, safety is paramount. Because we deal with, with hot things, things that can kill you. And so typically, when we start a meeting in the oil and gas sector, we start with a safety moment. I love it. And I think given that it’s coming up on the new school year, we all need to be reminded to go a little slower, take a little more time, watch out for those school zones that we’ve been flying through the summer. So that’s my safety moment.


Will Bachman 1:33

I love it that, you know, I was in the nuclear Navy, and having a safety briefing is part of a lot of things. And that was the first safety briefing on the show. So it took almost 430 episodes to get to safety briefing. I’m glad that you brought that up. Be careful out there.


Jon Van Leeuwen 1:50

So no, so let’s jump into it because it’s going to, there’s a whole litany of terms that we’re going to have to introduce, as you mentioned, To start off with, he talks about upstream. Now upstream really talks about or focuses on drilling wells, and producing oil from from the well or gas from the well hydrocarbons, we should say. But it goes it starts much earlier than that, we need to start with exploration and development. And many of the companies are going to have to go and contract with governments for leases, or for opportunities to drill and to explore in various sectors of the world. And so you’ve got upstream and exploration and before exploration, you have to do seismographic. So you have to actually figure out what’s underground by exploding explosives. And then looking at reflections of the signal that hits rock and hits other formations underground. So when you move from seismic into exploration, then you are looking at finding oil and gas that may be 10, or 20 or 30,000 feet below the surface of the ground and maybe under 10 or 15,000 feet of water. Once we’ve explored and found oil are found gas, then you’re going to develop those wells. And so you’re going to have you’re going to drill a drilling program to develop a number of wells, then you’re going to connect those wells and produce the oil or the gas. So that’s the kind of what upstream is in a nutshell. There are a number of companies, all the large oil majors that are involved in it. But there’s a lot of companies you might have heard of things like wildcatters people that go out and get a few 100 million dollars and try to find the next major oil fine. Now moving from upstream, we have what’s mid what’s called midstream. And typically on land, you would have gas gathering oil gathering systems that would gather the hydrocarbons into a central location and then pipe them to the downstream refining facilities. You may have heard of in the US we have the Keystone pipeline that’s had a lot of press recently, there’s a number of other pipelines that have had a lot of press. And that’s the easiest way to move hydrocarbons on land. And of course when removing hydrocarbons, oil and gas from from Middle East or other locations, we’re putting them to tankers, or even trucking hydrocarbons. Beyond that we have downstream and downstream typically focuses on refining assets where we’re taking the oil and heating it up or and putting on our pressure and separating the oil into various components. You can have light ends Such as ethane, methane, propane, you’re gonna have gasoline, and then you’re gonna have heavier material like diesel, and even asphalt beyond downstream, then you typically have what they call marketing, which is selling the products either through the gasoline retail station, or other means of distribution. In parallel with all these upstream midstream downstream, we also have the whole gas stream, and we have what we call natural gas liquids, which has been very popular in the US recently, and sort of spearheaded the chemicals industry in the US with the prevalence of ethane from fracking, which gets me back to something that I missed in in the upstream. There’s a lot of discussion around conventional and unconventional oil and gas, and unconventional oil and gas has what we call fracking, or fractionation of the rock. And that’s where we’re breaking up the rocks so that the hydrocarbons that are locked in the rock pores can come to the surface. If I continue, another element of downstream would be the petrochemical industry. And without oil and gas, we wouldn’t have a significant portion of our petrochemicals, including many of the plastics that we use in everyday life today.


Will Bachman 6:42

Okay, so I’m going to pause you there, because I got a couple questions. Absolutely. So I do want to get to some business stuff, but I guess got some technical questions that I’ve always wondered about. So Sure. So drilling these holes that are 20,000 feet deep, like almost four miles deep. I guess just, you know, being kind of ignorant about it, I kind of had this, you know, I’ve just picture it, of being some kind of this drilling and this rig being kind of something that would be turning up at the top and this big, long kind of metal, you know, super long kind of drill bit, you know what, you know, drilling down, but I’m thinking, Okay, you can’t have a four mile long drillbit, because it’s just going to share. So how do you actually drill for miles down into the earth? Like, is the drill just kind of some motor at the bottom of this thing? How wide are these holes?


Jon Van Leeuwen 7:39

A very good question. It’s actually pretty amazing what the oil industry has, has been able to do. I don’t know all the technical details, because I’m no drilling. But on the horizontal drills, horizontal or on the vertical wells, you actually do drill with a drill pipe, down one mile, two miles, three miles. But what’s really interesting about drilling is they actually do horizontal drilling. So how do you go down 10,000 15,000 feet, and then start drilling horizontally. And they actually do have a motor, but they don’t have a motor, then traditional mindset, and you would have like electricity. Powering the motor, they actually power this motor with with material called mud drilling mud, which is a liquid that they pumped down into the well. And they force it through a thread system that causes the drill bit to turn, and then actually drills the hole. Pretty interesting how they’ve figured out how to how to do all these things. 234 miles down in the earth?


Will Bachman 8:49

Wow, that’s incredible. And how wide are these holes? They go into the ground?


Jon Van Leeuwen 8:53

The diameter is often about nine or 10 inches. Wow, you can’t fit much down that well.


Will Bachman 9:00

Yeah. Holy cow. All right. And do they have to reinforce it all the way down? Or is it just solid rocks? I mean, God, I just imagine that the rock might shift and you know, knock some rock into there. And then you got to dig, drill the darn thing out again. So


Jon Van Leeuwen 9:15

you’re a very curious guy, and you’re asking really great questions. At the top of the well, you’re going to cement the well in, you’re going to cement a pipe producing pipe. So they actually do support the, the wellbore. with Samantha with a pipe. There are other issues that you have to deal with. Down in the well you have maybe sand that might want to come into Well, you may have other elements that might come in the well. So they do run casing, a metal casing down the entire length of the well. And in some cases, you’re going to use screens to keep the sand out of the well as well.


Will Bachman 9:56

Wow, that’s incredible. Now, question about pipelines. I’ve always just wondered this, I should probably just look it up on YouTube or something. But I does a guy on the phone. Do those pipelines have pumps every so often? I mean, how do you keep the oil the hydrocarbons moving along?


Jon Van Leeuwen 10:14

They absolutely do. There’s two types of pipelines. There’s a gas pipeline, and an oil or liquid pipeline, they operate slightly differently, of course, no liquid pipeline, you’re going to have a pump every 20 3040 miles and a gas pipeline, you’re going to have a compressor to compress the gas. But what’s interesting about the liquid pipelines is if you have a what they call a products pipeline, you can actually put gasoline and then put diesel and then put different products, like regular and premium gasoline into that pipeline, and then just separate it, you know, between the different products, and they don’t actually mix that much. So you can actually have regular fuel and then premium fuel in the same pipeline.


Will Bachman 11:04

That’s amazing. Yeah. All right. Cool. So back to the business side. So there’s all these different aspects of oil and gas? And I guess, you know, I would imagine, I mean, this is sort of the most obvious thing to say, but sort of an unusual industry to some degree, because the end price is fluctuating so much, right? The price of oil is always going up and down. So like, but some things probably just they just have a cost, what they cost. So where along the that whole value chain, do things get particularly squeezed? I mean, probably, I’m just guessing that the pipeline cost is sort of what it is like, you don’t pay more or less, depending on the price of oil that day. So like, who really kind of gets squeezed if the price of oil goes down? And who makes it makes a ton of money if the price of oil goes up?


Jon Van Leeuwen 11:59

Well, you know, the oil industry is a true commodity industry. And so price is really driven by supply and demand. Now, a lot of companies will just take a tolling cost for, you know, transporting oil or gas in their pipeline. But some people will get greedy and say, Okay, I want to have a certain percentage of the price or the value. And so they will, you know, they’ll they’ll want to participate in the upside, as well as the downside prices. So when prices are looking are looking really good, of course, they’re going to look for upside. And then they’re going to try to pull away and go more to a toll tolling agreement or a tariff agreement when prices are going down.


Will Bachman 12:48

Talk to me about the structure of the industry a bit in terms of the companies, I mean, we’ve all heard of the, you know, the big sort of consumer name brand companies, you know, Exxon, and mobil and so forth. But what, you know, are there places in the industry where it’s lots of like, highly, highly fragmented, and lots of companies that the average person’s never heard of all just talking about some of the, you know, that whole ecosystem?


Jon Van Leeuwen 13:17

Very good question. This is a highly entrepreneurial driven industry. And I’ll get to that in a point. But everyone knows the big oil companies we call an IOC s or the integrated oil companies. Going to the next level down, we have the independence or the smaller majors. And those independents might be like a Devin, or a Apache, or a pioneer, you may or may not have heard of those names. Beyond that we have a lot of smaller companies. And what’s really happened in the US and part of the industry is a lot of private equity backed oil companies. These are oil executives that have come from the larger companies received 100 million or 200 million or some number to go and acquire some land and develop some wells. What what backs up all the oil companies is a very large ecosystem of oilfield service companies and oilfield equipment companies. This has happened sort of a 3040 years ago, the oil industry was much different. We had the integrated oil companies had were fully backwards integrated in the value chain. And they could provide all their services, drill their wells, and do everything else. But over the years, they have spun out a lot of these services and equipment programs. And so now they rely on a large ecosystem of service providers and equipment providers. And so and then what you Have happening is a lot of these companies have people that decide to leave and develop a new technology and service the company industry again. So you have hundreds and hundreds, at least in the US, you have hundreds and hundreds of small, independent service organizations that have gone out and bought some equipment, and are now providing services to the larger oil companies.


Will Bachman 15:26

That’s interesting. And I imagine at the at some scales, it sounds like there might not be big opportunity, you know, big economies of scale. Like if you’re, you know, providing a service at you know, at some oil field that doesn’t, you don’t get a lot benefit. If you’re, you know, we’re much, much bigger organization with overhead. Is that the idea?


Jon Van Leeuwen 15:47

Well, you got to think about the industry and multiple segments. Clearly, if you’re building a major if you’re developing a major wellfield, in Guyana, or Russia or in the Gulf of Mexico, you’re going to need to go with a larger organization that can funded that can take on the risk, and has the technical wherewithal to, to undertake a major billion multi billion dollar oil project. But when you get to the smaller fields in Arkansas, West, West, Texas and New Mexico, yes, you can go with much smaller organizations.


Will Bachman 16:31

Give me Give me either not necessarily specific names of companies, but to sort of describe for me a couple different types of companies that are in that smaller scale of oilfield services, you mentioned renting equipment like what kind of equipment might they rent? And and how do


Jon Van Leeuwen 16:48

we know if we go back to the upstream that’s primarily what I’m talking about. If you have to drill a well, you have to complete a well, which is pumping doing the fracking of the well pumping chemicals into the into the wellbore to develop it, then you’ve got to run your semantic, you’ve got to run your casing and run your cementing and then you got to put a wellhead on it. So, there are companies that are focused on each element of drilling and completing a Well, once the weld is completed, of course, you have to tie that well in to the pipeline system. And then you have to produce the oil or gas subsequent and and as you had said earlier, Wells can consult up they can sand up the wellbore can collapse. You also can get paraffin and other materials forming in the wellbore. And so frequently, you have to treat the well with chemicals. So let me just focus on one area that you probably have heard before it’s it’s pumping services, which is basically fractionation of the wellbore. There are big companies like Halliburton, liberty, Schlumberger, that have been doing pumping services for quite some time, and they’ll have large fleets of equipment, billions of dollars of assets, focused on pumping. But over time, they develop their technology. And there’s equipment available in the market for a lot cheaper. Either it’s used equipment that’s been sold, or it’s been bankrupt companies that have had their assets taken over and then sold at auction. And so someone with these up f150 can go and buy older technology equipment, and start a business pretty much on the cheap and do something similar, not as good, but they can also they can provide it at a lower cost points.


Will Bachman 18:53

What about staffing firms in this industry? Is there a lot of sort of independent workers who will kind of work on a project for a while, but then that project gets, you know, fully cleaned up or pumped or drilled or whatever. So are there a lot of independent professionals in this space?


Jon Van Leeuwen 19:10

There are a lot of, I’d say independent labor’s maybe less independent professionals, but there are independent professionals that have technical backgrounds, engineering that are completions, drilling, a lot of techniques, a lot of technical folks that’ll go on a website, be there for a couple of weeks and then move on to the next Well, yes, it’s it’s a very transient labor force. You’ll also find a lot of people, particularly overseas, you’ll have a number of technical people that will go overseas for four weeks on four week off rotations. And that’s just the way of life


Will Bachman 19:53

in transit and so independent labor force as well. So there’ll be a lot of more, you know, Labor type of workers who are, you know, kind of the people who would, you know, do either maintenance or, you know, work on the drilling equipment or so forth that will kind of go from job to job. That’s right. Interesting.


Jon Van Leeuwen 20:15

You’ll even see this in the downstream. What’s amazing, is you look at a refinery, and there may be only six or 600 or 1000 people employed at the refinery. But they’ll have another 1000 or 2000 contractors that are there, periodically, sometimes permanently, doing maintenance work. And then many times, these refineries have to come down for two or three weeks for a turnaround every couple of years to repair things, and to clean out things. And then you might have two or 3000 people on site during that repair time.


Will Bachman 20:51

Talk to me about some of the types of consulting projects that you’ll see in this whole industry, what are some of the common things where some of these firms will rely on management consultants for


Jon Van Leeuwen 21:06

some time, they’ll they’ll rely on for many different many different types of functional work. Like one of the challenges frequently in the oil industry is because it’s such an entrepreneurial driven industry. Sometimes they’re more comfortable doing figuring it out on their own than using a management consultant. But we’ve done organization work, done quite a bit of due diligence work on private equity companies looking at acquiring other organizations, quite a bit of supply chain work, what people don’t really realize, is that to drill a well, or to move hydrocarbons, it’s really a logistics and supply chain. If I’m going to drill a well, I need to make sure everything is at the wellsite at the time when I need it. It’s not there early. And if it’s late, it could cost me 50,000 or $100,000 a day in equipment that’s idle, and people that are idle, because I don’t have the right part there.


Will Bachman 22:07

Second, I can see, I can see wanting to avoid that.


Jon Van Leeuwen 22:12

Yeah, we call that non productive time. And that’s something that most oil companies measure very carefully.


Will Bachman 22:21

Yeah. I’m for independent consultants in this space, like, what are some of the other types of maybe trends that you’re seeing our other types of kind of themes, either around like data and analytics, or around, you know, digitization of processes, you know, some common themes you see in other industries or anything around crypto or blockchain or curious what what are some emerging things that you see?


Jon Van Leeuwen 22:52

Yeah, I mean, you know, digitization, and blockchain and all that are things that people are interested in talking about. And many of the larger oil companies do have digital programs. I think the two biggest things that are really at the forefront, all three big things that are at the forefront, most oil companies right now is first the energy transition, and many of them committed have committed to being carbon neutral, by 2050. And that’s a high order when you actually produce a product that produces carbon. So they’ve, they’ve got their work cut out, I don’t think they all know what they’re going to be how they’re going to get there. And if I’m the CEO of a company, I’m going to be retired before I get to that target. But they clearly have to work through that. Secondly, is just the broader ESG phenomenon. And yes, part of that is energy transition, but also social governance. But it’s really hitting most of the oil companies hard right now is with the energy transition. They’re having to move from thinking about being around forever and ever to having a terminal value on some of their assets, which is zero now. And so the investing community is now looking for positive free cash flow, as opposed to before that they would value oil reserves in the ground. And so that has been a major transition, of moving towards positive free cash flow and distributing more of their income and their cash flow to the shareholders.


Will Bachman 24:31

That’s really interesting. Yeah, you, certainly politically, you see, a lot of people are kind of denying, you know, that carbon is contributing to climate change and so forth. But it sounds like you’re inside these companies. There’s this recognition that yes, you know, we need to go you know, move away from carbon. And that’s just the reality of What what’s happening in the world. So it’s kind of interesting, like, maybe the people who, you know, some of the more frontline workers or you might be voting for politicians who just sort of deny climate change is happening, but but actually internally at the board level, and a top exact level people are, you know, kind of accepting and kind of making strategies around it.


Jon Van Leeuwen 25:25

I, that’s a good point, I actually like to group into three groups, there’s the advocates, or the first movers. There’s the realist, and there’s the denialist. I live in Houston, Texas, and there are a lot of denialists that believe that 2050 is, is not doable, and that we’re going to be the oil and gas. For some time, we are going to be needing oil and gas for quite a bit of time, particularly for the chemicals industry, but it’s going to change dramatically. Over the spring, several of the oil companies had a real come up on shell had a loss, a major court decision in the Netherlands, Exxon had to more energy, environmental friendly, board members voted on to its board, and Chevron had another program that came up. So all of all of the big oil companies are now recognizing that they have to embrace and be thinking about energy transition.


Will Bachman 26:31

So does that mean that they’re internally they’re kind of figuring Okay, you know, we really, we can only be running this refinery for another 30 years or something, because we’re pretty much going to need to be, you know, shutting down and not pumping all the oil that we have, you know, claimed and so forth, that they’re actually thinking, Hey, you know, we only got another 2030 years left, and we have to kind of dial down this industry to zero.


Jon Van Leeuwen 26:55

We don’t know, we don’t know. I mean, if I’m Saudi Arabia, and clearly thinking about how do I maximize the hydrocarbons that I have, in my country, if I’m shell or Exxon, and with a 10, year 10 years of reserves on my books, I’m thinking about how am I going to maximize those, and then I’m going to go and spend more money exploring for additional reserves or not, if I’m a refiner, and I was talking to a board member of, of a company that owns four refineries, I’m asking myself, what is the government going to tell me to do what is what are the new rules and regulations? Am I when am I gonna have to think about closing some of these refineries down because electric vehicles are going to reduce the amount of refined products that are needed. These are a ton of unknowns. And we’re all trying to figure out what, what the future is going to hold for us. But we could either we can understand we’ve had her sit and wait to be told. Or we can start creating some scenarios and figuring out what are the no regret moves that we need to make to be, you know, maybe not at the forefront? But be close to the front? Do you


Will Bachman 28:05

see companies saying, Hey, you know, we’re good at big technology, capital projects and looking to you know, build wind farms or solar, solar farms and so forth, or other sorts of renewable energy kind of things? Are companies going in that direction?


Jon Van Leeuwen 28:24

Well, they all are going in looking at the shell and BP in particular, the Europeans are much further along in embracing and accepting that there is going to be an energy transition. But all the companies are are looking at different vehicles to continue to be in the energy industry, but maybe in a less carbon intensive way.


Is this if you want to if you want to go on from that it’s not just electricity. You know, people are exploring, you know, what, how are we going to power vehicles? How are we going to power airplanes? How are we going to power major trucks? And one of the fields that people are looking at us hydrogen, we don’t know if that’s if that’s going to take off or not. But there’s been a lot of work on hydrogen as well.


Will Bachman 29:19

Yeah. Hydrogen vehicles and so forth. Find them in a few parts of the country, I guess, California. Yeah. Tell me about what’s it like in the oil and gas industry as an independent consultant? Have you found that it’s an industry that you know, very much, is only going to engage consultants who have sort of deep expertise in the space because there’s just a sense that they want people who have been in the industry and outsiders can’t figure it out.


Jon Van Leeuwen 29:56

Like in the industry, the white blood cells come out when you don’t Know the industry, there is a ton of technology and beliefs that if you haven’t drilled the well, you know, you don’t know the oil industry. I’m lucky because I spent some time in Nigeria and people then feel sorry for me. So that’s, that’s my credits to get into the oil industry. But yes, it’s, you need to know, quite a bit of oil industry to be accepted into the oil industry.


Will Bachman 30:27

You mentioned, Nigeria, what Tell me about the international nature of it? I imagine that it might be more international than some industries, because, you know, so much of the technology, you know, it could just be used in any Well, I suppose, or, you know, any well for this, right kind of geography, and geology, and people often are working and, you know, relatively remote locations. Talking about some of those aspects of the industry.


Jon Van Leeuwen 30:57

The, the worldwide demand for oil alone, not not gas is about 95 to 98 million barrels a day, the US produces, I don’t know, the exact number of probably 10 to 10, or 12. For the US is is is a player but you know, not not the whole industry. Of course, everyone’s heard of Saudi Arabia, and they’re a larger player, large player. And OPEC is contributed quite a bit of oil as well. But it is a truly an international industry. You know, clearly the Middle East has a lot of production. Russia has production, Australia has production. But you know, think of a country and most countries produce oil or gas. Except maybe the small little Pacific Islands,


Will Bachman 31:53

right? And so is it imagined as a place where a lot of the people have spent time, you know, internationally, either, maybe to earn your stripes to get promoted at some of the majors, I imagine that you had to have, you know, worked on location, either at a offshore platform, or somewhere in South America or Africa or, or Central Asia. Tell me about that a little bit is that sort of part of the culture where people are expected to be willing to, you know, move abroad and, you know, live in difficult conditions for some time.


Jon Van Leeuwen 32:30

It definitely is part of the culture of being international living International, having international experience, it’s a great experience, because you move away from headquarters, and you have to do a lot more work on your own and figure things out. But there are also companies that are pure play domestic companies. So it really depends on which company you belong to, whether you’re going to get an international tour or not.


Will Bachman 32:56

Let’s turn to your practice a bit. JOHN, you mentioned a couple of types of things that you’ve done, but could you give us maybe walk through one or two case examples, you can sanitized obviously, of projects that you’ve been involved in?


Jon Van Leeuwen 33:11

We’ve recently had the fortune of working with a number of on a number of mergers. It’s actually been quite interesting, because we’ve worked parallel with the McKinsey team or a Bain team. And we’ve carved out the supply chain and sourcing and logistics side of the business. And so, you know, I’m thinking of one company, which was midstream company that purchased another midstream company, and they wanted to go in and upgrade their their sourcing and procurement practices. And we came in and did a typical sort of strategic sourcing diagnostic developed the program, and it was worth $180 million to improve their sourcing practices.


Will Bachman 33:57

That’s amazing. Can you tell me a bit some of the details of that? I mean, obviously, keep it sanitized, but like, what sorts of opportunities Did you identify for them? That’s incredible.


Jon Van Leeuwen 34:06

Well, you know, one of the things that we find in the oil and gas sector is there’s a lot of people that are doing things very quickly. That, you know, we’ve talked about non productive time or npta time. And so they’re, they’re always rushing to do things. And if you if you actually look at sourcing practices and come up with better contracting terms of things like that, you can find value pools that have been untapped. So in the case of this midstream company, we revisited some of their contracts. We looked at ways that they were buying valves and pipe we looked at in pipes, you have to inspect it on a frequent basis. Good example, you have to inspect it every couple of years to make sure there’s no cracks. There’s no potential flaws that might cause an explosion or leak. And they were, they were not contracting as well as they could. They were also analyzing over analyzing the data. So we kind of helped them to create a fit for purpose solution. And, and leverage the best value for that solution.


Will Bachman 35:25

That’s cool. So there must have been spending a pretty fair amount to be able to save $180 million, since


Jon Van Leeuwen 35:33

these projects can cost millions of dollars to lay pipe, I’ll give you a give you another example. We were working with a was talking about a fracture fractionation company or a pumping company. And this give you a great example of how they don’t plan very well. This company would plan on needing, let’s say 10 million pounds of sand every week. And by the end of the week, they would only need seven. So they’re always going to their sand provider we call a profit and asking for 10. And then telling you over the course of the week, telling them they only needed seven. And so that sand provider was having to scramble during the week and provide the sand to other people. And how does this happen? Well, a lot of companies, they don’t send they don’t commit to their suppliers until the Friday before the next week. And so if you’re always if you’re only committing three, four or five days ahead, then the supplier has to sort of over prepare for the next week, just so they don’t say no to their customers.


Will Bachman 36:46

And how did you help them get down to a smaller number without, you know, being short sometimes?


Jon Van Leeuwen 36:55

Well, it’s it’s it’s working with the customer base to understand and to get them to commit to longer longer lead time plans. It’s also in creating more transparency around the planning process. And so that they could consistently see that they were falling short. When we went and talked to them. First time they said, Look, we always we have 100% adherence to plan. We said, Well, how do you know that said, Well, every time we get an update, we update our plan. So what we started doing is taking every week, we would take a snapshot of their plan and then look at the variance to plan on a week by week basis. Once you start looking at the variance plan, now you can start figuring out where the problems are and addressing those problems.


Will Bachman 37:46

That’s pretty cool. So you really had to dig in there to actually like, because they didn’t even they weren’t even aware of the problem. It sounds like there’s more


Jon Van Leeuwen 37:53

there. They’re aware of sort of that the cerebral level, but not necessarily. At the data level.


Will Bachman 37:59

Yeah. Yeah. Yeah. To what would you suggest to people who want to learn more about this industry, if there’s any podcasts or newsletters or websites or books


Jon Van Leeuwen 38:16

that they’re probably are I’m actually going to pick on a friend of mine, who knew nothing about the oil industry or the petrochemical industry and got head hunted for a head of strategy for a petrochemical company. And so what I would have told him to do is there are a number of books out there, it’s called the non technical guide to oil and gas, the non Tyson co guide to refinery by a guy named lafleur. And that’s what I would start with my, my intro to petrochemicals, was in England. And I was told that, like any consultant over the weekend, you need to become an expert on pet petrochemicals. And so I bought the book on the non technical guide to petrochemicals and read up to least the familiar with the terminology. That’s great.


Will Bachman 39:07

And how do you kind of stay current with what’s the latest going on in the industry?


Jon Van Leeuwen 39:13

There’s quite a bit of research a lot of quite a bit of industry newspapers or or, you know, emails that go out and so I subscribe to a few of those.


Will Bachman 39:24

Fantastic. Well, john, if people wanted to follow up with you and get in touch, where would you like to share with them in terms of either your website? We can include any of these links in the show notes?


Jon Van Leeuwen 39:37

Oh, absolutely. My website is lion stats calm that’s lion is in the animal Li o n s t u Tz calm and I can always be reached on my email at jvl. JOHN Victor London. Outline stats calm


Will Bachman 39:56

and how’d you come up with the name for your firm?


Jon Van Leeuwen 40:00

Great question. There was a long and hard process, because most names start sounding like apartment complexes or wineries. But I’m my wife’s the marketer in our family and Lyman Stutz Van Leeuwen, which is my last name is Brian, and my mother’s maiden name is stuff. So the combination of line and stuff is how we came up with.


Will Bachman 40:21

Fantastic. All right. JOHN, thank you so much for being on the show today. This is a great discussion.


Jon Van Leeuwen 40:26

Thank you very much for having me. It’s an amazing industry and I’d be happy to talk to some of your listeners about it as well.



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