Chad McAllaster on Leading Operations, Embracing AI, and Cycling 207 Miles in a Single Day

Speaker A: Hi everyone. Welcome back to Fueling Tomorrow. I'm your host, Erin Bailey. And today we are joined by Chad McAllister, our executive vice president of operations at, ah, Diamondback. And Chad, thanks for coming on the show.

Speaker B: Well, thanks for having me. It's great to be here.

Speaker A: We're so excited to learn more about you and your career today. But first, start by telling us what you do as an executive vice president of operations.

Speaker B: Well, we really focus on safely delivering Diamondback's corporate program. Uh, and we focus on that really with our eyes on what we're doing this year. But we're always looking ahead in terms of what's coming next year and the year after so that we make sure it's repeatable, sustainable delivery of the results that the company really expects from us.

Speaker A: And in the time that we have today, what is something you hope our listeners take away about operations in the industry?

Speaker B: I hope what our listeners understand after this is the oil field is one large integrated system. And you need every component of that system running every day for the products ultimately to reach market. And so from our wells we're producing oil. We're producing, uh, salt water, natural gas. And embedded in that natural gas is natural gas liquids. Then we utilize a lot of electricity for our operations. And so those five, uh, areas are their own unique systems. And so as we produce from the wells, the water, the oil, the natural gas flow to a tank battery, we separate them at that tank battery and then each of those flow into their own system at that point. And what's, what's challenging is for example, uh, the produce water flowing into the produced water system. If you have an issue downstream of your tank battery, well, you can keep producing as long as you have tank capacity at that tank battery. But then you're ultimately shutting in. And that shut in is affecting the oil, it's affecting the natural gas, it's affecting the amount of power using. And so the issues cascade across the different systems. And so what people don't appreciate is how interconnected everything is. And you have to keep it running. It's a bit like trying to keep an orchestra running 24 hours a day, seven days a week, 365 days a year to keep these products moving to market. And uh, it's really quite a feat at the end of the day.

Speaker A: And speaking of tank batteries, there's so many that people see around town and uh, you don't realize how much goes into it when you just see it driving by. But then when you explain it from that high level, even you're just like, wow. It really is a lot that goes into it.

Speaker B: It really is. The technology we're using, the, uh, sheer number of steps to take a well, from an idea phase all the way through production to that tank battery, is really quite amazing.

Speaker A: And you, your career has spanned quite a few organizations from Anadarko to Endeavor and now Diamondback. What is something throughout organizations that has stayed consistent for you?

Speaker B: I think what really remains consistent is that the oil industry is a people business, and that I don't think will ever change. And, uh, we get to play with some really cool toys, we get to deal with some incredible technology. But the way you make things happen is by working with people. And I found in my career that the golden rule applies that treat others how you want to be treated yourself. And it applies worldwide in my experience.

Speaker A: And our next question is, I'm going to switch for you. But speaking of that, is there a specific mentor that has helped shape the way that you lead?

Speaker B: Well, I wouldn't. I've had the opportunity to work with so many great people and quite a number of great mentors. It's really been one of the highlights of my career. Thank you. Um, in terms of thinking about pivotal moments in my career or people, this is probably going to sound too simple, but for me, it was saying yes to opportunities. And those opportunities, uh, occasionally it was a different role. Occasionally it was moving to a different city for a different role. Um, on occasion, those looked like steps backwards at the time. But without fail, I said yes to those opportunities. And it ultimately proved to be the best for my career. And through those opportunities, it really opened doors that I don't think would've ever come about otherwise. And so, as I work with young professionals coming up into the industry, I just encourage them say yes to opportunities, because you never know where it's gonna lead and where it's gonna take your career.

Speaker A: And when you said yes to positions that were maybe out of where you thought your career was going to go, how did you approach stepping into that new role?

Speaker B: Well, you just, you come in with learning the business, really starting from the ground up, meeting the people, understanding the work that's being done, really trying to, uh, figure out what's working and what's not working and what is your role in that new job or task, and you just start building from the ground up.

Speaker A: And when you look at operations today, what are your top priorities and how do you make sure that the broader organization is aligned in those as well?

Speaker B: Well, as I described at the beginning, our goal is to safely deliver Diamondback's corporate plan. And we really break that into three different focus areas. The first is around safety. And we've, we call that be aware and act with intentionality. The oil field is a dangerous place. And really what we're wanting people to do is to be present in the moment, Come to work, not thinking about what you're doing this weekend or your upcoming vacation. Be present in the moment, have all of your personal protective equipment on, look at those around you, make sure that everyone else around you doing the job is ready as well. It's using concepts like stop work authority, that if you see something that's unsafe or something you don't understand, stop the job and have a conversation to make sure everyone's on the same page and that we get that work done safely. And then we're expanding it to the most dangerous part of the oil field, which this may surprise you, is actually driving to location. Driving is the most dangerous thing we do. And so we really focusing on our driving behaviors, our driving performance as part of that, uh, safety focus. The second area is really looking to the future and starting to look to how to transform our operations. There's so many cool technologies being deployed today, Whether it's autonomous controls, uh, machine learning, you know, AI type tools and agents, that we really think those will help us transform how we operate in the future and lead to much greater efficiencies down the road. And so we're challenging our teams to learn about those technologies. What are the business cases we can deploy those into, and how will it transform how we work in the future? And then the third and final item is delivering the corporate plan. That's our day job. That's what we're paid to do. We've got to do it safely. We've got to evolve and transform how we do it in the future. But at the end of the day, we want to deliver the results the company expects from us.

Speaker A: And with all of those things, you have employees and team members that work for you that are going above and beyond, uh, either their role or finding new and innovative ways to do the job. How do you make sure that's celebrated?

Speaker B: It's a great point. We have so many great team members and they are doing incredible work. And we recognize that, uh, it may be in staff meetings. We have quarterly reviews where we'll recognize that work. And we create special forums for it as well. Uh, for example, for our field personnel, we have created what we call operations excellence teams. They come up with so many great ideas in the field. We've asked them to form teams around those ideas, work on the implementation of those ideas, and ultimately bring them forward and present to us what those ideas are, how they can scale across operations. And those have been so much fun to sit in and look at those reviews. And then we ultimately vote and a small group of us vote on which one do we think is the best for that time period we're looking at. And we've even taken a few of those teams and their creative ideas to our board of directors meeting and had them present to the board just to showcase the creativity, the innovative work that they're coming up with in the field. It's so much fun and it's just great work.

Speaker A: And how do you think that surely those employees feel a sense of pride getting the opportunity one just to present to you guys, but then to present to the board. How do you think that affects them in their day to day?

Speaker B: Honestly, I think it made them pretty nervous.

Speaker A: They're like, no, no, I don't want to present. I just want to do my job.

Speaker B: Uh, but it was such great work. It was an opportunity we couldn't pass up to have them, uh, showcase their work. But I think seeing that work implemented in other teams, other areas that we operate, is a huge reward to see those ideas scale. So it is a neat opportunity.

Speaker A: I know, that is so cool. I didn't even know they did that. Yeah, so we're all learning together.

Speaker B: There you go.

Speaker A: Out of all the areas you oversee throughout your career, where have you seen the biggest technical shift?

Speaker B: Well, for my career, I started my full time work on December 31, 1997. So that's the time period we're working with here. And that, that may strike you as a pretty odd day.

Speaker A: What was your first role?

Speaker B: Just production engineer.

Speaker A: Okay.

Speaker B: Um, up in liberal Kansas. But uh, at those times we've evolved in our people practices and we've evolved with our technology. And uh, I had to start that day of the year because to get any vacation the following year, you had to start before year end and then you had to work six months before you actually got vacation. Oh my gosh, you got 10 days per year for your first five years. And so we've evolved a lot in our people practices, uh, along with the technology. From a technology perspective, I think the biggest shift has been the combination of horizontal drilling with multi stage completions. That those two coupled together has just transformed the US oil industry to where we're now producing in excess of 13 million barrels a day. Uh, which is Incredible. And it's changed the geopolitics all around the world. And uh, we're watching that play out in real time with what's happening in Venezuela, with uh, what now is happening in Iran. You know, situations that would probably were unthinkable a few years ago are happening in real time today in my mind, as a due in large part to the technology shift that happened in the oil industry here in the US and

Speaker A: when you first started your career in 97, did you ever anticipate one you'd be in the seat you're in now, or where the industry would go?

Speaker B: No, no, you're just trying to get your feet under you at that point in time and make sure you're contributing to the bottom line of the company. And. But the technological shifts that the uh, the industry's enjoyed over the period of my career has been completely remarkable. And they're going, they're going worldwide today to other countries as well. So it's, it's certainly fun to watch

Speaker A: and you've seen it change and evolve firsthand. But what do you think people outside of the industry still don't understand about how operations have evolved?

Speaker B: I think they don't understand how difficult energy is. And really all forms of energy that we need and use in our daily life. Um, from our perspective, you know, we're drilling 9,000ft down into the earth, we're turning that bit 90 degrees and then we're drilling 10 to 20,000ft laterally or horizontally out. We then pull that drill bit and pipe out of the hole, we run casing, we cement the casing in place, we do that multi stage, uh, completion job that I talked about. We equip the well and bring it on production. And I think there's still a misconception that we're just drilling into pools of oil underground and all we do is turn a valve and it shows up at surface. And it's not like that at all. The oil we're producing is in the tiny pore spaces between the grains of, of the rock that we're producing from. It's incredibly complex and the technology we use is incredible and the, the capability of the people we work with is remarkable. But it's all difficult. Um, and it just makes it all more remarkable. The growth that we've seen in our country from the oil industry and the application of that technology at scale, uh, just gives you a tremendous sense of pride for the industry we're a part of.

Speaker A: For a student that's graduating college and stepping into whether it Be a production engineer or a different role in the industry. What advice would you give them to really kind of like get their hands dirty and learn what they can to advance?

Speaker B: Uh, it's really go to the field, get out to the field, see the work, learn the work, so that what you're seeing in the office you can translate to. How does that actually happen in the field? Then like I described earlier, say yes to opportunities. Because there is so much you can do in this industry and so many different pathways that when you're starting your career, oftentimes they come in and think, I know what I want to do. And then you say, well, go try this for a little bit. And they come back and say, I've completely changed my mind on what I want to do going forward. And so I just encourage people to explore opportunities to learn what they really like.

Speaker A: And aside from being curious or keeping an open mind when kids are new in the industry, what other skills do you think are most important for the next generation of operations leaders?

Speaker B: Both character and competence are incredibly important to lead in this industry. And I think when I take a step back, you have to have a fundamental, uh, competence level for the teams you're leading. You have to understand the decisions they're evaluating, the trade offs in those decisions, when to lean in versus when to pull back. So you may not be an expert in that area, but you at least have to have a foundational level of competence for what that operational area is and how it impacts the broader business. And then how you do the work matters, your character matters. And so when I evaluate either a team or an individual, I often describe it as the what and the how. What did that team or individual do, what results did they generate, and then how did they do it? And you can have a situation where an individual did incredible work, uh, remarkable work, but they destroyed the team in the process. So that's not sustainable, it's not repeatable, and it ultimately comes with enormous cost for the company. And so what you do is as important as how you do it in my mind. And we are doing incredible work in operations and we're trying to do it the right way at the same time so that what and how go together.

Speaker A: And you mentioned how not just the industry and our operations side of things, but the people side of things have evolved. What's your favorite part about working the oil and gas industry, besides the people that you get to work with every day?

Speaker B: Well, the people are the best part. It really is the best part. But I think what makes Dynamback So great is the continuous improvement mindset. And we've achieved remarkable, uh, feats when it comes to our cycle times. And when you think you've hit the best it can ever be, the teams figure out a way to do it even better or even faster. And it's just remarkable. And, uh, so being a part of that culture that's never, they're pleased but they're never satisfied and they always keep digging is, is really, really rewarding.

Speaker A: And we know that you're passionate about operations, you've been working in oil and gas for a while, but you're also very passionate, uh, passionate about cycling.

Speaker B: Yes.

Speaker A: So I get to hear about your cycling stories, but talk to us about how you got into cycling and when that became a passion of yours.

Speaker B: So I started cycling. I was transferred up to Denver and, uh, our company there had a cycling team and they participated in the MS.150 that went from Denver to Fort Collins and back. And so I bought a bike and I started training.

Speaker A: Did a coworker just come up to you and say, hey, I think we should do this? Or you were like, that seems cool.

Speaker B: Someone suggested it to me. So I was like, I don't know. So I bought the bike, started riding. I really didn't know what I was doing. And I went out for that first MS.150 and uh, completed the first day, completed the second day. But that second day was so painful, I, I nearly cried when I crossed the finish line, just. But you crossed it just to get through it. Um, and so I've kept it going ever since then, gotten much, uh, more interested in it. And lately I'm exploring this concept that we are way more capable of achieving things than we ever dreamed possible. And so last year in September, I participated in a ride called Platoja. Stands for Logan, Utah to Jackson Hole, Wyoming. That's 207 miles over three mountain passes. So it's about, I don't know, eight, 800ft of climbing. You do it in a day. And I, I did it just to see if I could finish, um, something I would have even a few years ago thought, no way. There's no chance I could do that. A double century ride. And, uh, but I tried it and I finished it. It took 12 and a half hours. It was a super long day on the bike. Um, but it's just proving that concept that we really are more capable than we think. M. It just takes the effort and the time and the discipline to do it. Um, and so I've taken that and I cycle all over the world now. It's a great way to see the world. I love going to Europe and riding the Alps and the Dolomites and northern Italy to Switzerland, to, uh, Austria, Germany, southeastern France. Those areas are just gorgeous to go see by bike. And really I, uh, ride the climbs that the pros race up and just compare yourself to what they do. And it just gives you a perspective for how good they are and how, uh, incredible they are, those athletes. And so it's been a lot of fun.

Speaker A: What made you want to continue cycling after crossing the finish line of your first M s 1:50 and almost in tears?

Speaker B: It's that feeling of accomplishment. It's like, you know, this was a really cool experience. Yeah, it was painful at the end, um, not having trained enough and prepared enough for that. But that, that sense of accomplishment and, uh, being able to see the world in a different way, uh, you just build on it over time.

Speaker A: Do you think you ever would have gone on these trips all over the world, especially the ones that you mentioned, if you weren't cycling?

Speaker B: Not to this degree, no. And we found a good group to do these cycling trips with. And so it makes it a bit easier and a bit fun because they're providing the bikes for us, especially when we're over in Europe. And so that's a super good way to do it versus having to take your bike over there.

Speaker A: But, yeah, that makes it a little bit easier.

Speaker B: Easier.

Speaker A: So what's the next trip that you have for recycling?

Speaker B: We're headed to France and to do Mount Ventu. So, uh, Mount Ventou is one that they race. The men raced last year in the Tour de France, and the women are racing this year in the Tour. And so it's about a 15 mile climb. It's a moonscape on top and, uh, a bucket list climb. So really looking forward to it.

Speaker A: And obviously, as people know, we do not have hills in Midland. So how do you practice and prepare for those climbs in such a flat climate?

Speaker B: Yeah, we talked about driving being the most dangerous thing we do in the Permian Basin. And so I trained indoors here. I don't risk it out on the roads here in the Permian Basin. But, uh, I use a set of rollers and my iPad controls the resistance. And I just do interval training here. Uh, and then I travel places to get outside and, and ride the actual mountains.

Speaker A: And you mentioned the discipline it takes and that feeling of accomplishment at the end of a ride or at the end of a race. How do you think that translates into Your work life.

Speaker B: Well, cycling is about. It is about discipline, it's about consistency, and it's about persistence. You, you have to put in the time, the work. You, uh, have to take care of yourself and recover. Uh, and I think one thing you learn while you're cycling is that everything is temporary. And you, uh, could be having the best moment of your life on the bike, or you could be having the worst moment of your life and everything's a struggle. You just have to remember everything's temporary. You're doing everything you can to make those good moments the best that they can be and last the longest that they can. Uh, and you're doing the same when it's. When you're struggling, you're trying to get to a better place. But it's ultimately that consistency, that discipline, that persistence that gives you the best chance of performing at a really high level. And that applies to life, it applies to work. You just, you never give up. You always keep moving forward, uh, trying to put yourself in the best place that you can.

Speaker A: I love that. Is there anything else that you would like our listeners to know today, whether it's about cycling or operations in the oil and gas industry?

Speaker B: Well, our, our operations team is, is roughly 1200 people. Uh, we love what we do. We love being part of the Permian basin. Um, we're excited about the, uh, the way we can transform what we do going forward. We're always learning, we're always trying to get better and continuously improve in our operations. Uh, but, but the future is right in front of us, and we're thrilled with what we're going to be able to do with it. So we've got a great team.

Speaker A: Wonderful. Um, thank you, Chad.

Speaker B: Well, thank you. Thanks for having me.

Speaker A: Of course, everyone, on behalf of Chad and myself, that does it for this episode of Fueling Tomorrow. We'll chat next time.