This week’s Pipeliners Podcast episode features Dale Schafer, Vice President of Business Development with EnerACT Energy Services and VP Business Development for EnerSys Corporation, discussing the Natural Compliance Journey.
In this episode, you will learn what Natural Compliance is, the three critical parts of Natural Compliance, the glue that holds it all together, how Natural Compliance supports the pipeline control room, and other key areas that support operators as they seek to naturally comply with applicable regulations.
Natural Compliance: Show Notes, Links, and Insider Terms
- Dale Schafer is Vice President of Business Development at EnerACT Energy Services. Connect with Dale on LinkedIn.
- EnerSys Corporation is a frequent sponsor of the Pipeliners Podcast. Find out more about how EnerSys supports the pipeline control room through compliance, audit readiness, and control room management through the POEMS Control Room Management (CRM Suite) software suite.
- Mercury Manometer is a scientific instrument used to measure gas pressures. A mercury or oil manometer measures gas pressure as the height of a fluid column of mercury or oil that the gas sample supports.
- Valve Manifold is equipment that connects two or more valves of a hydraulic system. A variety of block/isolate valves can be combined in a single body configuration. Each of these valves has a separate opening below in order to connect a pipe. The main body or valve chamber is common to all.
- Direct Mount Manifold allows a direct connection to a measuring device by a flange or threaded connection.
- Gauge Line Error (GLE) is when the differential pressure (DP) at the orifice fitting pressure taps does not equal the differential pressure (DP) at the end of the gauge lines. GLE is typically caused by either pulsation or other flow phenomena.
- Flow Computer is an electronic computer which implements algorithms using the analog and digital signals received from flow meters, temperature, pressure and density transmitters to which it is connected into volumes at base conditions. They are used for custody or fiscal transfer.
- Gas Chromatograph (GC) is an analytical instrument that measures the content of various components in a sample. The analysis performed by a gas chromatograph is called gas chromatography.
- Ultrasonic Flow Meters are inferential meters that use ultrasonic technology to measure the velocity of an acoustically conductive liquid moving through it.
- The Permian Basin is a large sedimentary basin in the southwestern part of the United States. This sedimentary basin is located in western Texas and southeastern New Mexico and covers more than 86,000 square miles. The Permian Basin lends its name to a large oil and natural gas producing area, part of the Mid-Continent Oil Producing Area.
- Southwest Research Institute (SWRI.org) is an independent and nonprofit applied research and development organization that provides contract research and development services to government and industrial clients.
- Orifice Plate is a device used for measuring flow rate, for reducing pressure, or for restricting flow of product flowing through a system.
- Natural Compliance in the context of pipeline control room operations is setting up systems where the records that are required to validate compliance with regulations are automatically created in the background as the work is being performed, eliminating a second “unnatural” step of creating compliance records. The compliance records become a natural output of the work that is being performed.
- The CRM Rule (Control Room Management Rule as defined by 49 CFR Parts 192 and 195) introduced by PHMSA provides regulations and guidelines for control room managers to safely operate a pipeline. PHMSA’s pipeline safety regulations prescribe safety requirements for controllers, control rooms, and SCADA systems used to remotely monitor and control pipeline operations.
- Gap Analysis is the means by which a company can recognize its current state—by measuring time, money, and labor—and compare it to its target state. By defining and analyzing these gaps, the management team can create an action plan to move the organization forward and fill in the performance gaps.
- OSHA (Occupational Safety and Health Administration) is an agency in the United States Department of Labor. Their mission is to “assure safe and healthy working conditions for working men and women by setting and enforcing standards and by providing training, outreach, education, and assistance.”
- EPA (Environmental Protection Agency) is an independent executive agency of the United States federal government tasked with environmental protection matters.
- DIMP (Distribution Integrity Management Program) activities are focused on obtaining and evaluating information related to the distribution system that is critical for a risk-based, proactive integrity management program that involves programmatically remediating risks.
- Ross Adams is the General Manager of EnerSys Corporation. Connect with Ross on LinkedIn.
Natural Compliance: Full Episode Transcript
Russel Treat: Welcome to the Pipeliners Podcast, episode 229, sponsored by the American Petroleum Institute, driving safety, environmental protection, and sustainability across the natural gas and oil industry through world-class standards and safety programs. Since its formation as a standards-setting organization in 1919, API has developed more than 700 standards to enhance industry operations worldwide. Find out more about API at api.org.
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Announcer: The Pipeliners Podcast, where professionals, Bubba geeks, and industry insiders share their knowledge and experience about technology, projects, and pipeline operations. Now your host, Russel Treat.
Russel: Thanks for listening to the Pipeliners Podcast. I appreciate you taking the time. To show that appreciation, we give away a cool, customized YETI tumbler to one listener every episode. This week, our winner is Paul Kinder with Kinder Morgan. Congratulations, Paul. Your YETI’s on its way. To learn how you can win this signature prize, stick around till the end of the episode.
This week, Dale Schafer, Executive Vice President with EnerACT Energy Services, is joining us to talk about the natural compliance journey. Dale, welcome to the Pipeliners Podcast.
Dale Schafer: Thank you. Pleasure to be here. It’s my first time. I’m feeling like a newbie.
Russel: I know. As long as you and I have known each other, I don’t know why I’ve waited so long to get you in because you’re the best storyteller on the team.
Dale: I’m not so sure about that, but I’ll certainly give it a try.
Russel: [laughs] Oh yeah. Before we dive in too much, how about we do a little introduction? Tell us a little bit about yourself and your background and how you came to find yourself in the pipelining world.
Dale: It all started when I was 16 years old and I was working in a gas station, pumping gas and being a night manager, going to high school. I ran into a guy who was the personnel manager at the Meriam Instrument Company in Cleveland, Ohio.
I graduated from Lorain County Community College with a technical degree. He stopped in one day because I was working part time there and said, “Well, why don’t you consider going to work for Meriam Instrument? We need a sales engineer.”
I didn’t even know what the term was. He described the job. I agreed to go down and interview. The next thing you know, I was sitting there, selling mercury manometers, 100-inch water columns, 35JA10 calibration kits, and dealing with the natural gas industry.
From there, I wound up moving to Houston with another guy who came to work for Meriam, Darrel Pinkard, and we formed our own company called PSA. We set out to change the world. After about 10, 15 years, I went one way, he went another, and I wound up working for PGI.
I wound up in the valve manifold business, and that was the time that direct mount manifolds, gauge line error, and square root error were becoming a big topic in the industry. I became the voice of that change.
Following that, I went to work for ITT Snyder. I was a sales manager at ITT Snyder, where we sold the Barton flow recorders, and the Barton Scanner flow computers, and other products used for measurement and control in oil & gas.
Then from there, I went to work for ABB where my first job there was to sell ABB’s people and ABB’s products because they weren’t buying them. I eventually moved to the Total Flow division as international sales manager over flow computers, gas chromatographs, and at the time the ultrasonic flow meter, ABB was co-marketing with SICK.
I was one of the luckiest guys in the entire world. I spent 15 years traveling all over the world. 60 different countries, every oil and gas company you can imagine. I was in their offices, talking with their people about SICK meters, Total Flow computers, and Total Flow NGC gas chromatographs.
I left ABB in 2013 and decided to stay home rather than travel so much. That’s when I joined EnerSys and became focused on control rooms, software, compliance, and helping people in that area.
Russel: Dale, that’s quite a career. I’ve known you for a long time. You were one of the first guys I met and built a relationship with when I was getting into the business back in the early ’90s. I first ran into you at one of the Permian Basin measurement schools, way back in the day.
We’ll leave it at that because probably other stories neither of us want to tell about…
Dale: There’s probably a few of them that are best left unsaid. Yes.
Russel: Yes. That was a different world we were living in back then.
Dale: It was very different.
Russel: You certainly have a background of taking new ideas, new products, new concepts to market. Because you listed a whole bunch of technologies there that you were involved in very early on as they were coming to market.
What would you say is key when you’re looking at a new product and you’re trying to figure out how to get that out to the market and deliver the value that somebody invested in to create the product?
Dale: The first thing is there has to be a need for the product. Unfortunately, in many cases, people don’t realize they have the need until it’s shown to them.
In the case of the Direct Mount manifold and Gauge Line Error, the Southwest Research Institute started to highlight this back in the late ’90s. They talked about how Gauge Line Error and Square Root error would affect measurement.
It wasn’t until PGI, and myself included, developed a test kit that we could actually go out in the field, hook it up to an orifice meter, and show the measurement superintendent that the reading on the orifice fitting was very different from the reading 25 feet away at the end of the gauge lines.
When we equated that into lost or gained revenue, because it could go either way. All of a sudden measurement superintendents started taking off the tubing and mounting the transmitters right on the orifice fitting.
The process was to discover the problem, come up with a solution to the problem, and then show the customer why the solution is the right solution for them. The rest of it was pretty easy.
Russel: You just said a mouthful there because showing the customer the solution…I mean, you’ve been with our company for seven years now and showing software is different than showing hardware.
Dale: Very definitely. With software, you can show the software, but you have to articulate it into the value to the client. To do that, you have to understand the client’s pain. What does he have now? What is not working for him, or what does he want to achieve that he doesn’t have the ability to achieve at this time?
Russel: We’ve had a lot of conversations. Through those conversations you and I have had, I came up with this idea of natural compliance. Simply stated, natural compliance is when I build out my systems and tools, then I do my work, and the records just get created as the natural result of doing my work. They’re created in a way that I can find them when the audit rolls around and I’m ready. Perpetually prepared for the audit based on the way I’ve built my systems and tools out.
When you think about that, you can pretty much say that to anybody. People are going to nod their head up and down in the pipeline space. They’re going to go, “Oh, yeah, we need that desperately.”
Demonstrating that is a whole different kind of challenge or problem. How do you actually demonstrate that value? How would you go about answering that question?
Dale: I think the only way that you can demonstrate that value is through the proven results of the program. In our software world, anytime you’ve got a customer that has a real success with a set of software tools and you can quantify and identify that success, you can turn that into a message that you can relate to others and that will resonate and hopefully get others to want to learn more about it.
Just the step of learning more is a big step because when a customer wants to learn more about a product, our first role as defined by an old friend of mine named Don Griffies from many years ago, his comment was “You need to listen more than you talk. You always need to be willing to offer more help than just whatever it is that you’re selling.” He was an absolute champion of that concept.
When we talk about just learning more about how our natural compliance program works, the first step is to really listen to what the customer has nowt, what his problems and issues and pains are, and then from there start to craft a potential solution for him that might take him down a path of success for his organization.
Russel: I think I want to flip the script a little bit right now and use this as an opportunity because this is a topic for our podcast. It will differ from what we do because it’s a little bit more how the business development side of all this works.
I think it’s important. People understand that just as much as they understand all about the tools, the technologies, the regulations, and all the other stuff. What kind of questions would you want to ask me about natural compliance and what we’re trying to do?
Dale: My first question would be, how was the outcome of your last audit? If we have a bit of a relationship with a customer, some of the barriers to communicate come down, and they tend to get honest and they talk about the auditor, the process, what was going on inside their house, and then ultimately, what the findings or the final results of the audit was.
If the potential customer is being very protective, he might just say, “Well, it was fine.”
Russel: Right.
Dale: In general, we know that’s generally not the truth. [laughs]
Russel: I think the point you’re making is that one of the key things that we have to do is we have to build trust. There’s a couple of pieces to that. One part of trust is integrity, meaning you’ve got to do what you say you’re going to do.
The other thing is competency. I’ve got to believe you actually have the ability to do what you’re saying you’re going to do. You need both those things.
For somebody to share with an outside party the nitty-gritty details of what they’re struggling with, first and foremost, that requires a relationship built on trust.
Dale: Absolutely. It also requires, to have that trust, you have to also be engaged and involved in the industry at a level where people know who you are, you’ve been around for a few years, you’re very visible, you’re involved, you’re engaged in the different committees, you attend the affairs that the industry attends, and as you say, you do what you say you’re going to do.
At the end of the day, you never want someone to say, “I told him this and then he leaked it to three other people.” Your reputation and your credibility is probably the most important thing you own. There is nothing else that you have that’s more valuable.
Russel: Yeah, that is so very, very true in our business. Our business, it’s one of the things. Oil and gas by itself is a small world, but when you get into pipelining, it even gets smaller. Your reputation matters. It really does matter. That’s for sure.
Dale: Very much. Russel, in our company, you’ve had these tools for the control room that dealt with tasks, dealing with all the different things you have to do in the control room and records you need to keep.
We also wound up, through Ross Adams joining the organization, doing a lot of consulting work around the area of compliance facilitation and audit support, which we found a big need for in the smaller and medium-size pipeline companies. How did you come up with this idea of natural compliance from consulting and tools?
Russel: Thanks for the question, Dale. It’s really a good one. When I first got exposed to control room management about 2007, at that time, what we were primarily doing was SCADA projects. We were putting in SCADA updates, SCADA systems on new facilities, that sort of thing, building control rooms out and all of that.
We hadn’t had any exposure to control room management. I started reading some stuff and saw that this rule was coming out, and I started getting myself educated about the rule, and I really got excited about our business again.
I got excited because it was starting to become about more than just the technology. It was becoming about human factors, and effectiveness, and safe operations, and I got excited about all that.
What I found is we first started going into the market and getting into this whole compliance world. We started doing some consulting, and we brought Ross on to help with that. We were doing CRM reviews, GAP analyses, do people have programs, what do they need to put in place, all that kind of stuff.
As we started doing these reviews and analyses, and so forth, what I was finding is there were three classes of needs to do this well. One class was I have to have tools in the control room that allow me to do the work. I’ve got to have the log books, and the shift handover, and alarm analysis, and all those kinds of tools to do the work.
I also have to have a way to make sure that my program is written in a way that I’m not leaving anything out. Then I’ve got to have a way to glue between the tools to do the daily work and all the processes that have to occur, like my annual program review, and my monthly alarm review, and so forth. I started wrestling with how we are going to streamline all of that? How do we make that easy?
Being a guy that’s worked with software for years and years, and done it in a technical environment, I said there’s got to be a software way to do this.
We released our first CRM where we put in place our first CRM, what I would call our first CRM compliant control room probably 2009, right around the time the rule was coming out. Then by about 2014, 2015, we matured the idea. Then what started happening is the compliance control room reviews were really eating our lunch.
The idea came out of just pain we were having trying to service our customers and trying to make that more efficient, more effective.
I said all that, and the other thing that I would say is once I started thinking about this whole safety compliance thing in a broader context than just the control room, it gets pretty evident pretty quick that that problem is not unique to the control room. That problem is across all of compliance and not just pipeline safety.
You could throw OSHA, and EPA, and cyber security, whatever regulations are out there. They all have the same general need.
That’s where it comes from. It’s like, I want to be able to do my work and I want to be perpetually ready for the audit.
Dale: Was there ever a moment where the inspiration flashed and it was like, oh, I know to call this natural compliance? The moment of Zen, if you will.
Russel: I’ve had those kind of moment about things in the past. I didn’t in this case. I have found, probably the best ideas I ever came up with, they start a nascent way and then they mature. Then you get to a point where you say something in a conversation, and you go, “Oh, dadgummit. That was it.”
It’s like that idea has been formulating in your mind, and then some day, you’re just trying to language it and explain it to somebody, and it comes out a real clear way and you go, “Oh, that’s really good. I need to remember that.” I don’t know that I had the idea that way, but the way to communicate the idea occurred that way.
Dale: That sounds about right, because those kinds of things don’t usually evolve. They just happen. It’s like a lightning strike. I know that when I was doing the promotion of the Direct Mount Manifold and gauge line error, there was a lightning strike moment where it was like, “Well, we need to show people that the differential is one thing on the orifice fitting, and it’s another thing at the end of the gauge line.”
Then, from there, we went through a long process of trying to figure out how to do that. Originally, it was strip chart recorders matching up to strip chart readings, and it showed a true differential. Then we employed a software developer to write a program and then we packaged it into a toolkit and went out in the field and tested it.
Then once we had the results, we went around to all of the gas measurement schools and conducted private meetings with companies showing them how this happened and explaining the technology. It was amazing, because over a course of several years, those direct mounted manifolds took over the hand built manifold business in the industry.
Russel: Dale, what I would say is what you probably did for a long time and I certainly did this for a long time and this whole conversation around natural compliance is you probably sat in the problem for a long time. Until one day, all of a sudden, the answer presented itself.
I don’t know if you’ve ever done this. If you read biographies of people like Edison and Einstein and some of the other people that were known as the great inventors of the early 1900s and mid 1900s, almost all of them had some kind of practice where they would try to tap into…
You’d call it tapping into your psyche or a higher intelligence or whatever, but they all had mechanisms for finding that thing that would present itself out of their mind. Those are not the kinds of things that they’re drawn out of analysis and conclusion. They tend to pop out in an instant coming out of the struggle.
Dale: Exactly. You are referring to the 3:00 a.m. brilliant idea.
Russel: Yeah, exactly the one that…
Dale: You all get it. [laughs]
Russel: You got to keep a pencil and a piece of paper next to your bed, so you can write it down. Otherwise, you can’t go back to sleep. That’s exactly what I’m talking about.
Dale: Funny how the mind works like that, because once you have clarity about something and you can put that story together and get your concept aligned in a way that you can deliver a message, it can have a lot of power.
Russel: That’s right.
Dale: Then the challenge becomes communicating that to the audience you want to communicate to. An awful lot of education, training, and communication supported by marketing and literature, and things that tend to change an industry and move us in the right directions.
Russel: Yeah, that’s exactly right. That’s exactly where we are with this whole natural compliance idea. I think we have that idea pretty mature in the control room. We’re working to get it into other areas like DIMP leak monitoring, and transmission integrity management, and other areas that have the same problems but different technical specifics.
We’re going to be making our first public presentation on natural compliance at the Pipeline Opportunities Conference in Houston here in a few weeks. We think we have the ideas, so now we’re going to take it to the market and start telling people about it. We’ll see whether we have the idea, because the market will tell us.
Dale: Early returns are that we have a resounding message. It’s getting through. We’re starting to see more activity, even if it’s just people saying, “I read what you posted. I saw your brief video on natural compliance. That’s exactly what we’re doing right now in our organization.”
There’s affirmation that natural compliance is something that truly takes place. Some people have the right tools, and some don’t.
Russel: I think too that the other thing that tends to happen is people tend to get clear on the problem and the pain way before they get clear on and comfortable about the solution.
Dale: Exactly. I would agree with you.
Russel: It’s equivalent to going to the doctor. You go to the doctor and you say, “My elbow hurts.” If he just gives you a prescription and doesn’t do any examination, or teaching, or questioning, or anything like that, you think he is a quack, even if he knows exactly what it is.
On the other hand, you go to another guy and he looks at you and he says, “Here, would you move your elbow this way? Does this hurt? When I touch you here, is it a dull pain?” All those kinds of questions that doctors ask. At the end of the day, he gives you the same prescription and instruction, you’re likely to follow it.
To your point, it’s a matter of education. It’s part of the obligation we have as professionals, is to bring everybody along with us, and if we can’t, then we don’t have a valid idea.
Dale: I would totally agree with you there, totally.
Russel: The other thing I would say, Dale, about this whole natural compliance thing is there’s kind of, I’ve said this again, but I want to say it a different way, there’s three parts to this. One part is you’ve got to have your plans and procedures, so all the things that write down your policy and your practice about how you’re going to do your work.
The next thing you’ve got to have is process management. Some way to make sure you’re doing all the analytical processes that are called for either in the regulation or in a Pipeline Safety Plan, Do, Check, Act methodology. Then, lastly, you got the tools to do the work.
Most people I find have the plans and the procedures. That’s required. Most people have the tools to do the work. It’s the thing that glues it all together that most people struggle with. That goes to, how do you actually make natural compliance work? You’ve got to figure out how to glue those things together.
Dale: The process management.
Russel: Taking the process management and taking the plans and procedures in the process management tools do the work. I don’t want to say integrating because for software folks and such, that means a particular thing, but you’ve got to make sure that all of that is tied together in a systematic way.
I have a way to look in and say, “Well, here’s this process. Where’s all the records without? Here’s this audit question. Where’s all the policy and records with that?” It’s different ways to view into the systems and the records.
Dale: Sometimes, one of the best ways to communicate that is just by telling a success story. You go through the history of how it began, what was done, what were the steps that were taken, and then what was the result.
Learning what a success story sounds like and the details of it, it lends people a lot of confidence that they’re either doing the right things or they need to maybe make some adjustments and corrections.
Russel: I want to ask you a couple of questions just from a business development standpoint, because you’ve been in business development forever, and you know this. I think you’re one of the very best at it.
What advice would you give to younger professionals that are looking at the business development side of our business as a professional? What advice would you want to give them?
Dale: I think I would start looking at the successes that other companies and individuals have had and trying to understand their success story, whether it’s in software, or hardware, or materials, or food, or drugs, or whatever it might be.
The second thing I would suggest doing is getting hands on as many books that talk about the process of how to develop business and how successful business development operates. It’s not just sales. It’s not like, “I’ve got a widget and I want you to buy it.” It’s a process and a methodology that goes along with it.
The third thing would be once you decide on what your industry is or your product, really understand the issues that are in that industry. When I started out in oil and gas, I was pretty young and green behind the ears. I wound up going to Morgantown, West Virginia for my first gas measurement school.
I remember sitting with a bunch of old timers 20, 30, 40 years older than I was, and I remember listening to what they had to say. I remember the guy that took me out in the field, he said, “Let’s go to a wellhead.” He showed me the pieces that were on the wellhead. We talked about the process and how it worked. That was the beginning.
I would have to say that through my career, I’ve never stopped doing that, because no matter how much I might think I know, I always find out there’s more to learn.
Russel: [laughs] First off, that’s outstanding advice. The other thing you have to realize is that if you’re going to spend 30 or 40 years in an industry, you’re going to have to do that because once you learn in the first five years is going to have no bearing at all on what you’ve done in the last five.
Dale: The windows of learning never closed. They’re always open. That your goal is to try and keep them open as long as you can.
I had a mentor tell me once, he said, “You know, you need to think about this learning thing like a big building with a whole bunch of windows.” He says, “When you’re young, the idea is to keep all the windows open by having multiple sources of information that make you curious and make you want to learn.”
As you get older and you think you start to know things, you think you can close these windows, but you shouldn’t. You should always leave all the windows open, because you never know what you might just learn, and it’s been true.
Russel: As we move around, I know a lot about measurement, but I haven’t worked in measurement on a daily basis in a while, and it doesn’t take very long. You have to be aware that if I were to go back to work in measurement full time, I’ve got a little bit of effort to get back current.
There’s a certain amount of effort required every day, every week, every year to stay current in any domain. It’s important. It’s a big part of what we do, and it’s super important for business development guys because the worst thing you can do is go see a customer and not know what you’re talking about. You’ll only do that once with that customer, and they’ll never do it again.
Dale: People like to talk to people they can learn something from.
Russel: I agree. I agree. You’ve certainly done that for me in my career. Hopefully, I’ve returned the favor a little bit.
Dale: You have, I think we learned from each other. You have different windows than I do. You have some windows that open up that I don’t really pay attention to, and it’s like, “Wow, that’s pretty interesting.” Your advice is always appreciated, and I’m pretty sure that you appreciate mine, too.
Russel: Oh, absolutely. For those that are listening, sometimes those conversations between Dale and I, they’re not all sweetness and light, but they’re always productive. They’re always, at the end of the day, rewarding.
Dale: I would agree with that. I would agree.
Russel: What I’m just trying to infer is it’s OK to disagree, because there’s a lot to be learned in that.
Dale: Sometimes disagreement brings out more knowledge than what you would anticipate.
Russel: Exactly. That’s exactly the point I’m trying to make.
Dale: Every guy that’s married understands that.
Russel: [laughs] So true. Listen, Dale, I really appreciate it. This has been a load of fun, something different than what we normally do.
I think all the business development folks that listen to the podcast will probably appreciate a little different perspective on the business and our different perspective on this episode. Thanks for coming aboard. Glad to have you and hope to have you back.
Dale: I appreciate the opportunity. I would only close by saying that I didn’t start my life out as being a salesman or business development manager. I started in my life thinking I was going to be an engineer. You never know where some of your natural talents will lead you. Keeping the windows open.
Russel: I would tell you also that you’re still an engineer.
Dale: Thank you.
Russel: [laughs] Thanks, Dale. See you soon.
Dale: Thank you, Russel.
Russel: Hope you enjoyed this week’s episode of the Pipeliners Podcast and our conversation with Dale. Just a reminder before you go, you should register to win our customized Pipeliners Podcast YETI tumbler. Simply visit pipelinepodcastnetwork.com/win and enter yourself in the drawing.
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Russel: Finally, if you have ideas, questions or topics you’d be interested in, please let me know either on the Contact Us page at pipelinepodcastnetwork.com or you can reach out to me on LinkedIn. Thanks for listening. Talk to you next week.
Transcription by CastingWords