Kleiner Perkins, GTI back oil field technology(3)

Kleiner Perkins Caufield & Byers has made a co-investment of $10 million with GTI Group in GloriOil, a company formed by GTI in 2005 to commercialise a biotechnology that increases oil well efficiency.

Silicon Valley-based venture firm Kleiner Perkins Caufield & Byers and New York-based private equity firm GTI Group have together made a $10 million (€7.3 million) investment in GloriOil, a company that develops biotechnology to help reduce operating costs and improve recovery in mature oil fields.

The investment lies at the crossroads of the popular cleantech, life sciences and energy sectors. GloriOil’s technology, Enhanced Oil Recovery by Microbial Consortia (EORMC), is a process by which microbe consortia and nutrients are injected into a wellbore, creating a bioreactor that stimulates growth of active agents that improve the mobility of oil and increase permeability of the reservoir around the wellbore. The process results in a 200 percent increase in oil production and a 30 percent aggregate decrease in water cut for a period of six to eight months after treatment, according to GloriOil.

The company is currently using the technology in mature oilfields in the Texas Panhandle and West Texas. GloriOil will use the funding from Kleiner Perkins and GTI to reach out to more customers and expand its service capabilities, according to GTI’s president, Jon Schulhouf.

“We’ve seen a terrific customer response, and we believe that this is a highly effective business,” Schulhouf said.

“We believe GloriOil’s technology will deliver much-needed improvements in recovery efficiency to many of the world’s 30,000 producing oil and gas fields,” Kleiner Perkins partner Joseph Lacob said in a statement.

GloriOil’s core research and development is performed at The Energy and Resources Institute in Delhi. TERI’s oil recovery enhancement technology has been developed and tested in Asian oilfields since 2001. GTI founded GloriOil in 2005 to commercialise this technology. Kleiner Perkins is the first outside investor to commit capital to the company, and will have a seat on GloriOil’s board following its investment.

As oil prices rise and scientists warn of a looming oil shortage, renewable energy and energy efficiency technology have become popular investments for private equity. Los Angeles-based US Renewables Group, which invests in renewable power generation, clean fuels and related logistics, just closed its second fund on $475 million (€348 million), nearly five times the size of its debut vehicle. Sir Richard Branson, UK billionaire and head of the Virgin Group of companies, is about to launch his first institutional private equity fund, a $400 million vehicle under the Virgin Green banner, targeting opportunities in renewable energy and energy efficiency.

The oil production industry has also attracted a high volume of private equity deals, and yielded some profitable exits in recent months. Earlier this month The Riverside Company made ten times money on oil and gas robotics company Welltec Holdings, after selling it to US buyout firm Summit Partners for an undisclosed amount. In June HM Capital sold its $600 million stake in Regency Energy Partners to GE Financial Services, for around $200 million more than the initial purchase price.