Silicon Valley’s technology investors have taken to the ramparts, threatening to tear down the oil and gas industries’ dominance with innovations that use ethanol, solar and wind. A chief champion of the cause has been Kleiner Perkins Caufield & Byers, one of the marquee venture capital firms. Its principals, John Doerr in particular, have passionately advocated development of alternative energies as a way to create energy independence and clean up the carbon-saturated atmosphere.

But Kleiner has also poured millions of dollars into Terralliance, a company that makes technology to enable more efficient drilling of oil and gas. The investment underscores a fact that is much less bragged about in the valley: For all the boasting in the region about investing in clean technologies, there have also been a smaller number of bets in companies set up to promote the development of fossil fuels — the source of many of the problems their other investments are meant to fix.

Joseph Lacob, a managing partner at Kleiner Perkins involved in the Terralliance deal, said the investment did not mar the firm’s overall commitment to eco-friendly so-called “cleantech” start-ups. “We’ve made 14 investments in cleantech and greentech,” he said. “We’re extremely committed to that investment thesis.” But others aren’t so sure.

Daniel Kammen, professor in the energy and resources group at the University of California at Berkeley, said such investments by Kleiner and other firms that portray themselves as green-friendly are inconsistent with their marketing message. “They’re being hypocritical,” he said of the firms. The former vice president Al Gore, the billionaire Richard Branson and other figures with ties to Silicon Valley’s green movement “should hold these companies to a higher standard.”

Still, Mr. Kammen acknowledged that venture capital firms like Kleiner deserve much credit for pushing an alternative-energy agenda. And their simultaneous interest in technologies oriented toward fossil fuels is understandable and defensible, given the huge market opportunity, he noted. “High prices of oil facilitate more oil discoveries and more innovations that get more money out of oil,” he said. In Silicon Valley, there’s a word for that kind of investment.

"It’s called browntech," said Erik Straser, a partner at Mohr Davidow Ventures. One of that venture firm’s investments is in a start-up called Panasas, which has developed computer storage technology to help oil companies become hyperefficient at finding new places to explore. Mohr Davidow invests in energy markets, he said, because they are big, and have big profit potential, not foremost because they offer an opportunity to help the environment.

"I’m here to make the kind of green my limited partners can spend,” Mr. Straser said. Mr. Straser said that he, too, was interested in environmental concerns. He sits on the cleantech committee of the National Venture Capital Association, an industry trade group, which is creating policy initiatives to promote investments in alternative-energy start-ups.

In 2006, venture capitalists put $727 million into 39 alternative energy start-ups, compared with $195 million in 18 such firms for 2005, according to the National Venture Capital Association. For investors in alternatives to oil and gas, the driving force has been the belief that whoever develops the next great energy sources will enjoy spoils that will make the gains from creating the next Amazon.com or Google seem puny in comparison. And there is, of course, the additional benefit of helping to save the world with cleaner, renewable energy sources. Do well by doing good is the mantra.

Yet money has also flowed into start-ups built to serve the oil and gas industries. In 2006, venture capitalists put $163 million into 18 such companies, up from $56 million in 14 oil and gas ventures in 2005. This is an investment category that has ebbed and flowed and that was as high as $586 million in 1999, the height of the dot-com bubble. The oil and gas industries represent a huge potential market, easily in the hundreds of millions of dollars a year. It’s a market that is in the sweet spot of Sub-One Technology, a start-up based in Pleasanton, Calif., that makes a high-tech chemical coating intended to reduce corrosion, friction and sludge inside oil pipes.

“Our technology isn’t going to overthrow any kind of oil service company or oil production company,” said Andrew Tudhope, the chief executive of Sub-One. “It certainly is going to benefit them.” “We’re not trying to push an agenda,” he added. “We’re trying to make money.” One of its investors is Chevron. Another is Advanced Technology Ventures, a venture firm in Palo Alto, Calif., that in September 2006 put $6.5 million into Sub-One.

Wes Raffel, a general partner with ATV, acknowledges that his firm is an “enabler” of the oil and gas industries and says it is fair to ask him whether such an investment is environmentally irresponsible. “Is it irresponsible? That’s a good question,” he said. “The answer is: I try not to do irresponsible things. It’s improving efficiency. People are going to use these Earth-given resources to provide energy. It’s going to happen. If you can create infrastructure that helps them do it for less costs” that is a good thing, he said.

In the case of Kleiner Perkins, the company has been involved in financing Terralliance to the tune of tens of millions of dollars, according to the venture capital trade group. On the Terralliance Web site, the company describes itself as an oil and gas exploration company that uses new technology to reduce the risk and cost of new exploration. Mr. Lacob, the Kleiner Partner, declined to specify how the company’s technology works, saying he did not want to tip off potential competitors.

Indeed, the Terralliance investment is not listed on the Kleiner Web site nor has it been mentioned publicly as one of its portfolio companies. But, speaking generally, Mr. Lacob said that companies that reduce waste associated with traditional drilling are making a contribution. “If we can improve the efficiencies of the oil and gas exploration, in some ways that’s a green message as well,” he said.
(Por Matt Richtel, The N.Y. Times, 16/03/2007)