Trash to cash: Agilyx turns waste plastic into crude oil


1011_Tactics_01Tigard-based Agilyx is converting waste plastic to crude synthetic oil, and striking gold.

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By Ben Jacklet

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Agilyx co-founders Chris Ulum, left, and Kevin DeWhitt display sacks of plastic feedstock at the company’s production facility. Agilyx has converted 2 million pounds of plastic into 250,000 gallons of crude oil. 
Photo by Katharine Kimball

One night several years ago, Chris Ulum was driving to the Oregon Coast with his 10-year-old daughter when she asked him to explain the project that had been keeping him so busy on evenings and weekends. “So I finally explained it to her,” he says, “and at 10 years old she completely grasped the business opportunity and the value proposition. You don’t have to convince anyone of our dependency on fossil crude oil and the merits of having a drop-in replacement for fossil crude. And if you can get that from a garbage stream that’s already being picked up and handled by someone, then it’s not hard to sell the supply demand aspect of the proposition. It just makes intuitive sense.”

By that point, Ulum’s business partner, chemist Kevin DeWhitt, had figured out the technical challenges involved in converting waste plastic to crude synthetic oil. But before DeWhitt could scale the concept to produce significant amounts of oil, he needed money, and to get money he needed a business plan. That was Ulum’s job: to turn a great idea with solid science behind it into a great business.

Ulum, a 48-year-old graduate of Oregon State University with an MBA from Duke University, met DeWhitt through a colleague at Sun Microsystems in November 2004. Their weekend and evening meetings grew more common throughout 2005 and ultimately convinced Ulum to take the plunge and leave his job to launch a startup. They originally called the business Plas2Fuel, and have since renamed it Agilyx (pronounced “Agile-ix”). Recession notwithstanding, they have raised more than $26 million and formed partnerships with key players in the oil and waste industries while building a 35-person company poised to grow into a market leader.

The first step was to prove that their system worked. They accomplished that fairly quickly, raising $300,000 in seed capital in April 2006, building a prototype system at an industrial property in Tigard and extracting their first batch of crude oil from waste plastic several months later. That quick success enabled them to raise more money on better terms.

 


 

Agilyx
CEO: Chris Ulum
Founded: 2004
Employees: 35
Capital raised: more than $26 million
Strategic partners: Waste Management, Total Fuels, Kleiner Perkins
Patents: one issued (August 2010), five pending
Alternative energy subsidies: None

The second step was to prove that their system was commercially viable. This took some maneuvering. Ulum reels off the major milestones in rapid succession, from memory. Having proved that they could make good oil from bad plastic, they then proved that:

  • Someone would buy that oil at a good price;
  • Patents would protect their technology;
  • The appropriate regulators would issue the necessary permits;
  • Top investors such as Kleiner Perkins of Silicon Valley would back the business;
  • Dominant handlers of oil and waste (French oil giant Total Fuels and U.S. waste powerhouse Waste Management) were willing to sign contracts to get in on the opportunity.

“We’ve done all of those things over the past 36 months,” says Ulum. “Now we’re in a position to go out and execute.”

Agilyx sold its first truckload of oil to U.S. Oil & Refining in Tacoma, Wash., in December 2009. After two and a half years of production, the company is shipping as much oil to Tacoma in a week as it used to produce in a quarter. But Ulum’s plan never involved creating a huge production plant in Tigard. Instead, the company plans to help partners who are already in the waste industry to install plastic-to-oil systems at recycling plants, landfills and waste transfer stations in the U.S. and abroad.

 


 

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Photos by Katharine Kimball

“We want to put the technology where the waste is, rather than moving the waste to the technology,” says Ulum. “It doesn’t make sense to unnecessarily transport garbage. It doesn’t add value. It just adds cost and carbon emissions.”

Ulum says the systems can be scaled to fit the partner’s needs and will generally sell for between $4 million and $6 million, enabling waste handlers to boost profits and create jobs by producing and selling oil. Oil produced at these facilities will be pre-sold to refineries under contract with Agilyx and distributed through existing pipeline infrastructure. “We just take care of the systems,” says Ulum. “We take advantage of the refining infrastructure and the billions of dollars that have been invested there, and we sell our oil through those existing channels.”

The company has closed a deal on its first factory in the southeastern U.S. with an unnamed partner and is nearing a second deal in the Pacific Northwest.

Following this model, Ulum says Agilyx will ultimately create more jobs indirectly than it will directly. “We have the potential to become very big,” he says. “But we will create more jobs in towns like Spokane and Medford than we will here… These operations tend to be in economically distressed regions. This is precisely where we need good, living-wage jobs. Our system runs 24 hours a day, seven days a week. It can   be a job engine that just keeps chugging along year after year, and growing.”




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