"It smells like money," says Bill Ullom with just a touch of glee.
Ullom has just unstoppered a small glass vial of clear, yellow liquid. The unmistakable pungent odor of oil wafts up. "That's the best grade of light, sweet crude oil," he adds with obvious satisfaction.
What's in the vial is the end product of a proprietary process called "thermal depolymerization" that can convert waste materials like tires and plastic scrap back back into their original components: oil, natural gas and char (carbon black).
William L. Ullom, III, is chief technology officer of Vadxx, a company he began building nearly seven years ago. In 2009, CEO James W. Garrett came on board and together they began to turn a dream into a reality. One of their first steps was to become a tenant of The Incubator at MAGNET.
The dream was to develop an environmentally friendly and commercially viable process to transform petroleum-based waste products back into their components: crude oil and natural gas.
"We're a 'clean-tech' company that also happens to make economic sense," says Garrett with a laugh. Garrett says Vadxx's continuous process, once scaled up, can produce oil in the $35-$45-a-barrel range. With crude oil markets stuck in the $100-a-barrell range for most of the last decade, those numbers have been attracting lots of venture capital.
"For every 100 units that Vadxx implements, we will reduce our nation's Middle East imports by about one percent," predicts Garrett. "Every unit that implements will reduce landfills by about 20,000 tons a year. Oh, and along the way, our Vadxx units will create jobs, lot of jobs."
Standing in the converted cinder-block former bus garage that now houses Vadxx's spider-like two-story pilot plant in Akron, the intense heat, the throbbing shrill whir of pumps and the distinct smell of hot oil seem to confirm that the dream may be about to turn into reality.
The "Secret Sauce" is—People
Both Ullom and Garrett have deep roots in the natural gas and oil industries. But they are quick to admit that it is their complementary skill sets that have been key to Vadxx's success so far.
Ullom is a petroleum geologist and geochemist who spent years managing oil and gas exploration companies out West. Besides being Vadxx's CTO, Ullom runs an environmental consulting firm and is an adjunct faculty member at Stark State College of Technology in the Environmental Technology Program.
Garrett has spent 25 years in various financial, operating and engineering management roles at energy and technology firms that ranged from start-ups to Fortune 200 companies. He holds a BS and an MBA from Case Western Reserve University.
"As CTO, Bill is in his element now," says Dave Crain, director of Entrepreneurial Services at MAGNET. "He's the technology guy—the guy behind the curtain. And Jim is the right person for the CEO guy."
"I fired myself as CEO," admits Ullom cheerfully. "I realized that I wasn't going to be able to do all this myself. Once Jim came in, we started building our team."
Vadxx has grown from one employee (Ullom) in early 2009 to 10 employees in early 2012.
"An investor doesn't invest in a technology or a company," declares Garrett. "An investor invests in people. That's why our No. 1 priority has been building the team. We're very fortunate for a company this size to have the quality of people we have."
Winning Investor Confidence
In 2009, Vadxx had licensed a technology that Ullom was sure he could adapt for his purpose. And he had a line on a synthetic crude oil pilot plant that had been erected in New Jersey. Now he needed funds to move the pilot plant to Akron and put his team to work proving the concept.
With Garrett on board, the two entrepreneurs reached out to the economic development community in Northeast Ohio. One of their earliest stops was MAGNET.
"MAGNET helped Vadxx qualify for the Cuyahoga County New Product Development Loan Fund," says Crain. "That was the first regional vote of confidence that validated them. Since then, they've raised money from many different sources."
Indeed, the list of Vadxx's financial benefactors is long (see list below). But the company's relationship with MAGNET extended far beyond funding.
MAGNET helped Vadxx identify and apply for an Edison Technology Grant (E-TAG). With that state-supported funding, Vadxx hired MAGNET's Product Design & Development team to consult on two important aspects.
- First, how to manage the logistics of feeding vast amounts of pulverized waste materials into Vadxx's continuous process.
- Second, how to scale up the pilot plant by a factor of 10, to make an affordable, commercially viable production unit.
"Our major input was laying out in a 3D rendering what the full-scale system might look like," says Mike Pintz, senior mechanical engineer for MAGNET's Product Design & Development team. "Part of that included speccing out the in-feed equipment. They didn't know what the actual cost would be for the support equipment required for the scaleup. "
Pintz says that the PDD group's calculations showed that a full-size plant, running 24 hours a day, with three days of on-hand product, meant the company would need a whole warehouse of raw materials before they turned the plant on.
"We helped them with a reality check," says Pintz. "And we must've changed that design dozens of times."
The rendering produced by the PDD group became an essential exhibit in Vadxx's presentations to potential funders and investors.
"We were very fortunate to get that E-TAG grant and work with MAGNET on those engineering design issues," says Garrett. "That engineering design moved us to a level that gave us credibility with folks like Rockwell Automation."
"That rendering was important to Vadxx," admits Crain. "But I like to point out that it wasn't just the rendering. He was also able to go to Rockwell with a great deal of the engineering work already done. I think MAGNET's ability to help them engineer a complicated system was the biggest thing that established his credibility."
By August 2011, Vadxx's pilot plant in Akron was secreting a high-grade oil and things were getting interesting. In November, the company signed a memorandum of understanding (MoU) with Houston-based Greenstar Recycling to provide feedstock for Vadxx's first commercial plastics-to-oil unit to handle the City of Akron's curbside recyclables. By the end of the year, the company had plans for two more proof-of-concept plants in Northeast Ohio: a medical-waste-to-oil unit in Cleveland and a tires-to-oil unit in Akron.
Joining the Majors
On Nov. 2, 2011, Vadxx announced an agreement with Rockwell Automation Global Solutions based in Milwaukee, Wis. Rockwell will complete the front-end engineering and design work necessary to commercialize Vadxx's proprietary processes.
"With sustainable solutions being a key focus for our business wordwide, we are pleased to work with an innovative company such as Vadxx," says Terry Gebert, vice president and general manager, Rockwell Automation Global Solutions. "Our Global Solutions team will help Vadxx reduce risk while getting their waste-to-energy process to market sooner."
Garrett says Vadxx's first commercial unit will begin producing oil in the fourth quarter of 2012. In early 2013, the second and third units will come on line.
"After that, with partners like Rockwell, we can be in a position to come online with a unit a week," predicts Garrett. "Each unit produces about 90,000 barrels of crude oil a year. And with crude oil in the $100-a-barrel range, the numbers get real interesting, real quick!"
Advice for Entrepreneurs
What advice do Garrett and Ullom have for would-be entrepreneurs?
"Persistence," declares Garrett. "Patience is important. But persistence is even more important when you're starting a new company. Bill Ullom is the most persistent person I've met in my entire career."
Ullom agrees that he's persistent, but he says what helped him the most was his willingness to listen to a wide variety of counselors.
"I just listened to everybody and I tried to take everything to heart," he says. "This is what MAGNET, and the universities and the Akron Global Business Accelerator, JumpStart and Nortech—this is what they do. New entrepreneurs should also talk to other entrepreneurs who have succeeded and to entrepreneurs who have failed. Because those people can tell them about potential pitfalls."
Garrett says one of Vadxx's biggest advantages was its location in Northeast Ohio where universities, local, regional and state economic development authorities are active in promoting and implementing innovations.
"Vadxx simply would not exist without the initial help we had from the City of Akron, Cuyahoga County, the Great Lakes Innovation Fund and all the others," says Garrett. "Our objective is to pay back that assistance we had from MAGNET and others by creating jobs here in Northeast Ohio. We're going to pay them all back through jobs. And we take it very seriously."
Vadxx Funders and Business Partners
Vadxx in the Media
- City of Cleveland embraces company's plans to build tire and plastic-burning plant on East side, by Leila Atassi, Cleveland Plain Dealer, March 12, 2013
Cleveland—Vadxx Energy intends to build a 10,000-square-foot facility near the intersection of St. Clair Avenue and East 79th Street, where the company will burn as many as 60 tons a day of plastic and rubber waste, the company's Chief Executive Officer Jim Garrett told City Council members at a Community and Economic Development Committee meeting Tuesday.
- Ohio-based company creates WTE process, by Chris Gigley, Waste & Recycling News, May 2, 2011
- Vadxx working with Texas firm to convert plastics into synthetic crude oil, Crain's Cleveland Business, June 24, 2011
- Vadxx Energy teams with Rockwell Automation on energy demonstration plant, by Scott Suttell, Crain's Cleveland Business, November 3, 2011
- Tapping In: GreenStar Recycling to convert plastic scrap to crude petroleum, RecyclingToday.com, December 14, 2011
Economic Impact as of January 2012
Updated January 26, 2012