Venture capital firm Kleiner Perkins feels sting of investing in oil

Kleiner Perkins, one of Silicon Valley’s most respected venture firms, has made a big deal about investing in green technology.

The firm, which has backed famous companies like Google, Amazon and Sun, recently raised an entire fund devoted exclusively to investing in companies it hopes will clean up the environment.

So it was somewhat surprising a few years ago when Kleiner invested in an oil and gas exploration company, Terralliance, which boasted it reduces the cost of finding oil. In other words, it makes oil production even cheaper and thus makes burning fossil fuels more attractive compared to alternative energy sources.

Now, PeHub reports that Terralliance is struggling from mismanagement. Despite having raised $295 million from Kleiner and others, Terralliance has fired its CEO Erland Olson, characterized by a source as a “drunken sailor,” laid off around 80 percent of its workers, closed offices and is “desperately trying to renegotiate a massive debt-load.” Apparently, Kleiner Perkins was shocked by the initial results of a recent audit.

We’ve asked Kleiner Perkins to comment, and we’ll update if we hear back.

Former Secretary of State Colin Powell, a partner at Kleiner Perkins, is listed among the company’s advisors.