Funding Fault Lines: How the Shift in Investment Trends is Reshaping Reservoir Engineering Research

ABSTRACT The role of reservoir engineering has traditionally been defined by its key significance in hydrocarbon exploration and production. Petroleum research funding is undergoing significant disruption as global priorities increasingly shift toward decarbonization and sustainability. Topic investments in oil and gas by public and privately funded entities are slowly beginning to shift away from traditional […]

ABSTRACT
The role of reservoir engineering has traditionally been defined by its key significance in hydrocarbon exploration and production. Petroleum research funding is undergoing significant disruption as global priorities increasingly shift toward decarbonization and sustainability. Topic investments in oil and gas by public and privately funded entities are slowly beginning to shift away from traditional oil and gas topics and instead supporting low-carbon energy technologies like geothermal energy, carbon capture and storage (CCS), and hydrogen storage. The shift in funding also poses a challenge and opportunity for reservoir engineers, who will need to learn how to operate within a more diverse energy ecosystem.
The subsurface space will still require technical innovation as we converge on net-zero, only it will need to innovate in new ways. Reservoir engineers now need to transform with the industry and adapt their existing skills to something different. But, as funding streams change the greater question that looms is whether or not academia will remain aligned with the practical energy demands.
With extensive experience in underground gas storage gained both as a research graduate student in academia and as the project lead for carbon and hydrogen storage within the oil and gas industry, I possess a comprehensive understanding of the field from multiple perspectives. My MSc thesis in 2011, titled Underground Gas Storage in Depleted Reservoirs, was completed with distinction and subsequently adopted for advanced innovation studies. This subsequent research, “An Alternative Approach for Reducing Gas Hydrate Risks in Gas Storage and Production,” was co-authored with Professor Bahman Tohidi and presented at the Production and Development Conference and Exhibition (DEVEX) held at the Aberdeen Exhibition and Conference Centre in May 2012, where it was awarded the First Prize Poster Award. More recently, I successfully led a consulting team to deliver a pioneering pilot project on carbon capture and storage (CCS) in the North Sea marking a significant advancement in sustainable energy solutions. It is important to note that current industry trends reflect a notable shift in funding priorities, with increased government and private sector investment directed toward CCS and hydrogen storage projects as part of broader energy transition strategies. This evolving funding landscape underscores the growing recognition of these technologies’ critical role in achieving climate targets and sustainable energy goals.

INTRODUCTION
The Funding Drift: From Fossil-Centric to Future-Focused
Capital expenditure in upstream oil and gas research and development over the last decade has generally decreased as a result of climate-driven policies and changing climate-driven investor preferences surrounding environmental, social, and governance (ESG) concerns. The International Energy Agency reports that in 2022 public spending on clean energy research, development, and deployment (RD&D) exceeded that of fossil fuel spending for the first time, with governments’ $37+ billion investment going towards energy innovations, mostly in renewables, hydrogen, CCS, and energy efficiency.
This is particularly true with institutional investors and v.c. firms. A 2023 McKinsey & Company report indicates that 80% of VC funding in energy went to climate-tech and decarbonization solutions, and that geothermal and CCS are garnering increased focus. For reservoir engineers who have historically worked in oil and gas systems, this reallocation of capital represents a new reality in which expertise must be reinvented in order to be useful.

Geothermal, CCS, and Hydrogen: The New Frontiers
The traditional reservoir modeling that has been developed is being re-purposed for geothermal systems, hydrogen caverns, and carbon sinks as funding is re-directed . Reservoir engineers are good at subsurface understanding, modeling of well performance, and predicting fluid movement, all of which these other fields require as well.
Knowledge of fracture permeability and heat transport is, for example, also needed for geothermal reservoirs. Instead of PVT models, engineers have to now create thermal-hydraulic models. Similarly, CO2 storage performance, plume behaviour and the integrity of seals in storage sites is required to be precise in CCS projects, which is essentially an already acquired skill based on improved oil recovery.
But the transition is also not just a technical matter, but rather one of purpose – it is a conceptual shift. Rather than planning to maximize recovery of hydrocarbons, engineers now envision systems that sequester carbon dioxide, ensure hydrogen is stored safely, or harvest heat in a sustainable manner, with all resource management in the subsurface aligned with climate goals.

Misalignment Risks: When Academia and Industry Diverge
The transition narrative, while hopeful, is fraught with danger. There is also an increasing worry about the disconnect between academia and what the industry requires. As oil and gas companies continue to bear a vast majority of the global energy load, supplying over 80% of the world’s energy in 2023, an abrupt move away from hydrocarbon-related studies could create a void of specialized knowledge on reservoir performance, EOR, and mature field management.
For example, the lack of funding for traditional reservoir studies has already started to diffuse faculty expertise and graduate student interest in core petroleum topics. This creates a risk of losing talent in industries that are still relevant to the current global energy economy, oil-dependent countries such as Nigeria, Brazil, and some places in the Middle East.
On top of that, new fields such as CCS and geothermal necessitate multidisciplinary research integration that may not be sufficiently encouraged in conventional petroleum engineering programs. The solution to this will not only be research dollars but rather the collaboration within these frameworks.

The Case for Diversified, Strategic Funding
One possible answer has been put forward in blended funding models, where traditional oil and gas operators partner with clean energy entities and academia to fund cross-cutting research initiatives. These collaborations would enable reservoir engineering departments to work on the entire energy mix, assisting with both decarbonization as well as a continued efficient use of petroleum.
Consortia tying together universities, oil companies and clean-tech startups to develop CCS, hydrogen, and geothermal technologies are already being funded through organizations like the U.S. Department of Energy (DOE) and the EU’s Horizon Europe . These models create dual value in that they preserve core petroleum capabilities/competencies while at the same time building up capacity in low carbon technologies.
In Nigeria specifically, institutions such as the Nigerian National Petroleum Company Limited (NNPC) Research and Development Division hold a strategic position to match national interests with scholarly pursuits, one that dovetails with the country’s dual mission of hydrocarbons and climate mitigation.

Innovation at the Intersections
Though risky, this moment in time signifies a place and time of change for innovation in reservoir engineering. Low-carbon research should not be perceived as a break from the past but instead re-framed as an extension of the field. For example, technology recently developed for real-time digital monitoring of oilfields can be adapted for real-time monitoring of CO 2 plume movement in the reservoir.
Also, knowledge obtained from Modeling fluid injectivity and interactions with the matrix for enhanced oil recovery is being adapted to Modeling hydrogen storage in saline aquifers. This kind of innovation is facilitated by engineers working at the intersections of disciplines, bringing geoscientists, environmental modelers, and materials scientists along in their research endeavors. Stirring this process must begin with academic programs that can change their curricula and funding proposals in anticipation of legacy and new needs.

CONCLUSION
The next generation of reservoir engineering will be in the hands of those who can transform that deep domain knowledge for use at more diverse energy applications. The absolute size, and specifically the research into hydrocarbons, may be reduced, but the approach and methodologies remain foundational. It is now up to scholars, organizations and funding bodies to make those connections – to continue to preserve knowledge in the old while also taking risks in investments in the new.
Reservoir engineers, especially in developing countries, should be encouraged to ‘think globally, act locally’ by using knowledge developed at home while being part of international clean energy conversations. In this light, the funding shift is no longer a loss but an opportunity for reorientation, which enables the discipline to flourish in a new age of decarbonization, resiliency and technical reinvention.

About Author
Lymmy Ogbidi is a Reservoir Engineering Solution Lead, SLB, United Kingdom with 14 years of hands-on experience ranging from reservoir geology to advance production through to reservoir engineering.

REFERENCES
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