Pay BillIn Summary:
The U.S. Department of Energy recently announced up to $65.5 million in funding to support technologies and infrastructure that strengthen domestic oil and natural gas production. The funding is intended to reduce waste, improve operational efficiency, and accelerate innovation, creating new opportunities for companies in the oil and gas industry. Businesses considering these grants should also evaluate the related tax, cash flow, and compliance implications with their BMSS trusted advisors.
Written by Steven Eilders, BMSS Manager
On July 23, 2026, the U.S. Department of Energy announced up to $65.5 million in cost-shared federal funding for research, development, and deployment projects aimed at strengthening domestic oil and natural gas production. Administered through DOE’s Hydrocarbons and Geothermal Energy Office and the National Energy Technology Laboratory, the funding opportunity is designed to help producers maximize the value of existing infrastructure, improve the reliability of energy delivery systems, and convert underutilized resources into marketable products.
The opportunity is part of a larger, coordinated push by the DOE: it follows a separate $150 million funding notice released earlier this year for enhanced oil and gas recovery and produced water management (applications due September 8, 2026), bringing the department’s combined recent commitment to the sector to roughly $215.5 million. Both efforts tie back to the administration’s “Unleashing American Energy” executive order and its stated goal of expanding affordable, reliable, and secure domestic energy production.
What is the funding being used for?
The DOE is seeking to strengthen three areas through this funding: underutilized resources, infrastructure, and technology upgrades. The first funding area focuses on technologies that convert stranded or underutilized resources into marketable products. This is the idea that significant volumes of natural gas are wasted as it is either burned off at the wellsite because there is no way to capture and sell it, or it gets mixed with other resources like sulfur, which make it too costly or difficult to process and ship. The first part of the funding is to help develop new technologies to help convert that “waste” into a usable product that can be sold. The second focus of the funding is to help create better infrastructure or physical equipment that stores and transports oil and gas. Over time, pipes, valves, tanks, and other materials wear out, leak, and corrode. The repairs can be costly, so this funding can be used to help build and test newer versions of physical equipment so that it lasts longer with fewer leaks and less corrosion that leads to major repairs. The third funding area focuses on technologies that enable real-time monitoring of infrastructure, allowing operators to identify potential problems without relying solely on manual inspections. The funding will help people create and test new technologies upgrades so that the equipment will run more efficiently, allowing us to sell more of what is produced, with less waste, while reducing operating costs for upstream (drilling and production) and midstream (pipeline, terminal, and transportation) operations.
What does this mean for the industry?
This announcement signals a shift in the federal government’s current approach to supporting domestic oil and gas production by providing financial incentives for innovation and infrastructure improvements. This is a push for the federal government to help share development costs with companies to come up with better ideas and help go from a concept to something running in the field and accelerate commercialization of technologies that might otherwise remain in the research phase. Companies operating in the oil and gas industry may want to monitor these funding opportunities closely as it is a change in the funding appetite that will, hopefully, in the end make oil and gas operations more efficient and reliable.
How does this affect our clients?
Companies in the oil and gas industry may have access to new federal funding opportunities that could support operational improvements and technology investments. Before pursuing these opportunities, companies should discuss several considerations with their CPA or advisor, including:
- Cash flow implications, since many federal grants are reimbursement-based rather than providing funding upfront.
- The interaction between grant funding and available R&D tax credits.
- Section 174 capitalization requirements.
- Compliance with federal grant requirements, including Uniform Guidance.
- Whether the award could trigger Single Audit requirements.
If you’d like to discuss how this funding opportunity may affect your company, please contact our natural resources experts at BMSS by calling (833) CPA-BMSS or visit our website for more details.
