HOUSTON (Dow Jones)--University budgets are getting slammed by the financial crisis, but big oil companies are maintaining their contributions to schools, even as their profits have dropped.
Companies like Exxon Mobil Corp. (XOM), Chevron Corp.(CVX) and ConocoPhillips (COP) say they aren't cutting their contributions to leading U.S. universities to advance research in clean energy technology even after posting lower fourth-quarter earnings after oil prices collapsed.
The assurance comes as most universities are seeing funding evaporate from their financial investments, though corporate contributions from the energy sector and others such as agriculture, biotechnology, telecommunications and health care are surging. The benefits, in both access to research and in public relations, from the agreements more than offset the relatively low expense.
"Ours is a cyclical industry and in order to maintain a consistent level of funding support for university research, grants are not generally tied to profits," said ConocoPhillips spokesman Bill Tanner. "Our commitment to fund existing university research projects remains strong."
Company-sponsored research has emerged as a popular way for major oil companies to burnish a more environmentally friendly image, while increasing the industry's access to the newest technology in next generation biofuels, solar energy, carbon capture and storage, and others. At the same time, the universities have gained access to needed funds.
"In these programs, oil companies look green, by making what are relatively minor investments in university research," said Merrill Goozner, director of the Integrity in Science Project at the Center for Science in the Public Interest.
"For universities, however, the contributions are very significant because there are few funding options," added Goozner, a critic of the relationship between the energy industry and academia.
Stanford University, which has an agreement with ExxonMobil to receive $100 million over 10 years as part of a project to find ways to meet growing energy demand without contributing to climate change, expects to see the value of its endowment decline by about 25% to 30% this year. But the school said it hasn't seen an impact on its sponsored-research contributions, which represent almost a third of its revenue.
Alan Jeffers, a spokesman for ExxonMobil - which reported a record $45.2 billion profit for 2008 - said the company isn't changing its commitment to Stanford. The oil giant takes a long-term view to research and support to education, he said.
The general endowment of the University of California - which has agreements with Chevron and BP PLC (BP) - declined about 24% in the fourth quarter, but private donations grew last year, exceeding $1 billion a year for the past eight years.
"At least today we have indications that the oil companies that work with us will be growing their programs over time," said Ernest Moniz, director of Massachusetts Institute of Technology's energy initiative. MIT has collaboration agreements with ENI SpA (E), BP, Chevron, Schlumberger Ltd. (SLB) and Saudi Arabian Oil Co., commonly known as Saudi Aramco.
But although industry support has become crucial for universities, analysts say their help could become less vital if, as expected, the Obama administration dramatically increase federal funding for research on clean energy technologies.
"Government support is largely overdue and desperately needed," said Jennifer Washburn, visiting Fellow at the Center for American Progress. "Universities have been struggling with very low federal support for energy research for decades."
Universities are unlikely to eschew energy-industry money even if funds pour in from the federal government, and despite the risk of tarnishing their public images by cozying up to Big Oil.
Federal funds could be spent especially in technologies of little interest to oil companies, said Kenneth Medlock, an energy fellow at the James A. Baker Institute for Public Policy at Rice University. The energy industry generally supports the development of biofuels or other alternative fuels that can be compatible with its current refining and distributions business.
(Isabel Ordonez covers U.S. integrated oil companies for Dow Jones Newswires. She can be reached at 713-547-9207 or isabel.ordonez@dowjones.com.)