BISMARCK – In another sign of the oil industry slowing down and infrastructure catching up in North Dakota, the state engineer’s office is discontinuing a program that allows irrigation permit holders to sell water to the oil industry for use in hydraulic fracturing.

The engineer’s office launched the Industrial Water Use in Lieu of Irrigation Policy, or ILOP, in 2011 as an emergency measure to meet the industry demand. The voluntary program allows farmers who held the permits to suspend their irrigation use for a season and use that water for fracking in the oil industry.

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Water supply and distribution were inadequate and thousands of trucks hauling water long distances to fracking sites were damaging roads and leading to more vehicle collisions, said Jon Patch, director of water appropriations.

Now, roads have been improved, more water pipelines and depots are in place and industry demand is down, leading the engineer’s office to determine that the emergency conditions that necessitated the policy no longer exist, Patch said.

“We’re seeing a big drop in the activity,” he said. “We’re not seeing the amount of truck traffic, which is what created the emergency in the first place.”

The number of active drilling rigs in North Dakota has fallen from 190 a year ago to 66 as of Monday. Nearly 1,000 wells were waiting on completion at the end of August, Department of Mineral Resources Director Lynn Helms said, as producers try to wait out depressed crude prices that have dropped by almost 50 percent in the past year.

At its peak in 2012, the policy provided the oil industry with 1.34 billion gallons through 33 permits held by 26 users, accounting for one out of every four gallons used in the fracking process in North Dakota, Patch said.

The number of permits taking advantage in the policy remains relatively steady at 34 this year, but usage is way down, accounting for less than 10 percent of the industry’s usage, he said.

The policy is being discontinued effective Dec. 31, except in two areas where there are insufficient permitted industrial water supplies: the Skjermo Lake aquifer in Divide County and the 29-mile corner of the Little Muddy aquifer in Williams County, both of which will have until Sept. 15, 2016.

Reach Nowatzki at (701) 255-5607 or by email at mnowatzki@forumcomm.com.