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NEWS CATEGORIES

Water pipeline project underway, under fire

Written by: Mike Albrecht

A $150 million water pipeline project that will bring clean drinking water to western North Dakota has surged forward despite a flood of concerns from independent water suppliers.

The Western Area Water Supply Project hopes to provide drinking water for an estimated 48,000 people in oil country while shuffling a majority of its costs to oil companies desperate for massive amounts of water for drilling. Water haulers who have already invested hundreds of thousands of dollars in private facilities to serve the oil industry’s water needs say the state-financed pipeline project is flawed and will undercut their water sales.

(Submitted Photo) Water storage tanks in western North Dakota will be served by a new pipeline that was commissioned by the state Legislature during the 2011 session.

The pipeline will pump water from the Missouri River near Williston and sell it to oil companies, counties and cities. The water will eventually reach taps in McKenzie, Williams, Divide, Burke and Mountrail counties, including the cities of Williston, Watford City, Ray, Tioga, Stanley, Wildrose and Crosby.

Planners say they will sell surplus water to the oil industry while the population catches up with water supplies. An oil well requires 1 million to 1.5 million gallons of water in the hydraulic fracturing process to breakdown underground shale formations.

The pipeline was designed to deliver water to the 48,000 people expected to be living in the area by 2032. According to the most recent census numbers, about 27,000 people lived in the service area last year and growth projections call for another 20,000 in the next 15 years.

Water sales to the oil companies are expected to pay back 80 percent of the initial cost of the project. The state agreed to back the project last year, putting up a $110 million loan through the Bank of North Dakota and promised the remaining $40 million in 2014.

“As a whole, I believe the benefits to those communities and the rural areas will be very well received,” said Michelle Klose, assistant state engineer for the North Dakota State Water Commission. “There is very poor water quality in that region. If this project hadn’t been jumpstarted I don’t think we’d have seen water services in areas like Crosby and Wildrose.”

Opponents say the unorthodox water project has put the state and their livelihood at risk. Taxpayers across the state would be on the hook for a sizeable bill should oil companies pull out of the region and industrial water sales evaporate. Oil companies are expected to cover a majority of the system’s cost in five to seven years.

“House Bill 1206 was so out of the ordinary,” Steve Mortenson said about legislation that provided funding for the project. Mortenson is a farmer and rancher who also sells water from a depot he operates near Trenton. “It has none of the safeguards in it to protect. North Dakota is going to be responsible for this project. It will be our taxpayer dollars that are going to the engineering firm who designed this.”

Mortenson is the president of the Independent Water Providers, an organization of farmers, ranchers and private business owners. They operate more than 70 private water depots that supplied an estimated 70 to 80 percent of the oil industry’s needs last year.

“There were other avenues to get the funding rather than to compete with private businesses who have already invested their money and are already providing this service,” Mortenson said. “We were never opposed to the domestic side or the communities having an industrial depot in their own area. We just didn’t want them to put out depots where we already have depots. We felt it was wrong for them to come out and compete with us.”

The project originally called for 15 water depots, but that number was reduced to 12. Two are operational and another six should be up and running by the end of this year. The legislation requires the water authority to avoid building depots near existing ones to stay out of competition with private water sellers.

“They said they would minimize the impact to the private sector but in reality they’re not,” Mortenson said. “They’re not paying attention to the bill, they’re just doing what they want to do.”

Denton Zubke, chairman of the Western Area Water Supply Authority, said oil companies demand enough water to keep them all in business, but even if they didn’t the sacrifice may be justified.

“They’re selling water to oil companies, but whose water is it? They provide no tax revenue to townships and counties, so their revenue is simply subject to income tax to the state and federal government.” he said. “I’m not disputing the fact that they should keep their permits and sell their water, but I don’t think if you talk to the individual that they should have an exclusive right.”

The water authority has received more than 4,000 requests for water across the region. Zubke said he’s been approached by everyone from residents and real estate developers to man-camp organizers and commercial entities. In the last month he’s received a stack of requests that would affect more than 1,000 people.

“It gives you an idea of what every one of the entities is seeing for requests, and most of these communities didn’t have any spare water to give,” he said.

Mortenson said he and the other independent providers never disputed the fact that there was a need for potable water in western North Dakota. They spent more than $100,000 last year trying to convince legislators that there were funding alternatives such as a small tax on industrial water sales.

“There were other avenues of funding and ways they could’ve worked with us,” he said. “It’s very interesting that they are using state funds to compete with private business. It’s just not right. I can’t believe how much politics has played into this.”

Michelle Klose, assistant state engineer with the North Dakota Water Commission, agreed the project was unusual, but said it’s necessary. The Water Commission, which traditionally takes a leading role in these types of projects, has stepped back.

“It’s a very fast-paced process,” she said. “A lot of things are happening in Williston that you don’t see in the rest of the state. With that much development in that part of the state it’s hard to get resources. The water supply is very scarce in that region.”

Klose is one of about a dozen representatives on the Western Area Water Supply Project board. Also represented are Williams Rural Water, McKenzie County Water District, the city of Williston, BDW Water System Association and the R&T Water Supply Association.

“We are able to give some insight and guidance at the meetings, but we don’t have a controlling interest. We just have a small voice,” Klose said. “We’re trying to be the neutral party to keep things moving forward. It’s kind of a difficult role.”

Opponents said the Water Commission’s position leaves the engineering firm who is servicing the project somewhat unchecked. Advanced Engineering and Environmental Services, Inc. or AE2S helped develop the project, and were the only firm to submit a bid.

“If you don’t have any skin in the game, you’re going to treat it differently than if you’re taking risk,” said Robert Harms, representative for the independent water suppliers. “If this thing fails financially, the people of North Dakota are going to have to guarantee the payments.”

Zubke, who also chairs the McKenzie Water Resource District, said they and other nearby water districts approached AE2S a couple of years ago to find a solution to their water needs. Although AE2S submitted the only bid, Zubke said he fielded questions from three other engineering firms who ultimately decided not to throw in their hats.

“It doesn’t look like this oil industry is going away in the near future,” he said. “So I’m comfortable with this.”

In addition to setting up water depots, the Western Area Water Supply Authority has awarded bids and broke ground on transmission lines and reservoirs. Hopes are to have the system up and running by 2014 or 2015.

-Mike Albrecht is a freelance reporter for the Great Plains Examiner.

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Comments

  1. Simple math tells us those private water terminals are selling way more water than their permits allow. That’s why Dalrymple vetoed the part of the bill to put water meters on those depots. Better to overuse the water than to put a slowdown on the drilling that needs that water, you know.

    In any case, the whole thing of the Western Area Water is going to take all the water sales is crazy. The water depots are selling water for way less than the Western project can. They will still get lots of business. Their concern of the depots being put side by side really isn’t that much of a concern from the sales standpoint, the trucks would come and buy from the private guy unless the line is too long due to cost.

    The problem if the depots are close together is that then they won’t save all those truck miles it is hoped will be saved once the water sales depots of the Western Area Water project are in place.

    Water depots in the towns is one of the very things the project is trying to avoid. No use putting way more traffic into towns with too much traffic already. Plus the towns are not supposed to buy water at a low price and turn around and sell it to the oil companies because that would screw up the whole mechanism for paying for the project.

    In the end, the private water depot guys should thank their lucky stars they are making bucks because they had and were able to convert irrigation permits to industrial sales. It cost them some bucks and their irrigation is done but it’s about like hearing the guy who won a million dollars in the lottery complain he didn’t hit bit one.

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