By Ernest Scheyder

WILLISTON, N.D. (Reuters) - North Dakota's oil industry is pushing to change the state's radioactive waste disposal laws as part of a broad effort to conserve cash as oil prices tumble.

The waste, which becomes slightly radioactive as part of the hydraulic fracturing process that churns up isotopes locked underground, must be trucked out of state. That's because rules prohibit North Dakota landfills from accepting anything but miniscule amounts of radiation.

The most common form of radioactive waste is a filter sock, a mesh tube resembling a sandbag through which fracking water is pumped before it's injected back into the earth. Tank and pipeline sludge are also radioactive.

It's not clear how much of this waste is generated, as North Dakota officials only began requiring tracking last year; final 2014 reports aren't due until next month. Some put the number at 70 tons per day; others say 27 tons.

Given that, estimates on potential savings aren't precise. But the oil industry says allowing North Dakota's landfills to accept more radioactive material could save at least $10,000 in transportation costs per truckload. There are 11,942 active wells in the state, so assuming each well generates at least one 15-cubic yard Dumpster's worth of radioactive waste each year - a conservative estimate, state officials say - that translates to an annual savings of about $120 million statewide.

"You're talking hundreds of dollars to transport versus tens of thousands" of dollars if regulations are changed, said Kari Cutting, vice president of the North Dakota Petroleum Council.

Cutting attended three hearings last week across the state to testify. Some oil companies, including SM Energy Co, also attended. "This just shows how much of a priority we're putting on this and these costs," Cutting said.

With U.S. crude oil prices down more-than 60 percent since last June, eating into the industry's financial lifeline, every penny counts.

Story continues

The changes would most-directly affect companies that operate saltwater disposal sites. Oasis Petroleum Inc is the largest publicly traded company with saltwater sites, though most operators are privately held. Oasis did not return a call seeking comment.

Changing the regulation would also make North Dakota's energy industry more self-reliant, oil producers said.

If other states stop taking the waste - Utah, Washington and California have far more liberal standards but for now aren't planning to close the gates - North Dakota's oil development would stop.

Clean Harbors Inc's Colorado landfill currently accepts North Dakota's radioactive waste. But allowing the company's North Dakota facility to do the same could represent a boon for the company. Clean Harbors said it supports changing the regulations.

The proposed changes are not universally popular. During the hearing in Williston last week, some attendees held signs reading: "Protect Health Not Oil's Wealth!" that were plastered with radioactive symbols.

"The only reason we're doing this today is to cut the oil industry's costs," said Darrell Dorgan, spokesman for the North Dakota Energy Industry Waste Coalition, an environmental group.

HOW IT WORKS

The hydraulic fracturing process - commonly known as "fracking" - extracts millions of gallons of water per well alongside oil. That mixture also contains small amounts of radium, a byproduct of uranium, and other sediments.

After that water is separated from oil, but before it's sent back into the earth, it must be pushed through the mesh filter socks to remove sand, pebbles and other materials that could potentially clog injection wells.

Filter socks are also used at drilling sites to separate sediment from water that naturally flows back each time a new well is bored.

In both instances, the radioactive material is actually an afterthought: the filter socks aren't designed to collect it, but become radioactive when they do their jobs.

North Dakota's landfills currently can only accept waste with radioactive material up to 5 picocuries, a measurement of the radioactivity found in a gram of material.

A banana has, on average, 3.5 picocuries of radiation.

Last year, state officials commissioned Argonne National Laboratory to study what the safest levels of radiation would be for landfills. The answer: 51.5 picocuries. Armed with that information, the state's Department of Health is seeking approval to boost the level for in-state disposal to 50 picocuries.

The increase is part of broader regulatory power the health department is seeking; current regulations were not written with oil industry waste in mind, officials said.

"This is all a part of our efforts to protect the health and safety of North Dakotans," said Scott Radig, head of the department's waste management division, which late Tuesday extended the public comment period to March on the rule change.

Even if a legislative panel approves the change - which wouldn't happen until Oct. 1 at the earliest - North Dakota's disposal levels would remain below Utah's (10,000 picocuries), Colorado's (2,000) and Idaho's (1,500).

"On the radioactive scale," said Radig, "the material we're talking about is extremely low."

(Reporting by Ernest Scheyder; Editing by Terry Wade and Hank Gilman)